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Inflation is not caused by profits or wages. Read Friedman. No one has yet made a convincing argument that he was wrong. Inflation is a monetary phenomena, n

Inflation is not caused by profits or wages. Read Friedman. No one has yet made a convincing argument that he was wrong. Inflation is a monetary phenomena, not a function of normal supply & demand. In other words, it's precipitated by governments monetary practices. Look at the US, who spent 15+ years with very easy money. Now they are inflating like crazy. Proponents of Modern Monetary Theory are either ideological or simply liars. Debt matters, government spending matters, money supply growth matters. Lying about the actual inflation rate matters (the US again). As for the minimum wage, look at what happened with San Francisco & Seattle boosted their minimum wage. The current economic situation is nothing new. It's as simple as a grad school case study in macroeconomics

kurthr 4y ago
Hahaha... tell me more about whether bank reserves really matter, or reverse repos count and how many EuroDollars there are in "circulation". Even people at the Fed know they don't know. The global credit machine and rehypothecated swaps are both the liquidity that keeps things going and the confounding variable that makes any estimate of "money supply" hilarious. How many years (and $T) of QE was there... and nothing. Then supply chain breakdown and poof! You might as well argue it was caused by "printing bitcoin". https://youtu.be/pn8nh0jUvbs https://youtu.be/pn8nh0jUvbs Talk to an honest graduate economist. These are all inputs to a complicated foul smelling brew. I'm not arguing that debt doesn't increase risk (eg doesn't matter), but (especially when repaid) it can easily be deflationary. I will argue that we had a perfect storm of deflationary pressures (high initial rates, rising productive demos, globalization) and now we have the opposite (zero rates, falling productive demos, deglobalization) and it was all started with a pandemic and broken supply chains. The best description I can give is that keeping businesses and consumers solvent/spending during the pandemic (note that was actual spending not QE) did ALLOW prices to rise rather than causing massive demand destruction (and likely depression-deflation). Inflation at least allows those decades of debts to be repaid and might lower risk.

kurthr 4y ago

Hahaha... tell me more about whether bank reserves really matter, or reverse repos count and how many EuroDollars there are in "circulation". Even people at the Fed know they don't know. The global credit machine and rehypothecated swaps are both the liquidity that keeps things going and the confounding variable that makes any estimate of "money supply" hilarious. How many years (and $T) of QE was there... and nothing. Then supply chain breakdown and poof! You might as well argue it was caused by "printing bitcoin". https://youtu.be/pn8nh0jUvbs https://youtu.be/pn8nh0jUvbs Talk to an honest graduate economist. These are all inputs to a complicated foul smelling brew. I'm not arguing that debt doesn't increase risk (eg doesn't matter), but (especially when repaid) it can easily be deflationary. I will argue that we had a perfect storm of deflationary pressures (high initial rates, rising productive demos, globalization) and now we have the opposite (zero rates, falling productive demos, deglobalization) and it was all started with a pandemic and broken supply chains. The best description I can give is that keeping businesses and consumers solvent/spending during the pandemic (note that was actual spending not QE) did ALLOW prices to rise rather than causing massive demand destruction (and likely depression-deflation). Inflation at least allows those decades of debts to be repaid and might lower risk.