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> Given the worlds ability to produce JIT it feels implausible that supply can’t meet demand if inflation were just left alone. Just as you can not deliver a b
by danuker 4y ago
> Given the worlds ability to produce JIT it feels implausible that supply can’t meet demand if inflation were just left alone.
Just as you can not deliver a baby in one month with 9 pregnant women, you can not grow food faster than it takes.
Also, there is no "leaving alone". As a central bank, you have to choose an interest rate, and this affects bond yields, stock prices, and financing costs (such as to produce said food).
- fnordpiglet 4y agoYou can grow more food with more money as long as we have land to grow food on. As food becomes more expensive more food will be grown. If it gets expensive enough vertical farms and other capital intensive growing capacity would be viable (as long as capital is cheap). Your analogy is false because you’re measuring latency and calling it bandwidth. If I want more babies in a shorter amount of time then absolutely 9 pregnant women wins over trying to make one woman pregnant 9 times. With food we want more food and plants grow in parallel. It’s not about the first grain of rice, it’s about the trillionth. Leaving alone in what I said means “don’t mess with the cost of capital and let people borrow to expand supply as fast as we can.” Eventually as we grow capacity to produce and people compete for higher prices we will overshoot supply, a consolidation will occur, and prices will drop. Trying to decrease supply expansion by making it more expensive to borrow to fund expansion will not improve supply. It will indirectly reduce demand by inducing savings and inducing a decrease in economic activity and a recession and unemployment, and therefore suffering.