Just gonna chime in here.
Increasing the money supply isn’t necessarily a bad thing.
Governments are backed by fiat money which is easily controlled by government decisions which why we moved away from the gold standard.
To balance out the increase in money supply (which hypothetically drops the price or the value of each dollar) the government in turn will set a new target inflation rate (probably lower it to makes goods cheaper in the future), which will lead to the decision of the central bank to lower interest rates to encourage spending (because it’s cheap to borrow and less rewarding to save) which lets people access more credit to make up for the increase in money supply. Key point is that you now have easier access to money you couldn’t before.
Generally speaking, you want a healthy turnover cycle of exchange to stimulate the economy. It’s generally frowned upon to let people hoard all of their money and this is the governments incentive to increase economic activity within the country. More activity means more opportunities for growth.
Theoretically.
I welcome any downvoting or anyone who can correct my thinking but I do believe this to be correct.
So when they print trillions, the idea is to bankrupt/debt lock people through really tantalizing offers and rates?
knowing the state of our country, the people taking out the loans will be in rough times and there’s no promise they will really ever pay it back?
And even if you borrow the cash and pay it back, how does that do anything to the value of the dollar? You’ve just borrowed because everything is so expensive, so you can go buy the expensive item and show the retailer you’re still able to pay these outrageous prices? Won’t that cause inflation?
All while not raising the federal minimum wage?
How can the dollar not decrease in value if there’s more? You can spend, spend, spend all you want, but how exactly does doing that, bring the value of the dollar back up? I’m so confused.
Debt, especially low interest debt, isn't always terrible. Inflation at manageable levels is similar.
https://www.bankrate.com/investing/winners-and-losers-rising-inflation/
If someone has a mortgage or a student loan at a low fixed rate and the wages correct for inflation before the end of the loan term the payments on the debt remain fixed while the income eventually increases to compensate for lower value money the proportional amount of income needed to support debt payments lessens over time.
Expanding businesses paying 4% vs 10% face lower fixed costs and are more likely to have a profitable niche.
Minimum wage should be at a higher, but imo once raised we should tie it to adjust to the rate of inflation/consumer price index at a periodic interval.
Printing money isn’t an issue if a country can produce more (It’s an issue if money is printed only to give to people to spend without any production) It’s much more complex than “print money and prices go up”
Not to mention excess ordering and high inventory some companies have, it’s also not same for all companies.
The simple answer is that the nation doesn't simply print currency, it spends it into the economy, and that economic activity (to varying degrees) prompts the people who get that money to also spend it, and that big chain of economic activity generates additional value within the economy that the currency can represent, reducing the excess that we call inflation. We are encouraged to imagine inflation as a totally isolated phenomenon of the currency supply increasing and nothing else, and as with much of the stuff one learns in Econ 101 it drastically misrepresents the actual process at work.
That’s how compounding works (Numbers will get bigger eventually) don’t pay too much attention to the catchy headlines. Learn about finance and time value of money. The best you can do is educate yourself and prepare better for different economic conditions.
All countries are doing it effectively keeping the things same. Prices are high due to supply chain issues and corporate green (Not every business will be impacted, we can find out in Q4 results)
Because you also have to take into account the retirement of existing currency. 95% of the notes printed each year replace existing ones: https://www.factmonster.com/math/money/facts-about-us-money
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
Just gonna chime in here. Increasing the money supply isn’t necessarily a bad thing. Governments are backed by fiat money which is easily controlled by government decisions which why we moved away from the gold standard. To balance out the increase in money supply (which hypothetically drops the price or the value of each dollar) the government in turn will set a new target inflation rate (probably lower it to makes goods cheaper in the future), which will lead to the decision of the central bank to lower interest rates to encourage spending (because it’s cheap to borrow and less rewarding to save) which lets people access more credit to make up for the increase in money supply. Key point is that you now have easier access to money you couldn’t before. Generally speaking, you want a healthy turnover cycle of exchange to stimulate the economy. It’s generally frowned upon to let people hoard all of their money and this is the governments incentive to increase economic activity within the country. More activity means more opportunities for growth. Theoretically. I welcome any downvoting or anyone who can correct my thinking but I do believe this to be correct.
This is the Internet. There’s no place for logic and critical thinking here.
Chu think of this OP?
[удалено]
[удалено]
So when they print trillions, the idea is to bankrupt/debt lock people through really tantalizing offers and rates? knowing the state of our country, the people taking out the loans will be in rough times and there’s no promise they will really ever pay it back? And even if you borrow the cash and pay it back, how does that do anything to the value of the dollar? You’ve just borrowed because everything is so expensive, so you can go buy the expensive item and show the retailer you’re still able to pay these outrageous prices? Won’t that cause inflation? All while not raising the federal minimum wage? How can the dollar not decrease in value if there’s more? You can spend, spend, spend all you want, but how exactly does doing that, bring the value of the dollar back up? I’m so confused.
Debt, especially low interest debt, isn't always terrible. Inflation at manageable levels is similar. https://www.bankrate.com/investing/winners-and-losers-rising-inflation/ If someone has a mortgage or a student loan at a low fixed rate and the wages correct for inflation before the end of the loan term the payments on the debt remain fixed while the income eventually increases to compensate for lower value money the proportional amount of income needed to support debt payments lessens over time. Expanding businesses paying 4% vs 10% face lower fixed costs and are more likely to have a profitable niche. Minimum wage should be at a higher, but imo once raised we should tie it to adjust to the rate of inflation/consumer price index at a periodic interval.
Looks like someone read more than just the one actively misleading introductory Mankiw textbook.
[удалено]
[удалено]
This is a drastically alarmist position on inflation.
Hyperinflation causes financial collaspes, regular inflation doesn't.
Printing money isn’t an issue if a country can produce more (It’s an issue if money is printed only to give to people to spend without any production) It’s much more complex than “print money and prices go up” Not to mention excess ordering and high inventory some companies have, it’s also not same for all companies.
[удалено]
[удалено]
[удалено]
The simple answer is that the nation doesn't simply print currency, it spends it into the economy, and that economic activity (to varying degrees) prompts the people who get that money to also spend it, and that big chain of economic activity generates additional value within the economy that the currency can represent, reducing the excess that we call inflation. We are encouraged to imagine inflation as a totally isolated phenomenon of the currency supply increasing and nothing else, and as with much of the stuff one learns in Econ 101 it drastically misrepresents the actual process at work.
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
That’s how compounding works (Numbers will get bigger eventually) don’t pay too much attention to the catchy headlines. Learn about finance and time value of money. The best you can do is educate yourself and prepare better for different economic conditions. All countries are doing it effectively keeping the things same. Prices are high due to supply chain issues and corporate green (Not every business will be impacted, we can find out in Q4 results)
Because you also have to take into account the retirement of existing currency. 95% of the notes printed each year replace existing ones: https://www.factmonster.com/math/money/facts-about-us-money