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No, that's a facile understanding of how the economy and fiscal policy works. A large portion of inflation is still likely to be due to complex supply issues ra
by jjeaff 5y ago
No, that's a facile understanding of how the economy and fiscal policy works. A large portion of inflation is still likely to be due to complex supply issues rather than simply everyone getting some extra cash. There is also the fact that spending on services has shifted to goods and hasn't fully shifted back. It is likely once supply chains finally catch up and spending shifts back to services and travel that much of the upward price pressure will be relieved.
And of course, those are just a few factors, there are countless more factors that make the whole situation far more complicated than anyone could possibly account for.
- acchow 5y agoThe handing out money to consumers doesn’t help. If the the extra money can be absorbed (economy can produce enough to meet demand), that’s fine and the economy just grows. But there were supply chain hiccups holding back the production capacity of the economy. So here we are.
- nostromo 5y agoExactly right. Demand was induced with money printing. Supply was restricted with lockdowns. When demand outstrips supply, prices rise.
- jjeaff 5y agoMore money supply likely accounts for some increase in demand. But the lockdowns themselves likely had more effect on demand than more cash. People need or want more things when they travel less and have fewer services to consume. When behavior changes in large ways, demand shifts to different things. Printing more cash didn't drive demand for n95 masks. It also didn't drive demand for things like flour and many other commodities. With the exception of those in extreme poverty, most people didn't run out and buy more toilet paper and flour because they got a stimulus check.
- AnthonyMouse 5y agoThat's ignoring the global nature of the supply chain. If supply is constrained and you give money to your own people, they may bid up prices some, but not by the entire amount because mostly what they're doing is using the money to outbid people in other countries. Which also means your people get more of the stuff. This cancels out if everybody does it, but not everybody can do it. The increase in demand from people having more money may also make it economical to increase supply faster and alleviate the shortfall sooner.
- ALittleLight 5y agoIt's quite a coincidence that the numerous complicated factors all started causing inflation at about the same time as the government printing tons of additional money. Also a coincidence that the confluence of the ineffable complex factors had the same effect that a naive person would imagine printing a lot of money would have.
- forum_ghost 5y agoit's almost like "complex reasons" is simply obscurantism.
- mohanmcgeek 5y agoYou seem to imply that the supply chain issue and the resultant inflation would not have happened had your government not borrowed so much? What's more likely: - Prices went up because there was a short supply of tangible things that actually (somewhat) respect the supply-demand curve OR - Prices went up because there was an "excess supply" of money from "printing" that arguably does not respect the supply-demand curve
- JumpCrisscross 5y ago> the supply chain issue and the resultant inflation would not have happened had your government not borrowed so much? Probably not. Instead, we’d be in a depression amidst mass unemployment and bankruptcies.
- mohanmcgeek 5y agoSo this supply chain crunch would have still happened but people would not have noticed it while dealing with much bigger problems such as unemployment.
- deleted 5y ago[deleted]
- JumpCrisscross 5y ago
- WalterBright 5y agoIf these other factors cause inflation, then they would cause deflation, too. Why does deflation not happen?
- AnthonyMouse 5y agoa) It's easier to reduce supply on short notice than increase it. Nobody wants to sell below cost. b) Deflation is bad but really easy to counteract. Print money and give it to people. Counteracting inflation is more expensive.
- bloodyplonker22 5y agoDeflation is exactly what would have happened had the fed not stepped in with their money printing. It's just that they printed way too much and did it very inefficiently, with a lot going to scammers.
- colordrops 5y agoThe pundits claiming that "it's complex" are the same ones that claimed inflation didn't exist until it was undeniable.