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You 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:
by mohanmcgeek 5y ago
You 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> this supply chain crunch would have still happened but people would not have noticed it while dealing with much bigger problems such as unemployment Supply chain would have crunched but the demand fueling inflation would have been destroyed. Instead, we maintained both demand and production while the supply chains falter. (For the most part. Egregious stand-outs in destroyed production capacity are the automotive and rental-car industries.)
- AnthonyMouse 5y agoPrinting does respect the supply-demand curve in nominal dollars. It increases demand in nominal dollars.
- mohanmcgeek 5y agoAnybody making this claim should also explain how the government goes about "printing" money The government doesn't create money.
- AnthonyMouse 5y agoHow do you mean the government doesn't create money? The Federal Reserve Bank creates money. Sometimes literally by physically printing it, but more often by crediting someone's account in their computers. When the Fed "sets interest rates" on bonds, it buys bonds on the market using computer money it credits the seller's account with which it created out of nothing. Ordinary banks also create money when they make loans, which gets destroyed again when the loans are repaid. More money is created this way when interest rates are lower because people take out more loans then.
- mohanmcgeek 5y ago> The Federal Reserve Bank creates money So not the government. > When the Fed "sets interest rates" on bonds It doesn't set the interest rates on treasury bonds. They set a target and engage in the market to get the price to that level. Still a private entity doing private things. Not the government > Sometimes literally by physically printing it, but more often by crediting someone's account in their computers Definitely not! > More money is created this way when interest rates are lower because people take out more loans then. This is the only way money is created. The previous paragraph is far from how anything works.
- AnthonyMouse 5y ago> So not the government. The Federal Reserve is the central bank of the United States. Its board is nominated by the President and confirmed by the Senate. It's the government. Politicians sometimes like to pretend it's not so they don't get blamed for unpopular choices. > It doesn't set the interest rates on treasury bonds. They set a target and engage in the market to get the price to that level That's what setting interest rates means. > Definitely not! Where do you think coins and federal reserve notes come from?
- nightski 5y agoAre you implying that more money does not increase demand?
- mohanmcgeek 5y agoYes. It doesn't. Not only that: the government cannot and does not create money.