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> [argument is] COVID relief are driving inflation If you have a supply chain disruption limiting the supply of raw materials or finished goods to get into the
by sokoloff 3y ago
> [argument is] COVID relief are driving inflation
If you have a supply chain disruption limiting the supply of raw materials or finished goods to get into the market, and you increase the supply of money in consumers' hands without any corresponding increase in supply of goods/services, I wouldn't expect anything other than an increase in inflation.
I'm not saying that it shouldn't have been done, but to say it was done and didn't contribute significantly to inflation seems extremely unlikely to be correct.
- readthenotes1 3y agoDon't forget get the suspension of student loan repayments. Apparently most of that money went to entertainment, travel, etc., Not for any long-term life improvement (which is kinda in line with the insanity of the student loan business model)
- EdwardDiego 3y ago> Apparently most of that money went to entertainment, travel, etc. Do you have anything I can read on this?
- marcosdumay 3y ago> the supply of money in consumers' hands People are not exclusively consumers and stockpiling is a dynamic thing. If the government is actively stopping goods production from increasing, the prices raising is a good default assumption. But it's not an universal consequence. But anyway, the inflation spike happened much after the government stopped intervening and production of everything was already increasing quite quickly. But the main argument people use for that is that the COVID relief (and all the money going to workers) was tiny and irrelevant when compared to the direct interventions of the US government on its economy at the time, that had the explicit intent of creating inflation.