Can a government reduce inflation by selling public property – i.e. trading assets for private cash and reducing the money in circulation?

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Can a government reduce inflation by selling public property – i.e. trading assets for private cash and reducing the money in circulation?

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Anonymous 0 Comments

Yes!

The way this is actually done in practice is not generally with stuff like public land or buildings or things like that.

The way you’d be likely to see this happen in the United States is via a process called [“quantitative tightening”](https://www.stlouisfed.org/open-vault/2019/july/what-is-quantitative-tightening), which is the opposite of “quantitative easing”. Essentially, this means that the Federal Reserve will sell financial assets it owns (mainly US government debt aka Treasury Bills) to financial institutions (or at least, that it will buy fewer). The result is that the Fed gets cash, and the financial institution gets the asset, thus removing money from the money supply.

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