Money creation always ends up fuelling speculation: There is no good or bad money

It is often claimed that there are two kinds of money creation: “good” money creation, which fuels for example consumption among low-income households; and “bad” money creation, which fuels speculation and rising asset prices (equities, real estate). But in reality, there is only one kind of money creation, and whatever the initial use of the money created, it always ends up fuelling speculation. Consider the case of initially “good” money creation: the central bank implements helicopter money and gives money to low-income households. To be sure, these households will consume this money, but the money created does not disappear; it changes hands, and always ends up leading to an increase in savings invested in money (the money created has to be held by an economic agent, who may be completely different to the initial recipient). An increase in savings in the form of money holdings triggers a speculative “portfolio rebalancing” process: the additional money holdings are used to buy assets, which drives up the prices of these assets. Even if the money created seems “good” initially, at equilibrium it is “bad” insofar as it triggers speculative buying of financial or real estate assets.