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If money is not injected into some static immobile "vault" (the whole point of a bailout or liquidity injection is for it to flow outwards), then it is going to
by netbioserror 4y ago
If money is not injected into some static immobile "vault" (the whole point of a bailout or liquidity injection is for it to flow outwards), then it is going to be spent. For example, bailed out companies treat the cash injection similarly to investor cash, to be used. Departments get made, projects get spun up, equipment gets bought. In the case of banks, people get hired, existing employees get raises, liabilities get shored up, and assets get bought, which needed to be bought off of people who owned them or made them. And everyone involved at every point in this chain buys potatoes on the way home.
- Tade0 4y ago> If money is not injected into some static immobile "vault" You mean like crypto or meme stocks?
- netbioserror 4y agoIn a way, yes. People flee into assets and commodities they see as "vaults" when they're uncertain, or that they see as rocket ships when they're greedy; this is why their prices rise. The inflation from the liquidity injections is being contained to those assets. The bursting of the stock and crypto bubbles coincided with the rapid acceleration of inflation as people pulled their money out to both escape the falling knife and spend some of it on what they needed before inflation rose more, a vicious cycle. The effects of those purchases cranked the inflation stove.