Posted on 05/09/2016 6:09:29 AM PDT by GIdget2004
“When 150,000 people show up on the beach front property on Monday, instead of the usual 2, do you seriously maintain that the price of the property would be unchanged?”
Increased cost of some desirable things would occur briefly in the climate you describe. This is temporary. It is different than systemic inflation, which is not caused by windfalls. The powerball winners do not cause inflation.
As long as we’re accepted as a reserve currency, Trump’s right... But if that goes away we’re not different than Haiti... or some African hellhole. Everyone would ‘print money’ if they could.
Helicopter money dropped into accounts, which allows only a short window of opportunity for spending; and, will disappear once the expiration date arrives. Forces use it or lose it as an inflation driver at the base of the economy, inflation as a goal advocated by the Fed.
The money dropped on banks was a bad implementation which resulted in increased stock valuation; but, no actual increase in consumer demand and desired business production.
Then they will be undercut by new domestic manufacturers who want in on the profits they are making.
Not sure what you’re saying, but printing money causes inflation.
Create a debt instrument (An interest bearing Treasury note), and simultaneously print a face value equivalent of currency pushed to the central banks for distribution?
Eventually. That isn't going to happen overnight, and may not happen at all if the domestic manufactures don't believe Trump will stay in office and the tariffs will stay in place long enough for them to recoup the cost of investing in new production facilities.
The money printed is in the stock bubble-—literally.
The federal government gets about half it’s revenue from the progressive income tax. There is no way tariffs could completely replace that revenue stream so with finacing via tariffs means a smaller leaner federal government. Tariffs would force spending cuts if tariffs replaced the progressive income tax. Now having both tariffs and income tax is not a good idea. The income tax has to go.
“Increased cost of some desirable things would occur” —Good, you now agree that inflation can come from the printing press.
“briefly in the climate you describe.” Define briefly. Eventually, the effects of printing press inflation are “wrung from the system” as Friedman said.
“This is temporary.” Yes, it is temporary. Unless the printing presses do not stop, of course.
“It is different than systemic inflation, which is not caused by windfalls.” — What causes this systemic inflation? Sowell says ONLY the printing press can. How does across the board inflation occur WITHOUT an increase in the supply of cash? How do suppliers across the board demand and receive more cash if there is not more cash? How does that happen? If they demand, and do not receive, of course the price will drop.
“The powerball winners do not cause inflation.” Well, duh! Winning the lottery is nothing more than a VOLUNTARY REDISTRIBUTION of cash—it changes the money supply but not even one billionth of a penny. Of course it does not cause inflation, just as when I transfer my cash money to my daughter for her allowance does not cause inflation.
Not everyone can be as brilliant as you. : )
“Good, you now agree that inflation can come from the printing press.”
No.
“Define briefly. “
Money spent.
“What causes this systemic inflation? “
Lack of confidence in government.
I cut out the rest of your post, which was simply episode.
You did indeed agree...
“Increased cost of some desirable things would occur briefly in the climate you describe.”
Let me help you; “increased cost” is synonymous with “inflation.” Synonymous means they’re the same thing.
And you cut the rest of my post because you lack the knowledge to respond.
Twenty percent of nothing is nothing.
“One Trillion + per year! Debt.”
Printed money is not debt. It actually reduces debt. If I owe you $100 and I print a $100 bill to pay you back, my debt is gone.
The Fed claimed they needed inflation to stabilize the economy. Inflation is too many dollars chasing a limited amount of product. The response to the increased prices would have been increased production; and, more employment to support that expansion.
Financial reserves were allocated to banks so as to incentivize lower interest consumer loans, and also support business expansion as a consequence of increased demand.
What happened instead was bank investment of the monies into commodities and stocks. Artificial higher valuations were the result of too much money chasing the wrong investments. Money is misallocated resulting in a stagnant economy.
And that is part of the problem.
They are not. This is also a common misunderstanding.
As for knowledge, you know not about what you conjecture. I spent my entire career in this area in study as well as in the real world. There is no point in responding to a one-dimensional argument that stands apart from the reality of history.
For your historical consideration that demonstrates (as but one example) that money supply does not lead to inflation in history. Well worth considering. If you still hold this view and want to be persuasive, you will need to emonstrate that it always moves from money supply to inflation. This has not happened historically.
Best.
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