Comment on All the data so far is showing inflation isn't going away, and is making things tough on the Fed
gastationsushi@lemmy.world 2 months agoDoes this contradict what I’ve argued? I’m not seeing the connection
You originally made the argument about spending and inflation. It implies money is limited resource to a central bank.
chicken@lemmy.dbzer0.com 2 months ago
How does it imply that? What do you think causes inflation if not money going into the economy?
gastationsushi@lemmy.world 2 months ago
What caused receny inflation? That is easy. It’s caused by many things including supply chain disruptions, lack of competition, war, and non-existent government oversight.
Whatever the reason, they are making more money and workers are producing more than any time in history. So back to your point, companies need an excuse for their price gouging. The money supply is their biggest scapegoat. They also blame theft and high wages. But none of those arguments hold up to scrutiny.
chicken@lemmy.dbzer0.com 2 months ago
What scrutiny? Your only criticism of the widely accepted, evidence backed idea that putting money into the economy is a cause of inflation seems to be that companies you don’t trust are supposedly saying it, but that isn’t scrutiny of the idea itself.
If you accept that markets are real, and that supply and demand works roughly the way it is understood to work by the field of economics, it should be very straightforward why adding money causes inflation; in dollar terms, it increases demand, while supply stays the same, moving the equation towards higher prices. There is disagreement about whether all forms of adding money cause inflation; I’ve heard reasonable arguments that the money supply itself is not important but rather the velocity of money and whether people who will spend it are getting it is what matters, which I’m not sure I fully agree with, but since we’re talking about government spending, that is well known to be one of the most direct forms of economic stimulus and those arguments don’t apply.
gastationsushi@lemmy.world 2 months ago
There is not much evidence that a rich country growing deficits* causes inflation. Russia and Japan are recent examples.
*growing deficits = throwing money into the economy
Markets are real as in they exists and the free market was a historic idea used by capitalists to explain why the 19th governments shouldn’t interfere with them. But as a consumer living in the 21st century, the free market might as well be a fairytale. But if you still believe, who am I to bring you down.