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But doesn't that just make the value of the dollars left higher? If there is more value being created but less dollars to pay for it worth the value of a dollar
by CDSlice 7y ago
But doesn't that just make the value of the dollars left higher? If there is more value being created but less dollars to pay for it worth the value of a dollar should go up until the out of circulation dollars come back.
- danaris 7y agoBy some theories, yes, it should. I don't know if the reason it doesn't is that a) I'm wrong b) Something else is artificially holding the value of the dollar up c) Those theories are wrong, or d) It just hasn't been long enough yet.
- bsanr2 7y agoYes, without outside influence. That's called deflation, which many consider bad because it incentivizes saving over using money, slowing the economy. We would have seen that after the crash in 07/08, but the federal government stepped in to inject cash into the economy. Should we have done that? Sure, we saw during the Great Depression what happens when you don't. But the way we did it was obviously regressive: instead of forcing some of the existing money supply, the out-of-play portion we've been talking about, back into the economy via a wealth tax, we did a bunch of things that essentially routed "new" money through the major banks (so they wouldn't fail).