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To the degree that printing money by reducing interest rates and perhaps causing a bit of inflation, it basically punishes hoarding of cash by taxing it at the
by Robotbeat 6y ago
To the degree that printing money by reducing interest rates and perhaps causing a bit of inflation, it basically punishes hoarding of cash by taxing it at the inflation rate (plus the opportunity cost of having near zero nominal return in savings accounts). So that does force the original wealth into circulation. But it’s true that the Fed’s monetary stimulus is likely to be less effective at providing liquidity to individuals than direct fiscal stimulus like the stimulus checks people are getting. (Although it’s not all stimulating because many are using the money to pay off debts.)
- lumost 6y agoAlternately, those who have already built a mechanism for capturing a portion of the printed money as profit can simply purchase non-productive assets and benefit from the rising prices. https://advisor.morganstanley.com/liberty-group/articles/insights-and-outcomes/investing-in-wine--the-market-for-illiquid-liquids https://advisor.morganstanley.com/liberty-group/articles/ins...
- imtringued 6y agoThis is why we need to put the money into the right hands. It reminds me of trickle down economics. Instead of flooding one plant and hoping that you are pouring enough water to reach the entire farm field it would be more effective to just water every plant a little. It would require much less water overall.