5 ms·

Inflation results from more dollars chasing fewer goods. That can come from deficit spending, or that can come from tax cuts freeing cash for people to spend.

WalterBright 1y ago
> or that can come from tax cuts freeing cash for people to spend Tax cuts do free cash to be spent that otherwise would be spent by the government. As it gets spent either way, it is not inflationary. Inflation is the result of an increase in the supply of money relative to the value of goods and services in the economy.
- master_crab 1y ago
  You are making the assumption the government will spend the extra revenue. That depends on their fiscal behavior and obligations.
  - WalterBright 1y ago
    > You are making the assumption the government will spend the extra revenue. Yes, I am. They always do. Federal, state and local.
- disgruntledphd2 1y ago
  Oh so the massive increases in the cost of food had nothing to do with the energy price spike post Ukraine invasion in Europe? Interesting.
  - WalterBright 1y ago
    You can have price increases without inflation. For example, let's say the only things you spend money on are eggs and gas. One day, the price of eggs goes up. You buy eggs, now you have less money to spend on gas. The demand for gas goes down, and so does its price. I.e. a rise in the price of eggs does not result in an increase in your income to cover it. But with money creation, there is more money chasing the same goods, so your income goes up along with the prices. It's the Law of Supply and Demand in action.
    - 20after4 1y ago
      But... When the cost of gas goes up, so does the cost of almost everything else because the trucks and trains and planes that deliver everything all use gas of some kind.
      - WalterBright 1y ago
        Supply and Demand still applies. If you have less money, demand drops, and so do prices.
        disgruntledphd2 1y ago
        Not for food or energy. Those are pretty necessary and it's hard for people to consume less.

WalterBright 1y ago

> or that can come from tax cuts freeing cash for people to spend Tax cuts do free cash to be spent that otherwise would be spent by the government. As it gets spent either way, it is not inflationary. Inflation is the result of an increase in the supply of money relative to the value of goods and services in the economy.

master_crab 1y ago
You are making the assumption the government will spend the extra revenue. That depends on their fiscal behavior and obligations.
- WalterBright 1y ago
  > You are making the assumption the government will spend the extra revenue. Yes, I am. They always do. Federal, state and local.
disgruntledphd2 1y ago
Oh so the massive increases in the cost of food had nothing to do with the energy price spike post Ukraine invasion in Europe? Interesting.
- WalterBright 1y ago
  You can have price increases without inflation. For example, let's say the only things you spend money on are eggs and gas. One day, the price of eggs goes up. You buy eggs, now you have less money to spend on gas. The demand for gas goes down, and so does its price. I.e. a rise in the price of eggs does not result in an increase in your income to cover it. But with money creation, there is more money chasing the same goods, so your income goes up along with the prices. It's the Law of Supply and Demand in action.
  - 20after4 1y ago
    But... When the cost of gas goes up, so does the cost of almost everything else because the trucks and trains and planes that deliver everything all use gas of some kind.
    - WalterBright 1y ago
      Supply and Demand still applies. If you have less money, demand drops, and so do prices.
      - disgruntledphd2 1y ago
        Not for food or energy. Those are pretty necessary and it's hard for people to consume less.