1
DnD Central / Re: The Awesomesauce of the American 2024 Presidential Elections
Last post by ersi -Inflation is caused by the over-supply of money. Government spending beyond tax receipts (as a proxy for GDP) requires borrowing by the government. That borrowing is "deficit spending" and the mortgaging of future tax receipts is the only way to manage it. Unfortunately, deflating the currency has some nasty consequences!I have heard of those theories. The problem with them is that they are just theories with no basis in reality. No basis whatsoever, zero validity. Anybody who holds to the theories you are citing is a miserable fool. You are having a big balls day, so I can upgrade you from doofus to miserable fool status.
First, over-supply of money does nothing when all of it is stashed away in holdings. This is easily seen by Obama's attempt to address the Great Recession. He pumped out trillions to keep the banks up in crisis and to encourage lending, which according to mainstream economic theory should in turn encourage general consumption, thus ending the recession. The banks used the windfall for CEO bonuses and other static hoarding, therefore the recession persisted. That was trillions printed that had no inflationary effect whatsoever for a decade.
Then covid hit, which changed the dynamic in economy. People stayed at home, with no way to go anywhere, nothing to do, and started spending online on little luxuries for nothing better to do. And only then inflation raised its head.
Conclusion: Only money in circulation, i.e. money mass in transactions, matters. Static money has no effect, no matter how much you print it, because it is, well, static — it is not participating in the economy. It starts having an effect when it starts participating in the economy.
You see, different from your theoretical nonsense, I have a practical sense of economics. I have the capacity to observe how economy works in practice. I have survived the hyperinflation at the collapse of Soviet Union. That hyperinflation did not happen because government printed money, but rather because politico-economic deregulation and introduction of private entrepreneurship brought about the explosion of black market and grey economy outside state control where alternative money was used (DEM, USD, and gold) indicating utter distrust for the official rouble, whose value thus collapsed.
Inflation is not government printing money. Inflation is reduced trust/valuation of a particular currency. It is called inflation because in every economic sector the increased price (=valuation in terms of currency) of a commodity is called inflation, so when there is an increase of prices across the board, which does not appear to be due a change of objective valuation of the commodities, but rather sinking value of the currency itself, then that is called inflation too. (It is nonsensical to call inflation "deflating the currency" as you do above. Keep your terms straight. Nah, I know it's too much for you.)
In addition to end-of-SU hyperinflation, I have also survived two monetary reforms in person. I know all about money. If you want to know anything about money or about broader economics, you ask me and listen carefully.