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>and it never gets spent on consumer goods It doesn't need to be spent on consumer goods to cause inflation. It can also be spend on economic investment ie. ne

>and it never gets spent on consumer goods It doesn't need to be spent on consumer goods to cause inflation. It can also be spend on economic investment ie. new capital (new factories, new equipment, infrastructure inventory, supplies, training, R&D, real estate, mining operation etc. etc.). The money will quickly flow to employees and then to everything else. Only if the rich keep all the new money in cash form would it not cause inflation but this would usually be a very risky and unstable situation for the money hoarders as some of the money on the sidelines can start moving at any time which would cause inflation to spike and the rest of the stockpile to lose value quickly.

skybrian 7y ago
It seems like we already have something similar with high real estate prices and money-losing unicorns? But we don't seem to see unneeded new factories or mining happening. Apparently there needs to be some plausible idea around why the investment will make money, and tech has better stories about how that might happen.
apendleton 7y ago
> The money will quickly flow to employees and then to everything else. Sure, I never said it was the rich people that had to do the spending, so we don't disagree there, but if "inflation" as commonly measured (CPI, say) is to occur, the prices of consumer goods have to change, and someone at some point has to buy some, whether it's the rich people or their employees, and if it's the latter it requires that the former sink their money into something that employs people. The author suggests that this happens less reliably than it used to (that they hoard cash, or I dunno, gold? whatever -- something societally unproductive)
notahacker 7y ago
If newly minted money is spent on economic investment it generally creates economic growth rather than inflation (in general: obviously there are specific investments individual companies can make which drive up prices and it is possible for a rapidly-growing economy to run into short term supply constraints). Sure, the money will flow to the workers who will have more money to spend than they previously did, but it only does so because they are also making more stuff for the additional cash circulating to be used to buy...

skybrian 7y ago

It seems like we already have something similar with high real estate prices and money-losing unicorns? But we don't seem to see unneeded new factories or mining happening. Apparently there needs to be some plausible idea around why the investment will make money, and tech has better stories about how that might happen.

apendleton 7y ago

> The money will quickly flow to employees and then to everything else. Sure, I never said it was the rich people that had to do the spending, so we don't disagree there, but if "inflation" as commonly measured (CPI, say) is to occur, the prices of consumer goods have to change, and someone at some point has to buy some, whether it's the rich people or their employees, and if it's the latter it requires that the former sink their money into something that employs people. The author suggests that this happens less reliably than it used to (that they hoard cash, or I dunno, gold? whatever -- something societally unproductive)

notahacker 7y ago

If newly minted money is spent on economic investment it generally creates economic growth rather than inflation (in general: obviously there are specific investments individual companies can make which drive up prices and it is possible for a rapidly-growing economy to run into short term supply constraints). Sure, the money will flow to the workers who will have more money to spend than they previously did, but it only does so because they are also making more stuff for the additional cash circulating to be used to buy...