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Isn’t it just as simple as there is a supply of money that everyone is chasing that expands forever if governments let it. If it stops expanding governments cau

Isn’t it just as simple as there is a supply of money that everyone is chasing that expands forever if governments let it. If it stops expanding governments cause recessions if it expands more people get richer but this leads to everyone getting really scared there is too much money (debt) and so people start doing things to repay the money supply causing a recession. It can’t possibly be this simple so governments need to pretend it’s much more complex than that and that their tough stewardship of the economy is going to save the day.

geoduck14 5y ago
^^^This, but add in a bag of weasels and I'm pretty sure we got it figured out.
imtringued 5y ago
I don't see 2% inflation as some kind of evil thing. The problem is that things like automation reduce the need to work by some degree so people get to work less but employment tends to pile up on fewer people. People don't measure prosperity by how much wealth their work produces. They measure prosperity by how much their job pays. It's employment that decides everything. Since work has become a social activity people actually like to work more than they demand work themselves. So people compete for fewer and fewer full time jobs as productivity rises. Here is my explanation. 8 people work at a restaurant and spend 5 hours out of 40 per week making pasta. Someone invents a pasta machine. So now everyone gets to work 35 hours. The boss decides to fire one worker so that the remaining employees work full time again. Everyone is competing desperately to not end up as the last guy without a job. Full employment in this scenario would require people to eat the additional pasta (=consume more) that the machine produces. If you truly believed that the 8th person would find a better job then it wouldn't matter if you fire them or not. In fact, if you create a new full time job that needs 40 hours of work, then all 8 restaurant employees would apply at your company because they know they get to work 5 hours more. The best out of 8 would be chosen for the new job. One person leaves the restaurant, resulting in full employment of the 7 restaurant workers. Meanwhile if you just fire a random restaurant worker then it is entirely possible that one of the 7 employed workers is switching jobs and the unemployed worker has to get back to work at the restaurant. It's quite inefficient.
- SJC_Hacker 5y ago
  > If you truly believed that the 8th person would find a better job then it wouldn't matter if you fire them or not. In fact, if you create a new full time job that needs 40 hours of work, then all 8 restaurant employees would apply at your company because they know they get to work 5 hours more. The best out of 8 would be chosen for the new job. One person leaves the restaurant, resulting in full employment of the 7 restaurant workers. The "8th person" is the person who made the pasta making machine. Whats happened is you've lowered the cost of production of pasta. The owner can now try to increase profits by either keeping the price the same and taking the savings, or lower the price to increase sales, in which case consumers see the benefit, which most economic theories predict they should through a competitive market if the owner does have some monopoly on pasta making machines. From the saved money that the owner and/or customers, they will (hopefully) spend it on other things. Like maybe remodeling the restaurant or their home. Which means jobs are generated for restaurant and home remodelers. Yes for the laid off restaurant worker who only knows how to make pasta by hand and cannot easily transition into a job remodeling houses, this is a problem. But on the other hand you have two wins here - the company/person that made the pasta making machine, and the person who in the end receives money that otherwise would have been spent on laboriously making pasta by hand.
andrepd 5y ago
> Isn’t it just as simple as [short paragraph]. The answer is going to be no x)
- andy_ppp 5y ago
  Yes, it was a heavily tongue in cheek attempt to sum up the field of economics in a paragraph, if that wasn’t clear!
tmnvix 5y ago
> ...if it expands more people get richer Not necessarily. If you think of money as representing a claim on the finite resources of the world then if the distribution of the increase in the money supply is too concentrated then you can have a situation where more people end up poorer.

geoduck14 5y ago

^^^This, but add in a bag of weasels and I'm pretty sure we got it figured out.

imtringued 5y ago

I don't see 2% inflation as some kind of evil thing. The problem is that things like automation reduce the need to work by some degree so people get to work less but employment tends to pile up on fewer people. People don't measure prosperity by how much wealth their work produces. They measure prosperity by how much their job pays. It's employment that decides everything. Since work has become a social activity people actually like to work more than they demand work themselves. So people compete for fewer and fewer full time jobs as productivity rises. Here is my explanation. 8 people work at a restaurant and spend 5 hours out of 40 per week making pasta. Someone invents a pasta machine. So now everyone gets to work 35 hours. The boss decides to fire one worker so that the remaining employees work full time again. Everyone is competing desperately to not end up as the last guy without a job. Full employment in this scenario would require people to eat the additional pasta (=consume more) that the machine produces. If you truly believed that the 8th person would find a better job then it wouldn't matter if you fire them or not. In fact, if you create a new full time job that needs 40 hours of work, then all 8 restaurant employees would apply at your company because they know they get to work 5 hours more. The best out of 8 would be chosen for the new job. One person leaves the restaurant, resulting in full employment of the 7 restaurant workers. Meanwhile if you just fire a random restaurant worker then it is entirely possible that one of the 7 employed workers is switching jobs and the unemployed worker has to get back to work at the restaurant. It's quite inefficient.

SJC_Hacker 5y ago
> If you truly believed that the 8th person would find a better job then it wouldn't matter if you fire them or not. In fact, if you create a new full time job that needs 40 hours of work, then all 8 restaurant employees would apply at your company because they know they get to work 5 hours more. The best out of 8 would be chosen for the new job. One person leaves the restaurant, resulting in full employment of the 7 restaurant workers. The "8th person" is the person who made the pasta making machine. Whats happened is you've lowered the cost of production of pasta. The owner can now try to increase profits by either keeping the price the same and taking the savings, or lower the price to increase sales, in which case consumers see the benefit, which most economic theories predict they should through a competitive market if the owner does have some monopoly on pasta making machines. From the saved money that the owner and/or customers, they will (hopefully) spend it on other things. Like maybe remodeling the restaurant or their home. Which means jobs are generated for restaurant and home remodelers. Yes for the laid off restaurant worker who only knows how to make pasta by hand and cannot easily transition into a job remodeling houses, this is a problem. But on the other hand you have two wins here - the company/person that made the pasta making machine, and the person who in the end receives money that otherwise would have been spent on laboriously making pasta by hand.

andrepd 5y ago

> Isn’t it just as simple as [short paragraph]. The answer is going to be no x)

andy_ppp 5y ago
Yes, it was a heavily tongue in cheek attempt to sum up the field of economics in a paragraph, if that wasn’t clear!

tmnvix 5y ago

> ...if it expands more people get richer Not necessarily. If you think of money as representing a claim on the finite resources of the world then if the distribution of the increase in the money supply is too concentrated then you can have a situation where more people end up poorer.