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If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Other changes in the economy may occur that would effect price levels

If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Other changes in the economy may occur that would effect price levels of various goods, prices change all the time, but one thing is certain those dollars are 10% less valuable than if you hadn't printed any. You can claim your growth in the economy balanced it out, but dollar holders were entitled to deflation in that case but instead got higher prices. It's still a tax even if prices don't go up, beacuse they could've went down, that's what happens in competitive industrialized economies, prices fall to slightly above the cost of production and then the cost of production starts falling.

kaashif 3y ago
> If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Prices don't change immediately when the money is printed, prices begin to change when the money actually enters the market and starts bidding up prices. This means that if you print money and add it to bank reserves or put it in a vault, that would probably have less of an effect on prices than if you threw wads of cash out of helicopters into crowds who would immediately spend it.
- willcipriano 3y ago
  > Prices don't change immediately when the money is printed, prices begin to change when the money actually enters the market and starts bidding up prices. That is a symptom of inflation, it isn't inflation itself. Playing games with timing and guessing how much the economy grew only really serves people who want to print more money as opposed to raising taxes for political reasons. If your wages don't keep up with monetary growth but keep with CPI you'll see your standard of living decrease. Contrast the home ownership rates of your parents generation to yours to see this in action. On the other hand if your wages grew with the money supply you'd be richer than your parents due to the fact it got much cheaper to produce many of the goods you buy.
throw0101b 3y ago
> If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Tell that to Japan which has an increase in money supply but bouts of decreasing prices (deflation): * https://fred.stlouisfed.org/graph/?g=PA7P https://fred.stlouisfed.org/graph/?g=PA7P Just having a pile of money does not mean much: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Pre-pandemic people were complaining about inflation rate in the US being too low, even with a rising money supply: * https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Money hasn't done much in the US for the last few decades: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V

kaashif 3y ago

> If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Prices don't change immediately when the money is printed, prices begin to change when the money actually enters the market and starts bidding up prices. This means that if you print money and add it to bank reserves or put it in a vault, that would probably have less of an effect on prices than if you threw wads of cash out of helicopters into crowds who would immediately spend it.

willcipriano 3y ago
> Prices don't change immediately when the money is printed, prices begin to change when the money actually enters the market and starts bidding up prices. That is a symptom of inflation, it isn't inflation itself. Playing games with timing and guessing how much the economy grew only really serves people who want to print more money as opposed to raising taxes for political reasons. If your wages don't keep up with monetary growth but keep with CPI you'll see your standard of living decrease. Contrast the home ownership rates of your parents generation to yours to see this in action. On the other hand if your wages grew with the money supply you'd be richer than your parents due to the fact it got much cheaper to produce many of the goods you buy.

throw0101b 3y ago

> If you print 10% more dollars all dollars are 10% less valuable, all things being equal. Tell that to Japan which has an increase in money supply but bouts of decreasing prices (deflation): * https://fred.stlouisfed.org/graph/?g=PA7P https://fred.stlouisfed.org/graph/?g=PA7P Just having a pile of money does not mean much: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Pre-pandemic people were complaining about inflation rate in the US being too low, even with a rising money supply: * https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Money hasn't done much in the US for the last few decades: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V