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> Inflation is not the result of profits, gouging, etc. Inflation is the measure of the price of goods > It's the result of funding the deficit by running the
by rovolo 4y ago
> Inflation is not the result of profits, gouging, etc.
Inflation is the measure of the price of goods
> It's the result of funding the deficit by running the printing press
Increasing the money supply indirectly increases the price of goods. It matters in the long run, but the price of goods can change in the short-term based on supply. The oil crisis of the 1970s caused oil prices to increase because oil supply was limited. This would have caused inflation even without an increased money supply.
> creating debt backed by nothing. ... fiat money systems.
This is more of a tangent, but the money supply can also shrink in fiat systems. Fiat currency can be shrunk via taxes. Debts can be defaulted. Fiat systems aren't inherently inflationary; but they target a low level of inflation because they prefer it to deflation.
- WalterBright 4y agoYou can tell it's a monetary thing because you don't see deflation. > Fiat systems aren't inherently inflationary; but they target a low level of inflation because they prefer it to deflation. That's just the excuse. The real reason is so the government can spend money without raising taxes. So they sell you on the idea that inflation is good.
- selectodude 4y agoDeflation deepens recessions and lowers investment. It is inherently bad. It has nothing to do with spending money without raising taxes. Countries that can borrow in their own currency can already do that in any environment. Heck, parts of Europe had negative interest rates to combat deflation.
- WalterBright 4y ago> It has nothing to do with spending money without raising taxes. Where do you think Biden's trillions in extra spending is coming from? Not from raising taxes.
- selectodude 4y agoThe US has been deficit spending basically every year since 1929. Its impact on inflation is pretty questionable. https://fred.stlouisfed.org/graph/fredgraph.png?g=Tk32 https://fred.stlouisfed.org/graph/fredgraph.png?g=Tk32
- WalterBright 4y agoLook at it as percent of the money supply. And you didn't answer the question.
- zx85wes 4y agoThe eurozone only had a few quarters of deflation the past 25 years. The problem is that the ECB considers it main task to be providing governments in Southern Europe with cheap credit instead of focussing on price stability.