> they [the central banks] can expand the money supply to keep the system propped up.
They have to expand money supply to keep the value of the currencies stable as long as most money is not spent. The economy depends not on the supply of money but on the stability of the money.
By which force do central banks have to keep increasing the money supply once people start spending? There is no reason to do so and thus no reason for fiat currencies to collapse.
It's more likely that they increase interest rates when people start spending again, and thus reduce supply and as a consequence, keep the value of money stable.
> The economy depends not on the supply of money but on the stability of the money.
The supply of money is adjusted to match how much is needed, it's the entire reason why countries switched to fiat currencies. Everything else being equal, if the GDP is growing 5% each year you need 5% more money each year to keep the same velocity of money i.e. how much is being used in the economy.
> they [the central banks] can expand the money supply to keep the system propped up.
They have to expand money supply to keep the value of the currencies stable as long as most money is not spent. The economy depends not on the supply of money but on the stability of the money.
By which force do central banks have to keep increasing the money supply once people start spending? There is no reason to do so and thus no reason for fiat currencies to collapse.
It's more likely that they increase interest rates when people start spending again, and thus reduce supply and as a consequence, keep the value of money stable.