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[-] Melonius@hexbear.net 2 points 1 year ago

Money supply is a specific term and it will not always result in inflation. You've acknowledged that several times but still repeat it. It will depend how that increase in money supply is used, if at all.

If I got a trillion dollars printed and did nothing with it, no change in inflation. If I deposit it at banks, there would probably be some knock on effects on interest rates that make their way to the broader system.

If I go on a coordinated buying spree of oranges with the explicit goal of owning every last orange and orange producing land possible, inflation in oranges and substitute goods of oranges will occur. Easy conclusion.

You can argue that: When the capital owners get free money in bailouts, while workers get crumbs, there is an obvious disparity. Capitalists see less value in currency and will want more of it in exchange for their contributions (leeching) to society. So they raise prices because selling an orange for $1 doesn't feel as good as before.

If workers got more money while capitalists got nothing, that disparity is reversed. Capitalists want to compete for a supply of cash that they didn't have access to before. Prices will rise in inelastic markets because the opportunity to exploit presents itself, but in competitive markets there is a real drive to entice more purchasing. That's not to say that prices will go down (they can!) But raising your prices on food because everyone got $1000 could mean missed sales if the price raise isn't coordinated across the industry.

You saying that inflation is driven by money supply is not the direct reason for prices rising.

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this post was submitted on 22 Aug 2023
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