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> Assume doodads are $1 today. If tomorrow money supply is doubled, they will be $2. If you double every persons account, yes. If you do it through interest ra

> Assume doodads are $1 today. If tomorrow money supply is doubled, they will be $2. If you double every persons account, yes. If you do it through interest rates, you need to pay attention to the Cantillion Effect. The Cantillion Effect states that money flows from people who have it to things that those people want to buy. If you give money to rich people who have already reached capped consumption, they won't then go out and buy more apples. They will choose to save it(as they know with an ever-growing money supply, if they save it in assets they will have more buying power when they choose to spend it), and therefore investments will rise in price while consumption goods will stay the same price. This is exactly what the fed has done. The more wealth inequality there is, the less the fed has control over inflation.

jkhdigital 6y ago
And the more they print, the more wealth inequality there will be... unless they go straight helicopter money (although that would require substantial legislative changes).
- ItsMonkk 6y ago
  I recently came across this journal article[0]. Basically it outlines how getting off the gold standard leads to where we are today due to a cycle of.. 1. Economy isn't doing as well as we hoped. 2. Central banks lower the interest rates. 3. Households and governments go further into debt now that they can get cheaper loans. 4. We get a boom! Asset prices rise. 5. The boom gradually ends as all available credit has been lent. 6. People start paying off their debt, and the savers who they are paying end up saving more and more. The wealthy don't buy 200x as much food, etc... 7. Economy isn't doing as well as we hoped. One of the key lines in the article... > In words, this implies that if the richest households’ wealth rises by 10%, the interest rate has to come down by 32 basis points [0] https://scholar.harvard.edu/straub/publications/indebted-demand https://scholar.harvard.edu/straub/publications/indebted-dem...

jkhdigital 6y ago

And the more they print, the more wealth inequality there will be... unless they go straight helicopter money (although that would require substantial legislative changes).

ItsMonkk 6y ago
I recently came across this journal article[0]. Basically it outlines how getting off the gold standard leads to where we are today due to a cycle of.. 1. Economy isn't doing as well as we hoped. 2. Central banks lower the interest rates. 3. Households and governments go further into debt now that they can get cheaper loans. 4. We get a boom! Asset prices rise. 5. The boom gradually ends as all available credit has been lent. 6. People start paying off their debt, and the savers who they are paying end up saving more and more. The wealthy don't buy 200x as much food, etc... 7. Economy isn't doing as well as we hoped. One of the key lines in the article... > In words, this implies that if the richest households’ wealth rises by 10%, the interest rate has to come down by 32 basis points [0] https://scholar.harvard.edu/straub/publications/indebted-demand https://scholar.harvard.edu/straub/publications/indebted-dem...