3 ms·

Government spending puts money into the economy and taxation takes it out. Sure interest rates affect inflation too through loans and GDP affects the other side

• ajross 3y ago
  > government deficits are a big part of inflation. If they are then you could show me a correlation where periods of high deficits correlate with high inflation. You can't, because if anything the opposite is clearly true over the past 30-40 years. Jumping to declare that this is true now is a bit much, don't you think? Especially since deficit spending hasn't changed trajectory over the past two years as inflation dropped. Again, this is partisan economics. You're repeating stuff that you heard from people with an axe to grind. It's just not correct.
  • mminer237 3y ago
    Deficit spending has dropped tremendously the last couple years, almost perfectly mirroring inflation: https://i.imgur.com/OhHSukq.png https://i.imgur.com/OhHSukq.png Historically there admittedly hasn't been such a trend, but historically we've never printed as much money as we did in 2020 before. I never said it was the only factor. It's also clouded by the fact that if what I'm saying is true, deficit spending is a great course of action when other factors push inflation down. I'm just intuiting stuff from the basics. I haven't really heard anyone opinionate either way on this before, but how could adding 25% more money to the economy not create inflation?