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Hmm, let me ask you this. It we double the money supply because say, banks are allowed to loan more to each other, but that money doesn’t make it to the average
by VirusNewbie 3y ago
Hmm, let me ask you this. It we double the money supply because say, banks are allowed to loan more to each other, but that money doesn’t make it to the average consumer, does CPI go up and does GDP go up?
- Dylan16807 3y agoWe're not changing anything else with businesses? I wouldn't expect those numbers to change very much then. Certainly far less than 2x.
- VirusNewbie 3y agook, maybe too abstract an example. If a bank makes a loan (creating new money) to loan to some rich guy, who decides to pay 1B to buy a bunch of Microsoft stock, that counts as growing the GDP, even if the majority of the money just stays in the financial sector and never drives up the price of anything measured by CPI.
- Dylan16807 3y agoGDP measures goods and services, not stock purchases. A few trillion dollars of stocks bouncing back and forth don't change it at all.