3 ms·
Ceteris paribus, creating more money reduces its value. If, over some time period, you double the money supply, yet the monetary price of a basket of consumer
by waterhouse 6y ago
Ceteris paribus, creating more money reduces its value. If, over some time period, you double the money supply, yet the monetary price of a basket of consumer goods stays the same, then that means the monetary price would have been cut in half if you hadn't printed anything. So, just because other effects are strong enough to counteract your debasing doesn't mean you're not debasing the currency.
- eli_gottlieb 6y ago>Ceteris paribus, creating more money reduces its value. Ceteris is not paribus at all. If we're complaining about potential inflation rather than worrying about the raging pandemic and a full-blown depression like unto the Great Depression, we're in comparatively good shape!
- vkou 6y ago> Ceteris paribus, creating more money reduces its value. That is correct. What you're missing is that a large fraction of created money used to come from banks lending money. During a recession, or a pandemic, that lending tightens, which slows the rate at which money is created, and speeds the rate at which money starts getting destroyed. It's why the fed prints money during recessions, and destroys money during economic booms.