4 ms·
Increase inflation to remove more money from the system and encourage the _correct_ investment at the moment will eventually stimulate the economy?
by vuln 4y ago
Increase inflation to remove more money from the system and encourage the _correct_ investment at the moment will eventually stimulate the economy?
- slv77 4y agoPricing is the primary economic signal that guides investment in a capitalist system. When inflation runs too high the pricing signals break down as the result of speculation and hoarding. That can lead to malinvestment. Historically the Fed’s job was to “take away the punch bowl” and wring the bad debt and malinvestment out of the system before it became a systemic risk. Since 2008 the system has primarily focused on how to move the bad debt around to avoid default.