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Another example of grade-school economics - cherry pick a couple of points and draw a stick figure - proved! Let me try: more money in circulation means sales

Another example of grade-school economics - cherry pick a couple of points and draw a stick figure - proved! Let me try: more money in circulation means sales volume goes up, so prices fall (according to actual economic theory). Or: folks have more money so live healthier, increasing productivity and using fewer healthcare resources, so the economy benefits. It's easy! Just throw out some money-sounding words and make the rest up.

merpnderp 5y ago
No, it's not easy. But we do know that increasing the money supply faster than economic growth creates inflation. We also know that inflation helps the rich and hurts the poor since it inflates asset prices faster than wages. And guess who owns most of the assets.
ZetaZero 5y ago
> Let me try: more money in circulation means sales volume goes up, so prices fall (according to actual economic theory). Only true under certain circumstances. In general, when Demand increases, and Supply doesn't increase to match, prices go up.
deleted 5y ago
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simonh 5y ago
That may happen longer term, but the problem is supply at the moment is not able to grow to meet the increased demand. Just look at all the articles about container ships queueing up at ports, and companies unable to hire enough workers, chip shortages brining manufacturing lines to a halt, energy price spikes. There's proving to be a significant drag on capacity at the same time as the burst in demand. So it's not just QE driving this, but it's certainly a factor.
postingawayonhn 5y ago
> Let me try: more money in circulation means sales volume goes up, so prices fall (according to actual economic theory). Not according to any economic theory I've heard of. If consumer incomes rises then the demand curve should shift to the left. This will move the intersection of the supply and demand curves to a point where both quantity supplied and price are higher.
- JoeAltmaier 5y ago
  Except when supply is flexible. Manufacturing in higher volume will reduce cost.

merpnderp 5y ago

No, it's not easy. But we do know that increasing the money supply faster than economic growth creates inflation. We also know that inflation helps the rich and hurts the poor since it inflates asset prices faster than wages. And guess who owns most of the assets.

ZetaZero 5y ago

> Let me try: more money in circulation means sales volume goes up, so prices fall (according to actual economic theory). Only true under certain circumstances. In general, when Demand increases, and Supply doesn't increase to match, prices go up.

deleted 5y ago

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simonh 5y ago

That may happen longer term, but the problem is supply at the moment is not able to grow to meet the increased demand. Just look at all the articles about container ships queueing up at ports, and companies unable to hire enough workers, chip shortages brining manufacturing lines to a halt, energy price spikes. There's proving to be a significant drag on capacity at the same time as the burst in demand. So it's not just QE driving this, but it's certainly a factor.

postingawayonhn 5y ago

> Let me try: more money in circulation means sales volume goes up, so prices fall (according to actual economic theory). Not according to any economic theory I've heard of. If consumer incomes rises then the demand curve should shift to the left. This will move the intersection of the supply and demand curves to a point where both quantity supplied and price are higher.

JoeAltmaier 5y ago
Except when supply is flexible. Manufacturing in higher volume will reduce cost.