It’s not a very difficult concept. Shrinking the supply of currency helps support its value. You sell something (typically a government bond, but perhaps a virtual spaceship), take the money received in payment, and effectively make it disappear. It is like “unprinting money.” Believe it or not, most central bankers today — people in charge of managing real currencies, in real life, with real-life consequences for millions of people — haven’t figured this out.
Read Full Article »