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Option B is liable to cause inflation if not executed extremely carefully.
by TrainedMonkey 10y ago
Option B is liable to cause inflation if not executed extremely carefully.
- ghshephard 10y agoIf you are handing out USD, there won't be any inflation. And I don't think there is anywhere in the developing world that USD isn't seen as good as local currency (if not better in many countries)
- mcguire 10y agoWhat would prevent an influx of USD from causing (localized) inflation?
- jimmywanger 10y agoHow is the currency handed out gonna not cause inflation, no matter what it's denominated in? If you give out hundred dollar bills, local prices will rise for goods, which is the definition of inflation.
- nandemo 10y agoOption A increases the supply of chickens, so other things being equal the price of a chicken decreases. But people (aid recipients) are better off since they can eat more chicken. Option B slightly increases the supply of money, so other things being equal prices of basic goods increase a little. But people are still better off since they can buy more stuff.
- maerF0x0 10y agoOption B is also good because if (in their opinion) the superior case is A, they can use the money to implement A themselves. And if A was inferior for some reason (eg, need medicine now or die before said chickens mature) then the recipient could choose an alternate path . IMO this is why cash is the ultimate form of aid, it allows the recipient to do your "great idea" or whatever else is optimal in their case.