4 ms·
Adding more tradesmen will not increase the demand, and so will not result in any increase in the velocity of money. The demand for trades may not be fixed, bu
by gress 12y ago
Adding more tradesmen will not increase the demand, and so will not result in any increase in the velocity of money.
The demand for trades may not be fixed, but it is not proportional to the number of tradesmen. Most likely it's proportional to overall economic activity in some way. Doubling the number of tradesmen will not double economic activity across the whole economy, or likely have any significant impact on demand for tradesmen, so the value of tradesmen will drop until some are forced out and an equilibrium is reached, probably not far off where it is now.
- weeksie 12y agoIncreasing the wage of people who would otherwise earn far less will absolutely increase the velocity. It's preposterous to say that it would be one to one, I never made any such claim. However, your argument is that we are somehow at a perfect equilibrium with tradespeople. That's just not the case. I feel like you're throwing your lot in with freshwater economics which has a pretty terrible track record.
- gress 12y agoOk - fair point about the increase in velocity. But the increase in velocity will be distributed across the whole economy, and therefore of minimal impact on the tradespeople, whose value will be diluted in proportion to the supply.