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Congressional action made it worse. They literally injected another three trillion dollars of infrastructure spending into an already heated economy. How exact
by Axien 4y ago
Congressional action made it worse. They literally injected another three trillion dollars of infrastructure spending into an already heated economy.
How exactly is the fed suppose to fight the government printing presses?
- philjohn 4y agoThat $3tn is needed desperately, and spending on infrastructure is far less inflationary, especially in a supply crunch.
- ballenf 4y agoCan't wait to see the final accounting on how much of that spending makes it to actual bridges and roads and the like.
- karatinversion 4y agoThe fed is the one with the money printers. The federal government finances its operations through taxes and borrowing.
- starkd 4y agoThe congress sets fiscal policy that choose to fuel deficit spending.
- karatinversion 4y agoYes, and the deficit is equal to net government borrowing, because it is the part of expenditure financed through borrowing rather than taxes.
- acuozzo 4y agoI'm not sure I follow your line of thinking. The cause of inflation is an increase in the cost of goods and services. This is a choice that individuals within companies make. It is not a natural consequence of increasing the money supply.
- verelo 4y agoSo this is the crux of the problem. Someone is wrong. I’d say it is a major factor of over supplying the market with capital. You’re saying it isn’t?
- acuozzo 4y agoI'm saying that the root cause of the problem is speculation. Price adjusters within companies are using the news of the increased money supply to gamble that customers will pay more and they've been right, so far. There's quite a bit of tacit collusion driving this, of course, but it's also a self-fulfilling prophecy. Price adjusters within companies know that everyone believes that printing money "causes" inflation, so they take advantage of the opportunity.
- s1artibartfast 4y agoThe thought is pretty straight forward. Prices are a function of supply and demand. If buyers have more cash, they are willing to pay more, so prices go up. If you increase the money supply and that money gets into the hands of buyers, the prices will rise.
- acuozzo 4y agoAre there no humans involved in the process of raising prices?
- s1artibartfast 4y agoyes, on both sides. How much a human is willing to pay, and how much a human thinks they can get. If your point is simply that businesses are choosing to maximize profit, that of course is correct. It always has been unless you are a non-profit or state owned enterprise. The salient question is what conditions changed in the economy so that they can increase prices. It isnt like they were running as charities before.
- 4y ago