5 ms·

I think you mean adding more money without increasing demand is called inflation

by hackernewds 4y ago

ianai 4y ago
Without increasing supply*
- marcosdumay 4y ago
  Both are defined as exactly the same value... Edit: And from the downvote to disagree reaction, looks like people not only get their terms from economics without looking their meaning, but seem to be also incredibly confident on it.
  - sokoloff 4y ago
    I did not downvote, but the flaw in your reasoning is that while microeconomics defines supply and demand to intersect at equilibrium, it does not require those curves to stay unchanged. The argument of "if you add more money without increasing [demand|supply], the equilibrium price will change" has a different meaning depending on which of those words you choose, even though at both the old and new equilibrium, the curves will intersect.
    - marcosdumay 4y ago
      Well, they don't intersect "at equilibrium", they are the same, with the only possible addition of some noise with average 0 due to accounting delays. In microeconomics you can cut your data and ignore parts of them, so they can become different, but the thread up there is taking about markets, not single entities. The argument does not change if you trade supply into demand. In fact, demand and supply are not good quantities to put on it at all, because both are defined for a set price, so if you add more money and keep them unchanged, the equilibrium price doesn't change. The entire inflation event happens because they change. Both sides of the disagreement up there are logical consequences of looking at half of that issue and trying to get a full picture from it.
      - sokoloff 4y ago
        Equilibrium does not refer only to a static two-dimensional chart with quantity on one axis and price on the other. It also refers to the reactions of market participants to other factors (substitute goods, supply and prices of key inputs, money supply, taxes/tariffs, etc.)
        marcosdumay 4y ago
        I don't get where you are going. Supply and demand being the same does not depend on the reaction of people. They are the same because they measure the same thing.
        sokoloff 4y ago
        The supply curve shifts when conditions change. (When you make inputs more expensive, suppliers will offer fewer units at a given nominal price.) The demand curve shifts when conditions change. (When you airdrop money to people, they will be willing to pay more in nominal dollars for normal goods at any given quantity.)
        marcosdumay 4y ago
        Well, I'm pretty sure the OP was talking about quantities. Anyway, those curves are mathematical things people create for analysis, that mean absolutely nothing by themselves, and only give you back the conclusions of whatever assumptions you put on them. The phrases you have between parenthesis mean something, the ones you have outside of the parenthesis do not say anything. If people kept their discussion at the real stuff from the beginning, they wouldn't ever miss their meaning and try to form mathematically invalid arguments by trying to change half one equation while assuming the other half constant.

I think you mean adding more money without increasing demand is called inflation

ianai 4y ago

Without increasing supply*

marcosdumay 4y ago
Both are defined as exactly the same value... Edit: And from the downvote to disagree reaction, looks like people not only get their terms from economics without looking their meaning, but seem to be also incredibly confident on it.
- sokoloff 4y ago
  I did not downvote, but the flaw in your reasoning is that while microeconomics defines supply and demand to intersect at equilibrium, it does not require those curves to stay unchanged. The argument of "if you add more money without increasing [demand|supply], the equilibrium price will change" has a different meaning depending on which of those words you choose, even though at both the old and new equilibrium, the curves will intersect.
  - marcosdumay 4y ago
    Well, they don't intersect "at equilibrium", they are the same, with the only possible addition of some noise with average 0 due to accounting delays. In microeconomics you can cut your data and ignore parts of them, so they can become different, but the thread up there is taking about markets, not single entities. The argument does not change if you trade supply into demand. In fact, demand and supply are not good quantities to put on it at all, because both are defined for a set price, so if you add more money and keep them unchanged, the equilibrium price doesn't change. The entire inflation event happens because they change. Both sides of the disagreement up there are logical consequences of looking at half of that issue and trying to get a full picture from it.
    - sokoloff 4y ago
      Equilibrium does not refer only to a static two-dimensional chart with quantity on one axis and price on the other. It also refers to the reactions of market participants to other factors (substitute goods, supply and prices of key inputs, money supply, taxes/tariffs, etc.)
      - marcosdumay 4y ago
        I don't get where you are going. Supply and demand being the same does not depend on the reaction of people. They are the same because they measure the same thing.
        sokoloff 4y ago
        The supply curve shifts when conditions change. (When you make inputs more expensive, suppliers will offer fewer units at a given nominal price.) The demand curve shifts when conditions change. (When you airdrop money to people, they will be willing to pay more in nominal dollars for normal goods at any given quantity.)
        marcosdumay 4y ago
        Well, I'm pretty sure the OP was talking about quantities. Anyway, those curves are mathematical things people create for analysis, that mean absolutely nothing by themselves, and only give you back the conclusions of whatever assumptions you put on them. The phrases you have between parenthesis mean something, the ones you have outside of the parenthesis do not say anything. If people kept their discussion at the real stuff from the beginning, they wouldn't ever miss their meaning and try to form mathematically invalid arguments by trying to change half one equation while assuming the other half constant.