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The simple idea of you print more money therefore each dollar, euro... has less value, therefore inflation. Works for me
by freeduck 5y ago
The simple idea of you print more money therefore each dollar, euro... has less value, therefore inflation.
Works for me
- imtringued 5y ago1 Apple = $1 I borrow $100 from the bank which creates $100. I buy seeds and plant trees. I sell 100 Apples to pay the loan back. Did the value of the dollar go down? No it didn't. This is how the supply of money can go up much faster than inflation.
- kazen44 5y agoin the end though, a dollar, euro or whatever is just a abstract unit which represents hours of labour spend. Inflation is making the hours worked in the past worth less, and forces people to spend their money early to get maximum effectiveness out of their work. From a labourer's perspective, inflation is making the results from work done in the past worth less, while those who have the means to take risks can negate these negative side effects.
- freeduck 5y agowhat does the labourer's perspective have to do with anything. if there are a 100 dollars today and tomorrow there are 200. a dollars worth is halved right? or? Got some secret insight on supply demand, that the general public is unaware of? I would sooo like to know :-)
- freeduck 5y agoI would So Much Love to meet a rocket scientist some day, that could give me some true perspective.
- ItsMonkk 5y agoCantillion effects. Who gets the money? What do they spend it on?
- freeduck 5y agoLOL
- salawat 5y agoLet's extend this. Inject it at ground level. No banks. No taxing. Let's come up with a few scenarios. Everyone invests it in Stocks. Everyone saves. Everyone invests in assets to start their own businesses.
- ItsMonkk 5y agoYou can't invest money in stocks. Every time you transact with stocks, the person who is giving you stocks is getting your money, and so that money is not in stocks. The only time you "invest" in stocks is during a public offering. And when a company does a buyback, that's a de-vestment. Over the last 20 years there has been more buybacks than stock issuances. The market is running dry. Deflationary assets are exactly what r > g predict.
- imtringued 5y ago>Everyone invests it in Stocks. Everyone saves. Well, this wouldn't cause any inflation at all. It's basically just dead money. Either you own a stock or you save money in your bank account because someone bought your overpriced stock. >Everyone invests in assets to start their own businesses. This will cause inflation over the short term if there isn't enough labor available to do all investments. Interest rates would rise to encourage people to save their money. There is also another form of inflation. There is enough labor available but the investment fails. You borrow $100 but only repay $80 (inflation adjusted of course). There is more money without enough production to back it up.
- imtringued 5y agoIf the laborer is 2x as productive tomorrow then the value of your dollars is the same.
- ItsMonkk 5y agoThis is a bad take because if that dollar does not transact, you do not get inflation but you get a lowered velocity. However a lowered velocity rises r - g. This exacerbates wealth inequality.
- salawat 5y agoSounds to me like the Fed has spent the last fifty years dumping velocity then.
- edzillion 5y ago> This is a bad take because if that dollar does not transact, you do not get inflation but you get a lowered velocity. > However a lowered velocity rises r - g. This exacerbates wealth inequality. The cantillion effect: https://en.m.wikipedia.org/wiki/Richard_Cantillon#Monetary_theory https://en.m.wikipedia.org/wiki/Richard_Cantillon#Monetary_t...
- imtringued 5y agoThe r > g thing is cool in theory but it has an obvious flaw. As inequality rises returns go down. Interest rates have hit rock bottom rates. You have to explain how returns can exceed economic growth. Your returns have to be earned through coercion basically, the other party can't refuse. Overpriced stocks just result in lower yields. I can only think of real estate as something that is earning a fixed return through coercion. The other thing would be money if the fed forcibly raised interest rates but interest is already zero.