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Actually we don't know what would happen if a bunch of money were printed. I assume you expect inflation. What actually happens depends on who gets the money.
by cc101 3y ago
Actually we don't know what would happen if a bunch of money were printed. I assume you expect inflation.
What actually happens depends on who gets the money. If rich people get it, I would not expect much to happen. If middle income people get it, we could reasonably expect inflation. If low income people get it, that grows the economy even in a major economy.
Let me explain. Yes, if you give middle income people more money, then they can afford to pay more for widgets. So, the widget store owner can increase his income by increasing his prices: Inflation.
If low income people get the money, now they can buy the widget that they wanted. So, the widget store owner opens a widget store in a low income area and orders more widgets. The widget manufacturer puts on another shift. Both groups make more money and more people are employed.
Should the widget store owner raise his prices, fewer people can afford widgets and the store owner loses money. This won't happen.
The real world is more messy than this, but I think the principle applies.
"Inflation" is often a bugaboo used by resentful people to brand social innovation as harmful. Such people eventually hurt themselves and hurt their country.
- mantas 3y agoWe did that during pandemics. Mostly rich people got it. Low income people got some scraps too. Inflation happened.
- prewett 3y agoIt was capped at $100k of income (at least in the US) and the US median income is about $75k [1], so I'm not sure how "mostly rich people" got it when 75% of the people who received it were under the median income. [1] https://www.census.gov/library/publications/2023/demo/p60-279.html https://www.census.gov/library/publications/2023/demo/p60-27...
- mantas 3y agoNot sure about US. But here in europe a lot of money went into businesses.