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I need help with ECON 101, why does government spending cause inflation?
none | 6/15/22 | self

Posted on 06/15/2022 5:22:33 AM PDT by RaceBannon

I still cant fully understand how the printing of money causes inflation. Economies are normally driven by supply and demand at the basic level. .

If I need something that everyone else needs, it tends that the people who make the product or supply the service will raise prices to make profit when fulfilling the sale side of this, the need of that product or service making more profit for the provider. .

Supply can affect price, also, the scarcity of the product means it costs more, generally, because new means to provide the initial raw materials or shipping of the completed product/service will rise without the profit going up or need to rise unless that profit is spent to create new shipping supply costs and not genuine profit. .

The government printing doesn't put money in my pocket nor does it put money in the pockets of the gas companies, the grocer, the manufacturer.

The general population does not receive money to spend nor do manufacturers get money to improve or increase production, nor does the act of transporting raw materials or finished product come from government. .

So, who gets the money that government prints? Things that government purchases, infrastructure, defense and international aid is where so much money goes, welfare, SS, and interest on bonds... .

Yet, if none of that printed money goes to providers of goods or services, how does printing money cause inflation of normal commodities? .

The only thing I can see connecting increase in prices is increase in shipping and transportation costs by national policy concerning oil exploration or development, such as Biden is doing by causing the intentional slowdown in oil and natural gas development. That causes gas to go up, shipping costs to rise, therefore production costs to rise which is passed on to the consumer. .

None of that last paragraph has anything to do with printing money. I need some help here.


TOPICS: Business/Economy; Chit/Chat; Education
KEYWORDS: economics; inflation; printing
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To: RaceBannon

The PPP and unemployment cash was huge. People that were making $18K a year that lost their jobs were suddenly making $52K per year annualized. Billions of dollars turned loose on the public directly with no real increase in available goods to spend them on.


141 posted on 06/15/2022 11:52:53 AM PDT by Codeflier (I am just going to assume you are a Democrat if you call me a Putin supporter and ignore you.)
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To: Redmen4ever

“Can the Fed be described as a legal counterfeiter?”

You change the well established meaning of the word, and then have to write 20 paragraphs explaining why your misuse is justified.


142 posted on 06/15/2022 11:54:00 AM PDT by BiglyCommentary
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To: RaceBannon

Ever see a chemical equation that goes both ways? Both sides of the equation can push the reaction in one direction if one sides ends up with more. The molecules involved can’t see the big picture. They merely see more of x than y and then react until the natural ratio between the two occurs again. You mentioned supply and demand. Why does money itself get to be exempt from this law? Part of the confusion is the time it takes for the system to reach equilibrium. Under most inflation rates it takes about 18 months before equilibrium is reached.


143 posted on 06/15/2022 11:55:53 AM PDT by Nateman (If Mohammad was not the Anti Christ he sure did come in as a strong second.)
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To: Redmen4ever

“Brand names do not disappear upon a bankruptcy.”

To make that absolute statement is to be divorced from real world cases. Yes, many time those brand names are sold and retained but sometimes the whole company folds and so does it’s brand name. We saw this happen over and over during the covid lockdown. The brand name was not dying, but the company was not able to stay closed for 6 or 12 months with zero revenue.


144 posted on 06/15/2022 12:02:44 PM PDT by BiglyCommentary
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To: RaceBannon

yet, the costs of what is going up?

Everything, yet what causes those costs to go up?

when policy changes control how materials are retrieved, then, yeah, cost goes up, but just the simple adage, the fed is printing money! doesn’t explain anything.

The government printing money is a different excuse than the govt is stopping oil production and use of coal for power generation and the govt is at war the overseas shipping is stopped so precious metals and raw ore is not as available so costs go up.

If the government is buying bonds of their own, using their own money to buy from themselves, how does that make my groceries rise in price??

I fail to see any connection and all I hear and read is “When the govt prints money, money devalues and it makes prices go up and that is inflation”

Well, govt can print money all day and also pump more oil than ever like under trump and we had an economic boom. Inflation was quite low under some of the highest printing in history, highest deficit spending high, yet economic boom.

Under the same conditions. Yet the dollar did not devalue.

the printing of money did not cause oil production to slump or refineries to slow down, energy policy did. All goods, since they come by truck, need to rise in cost to recover the shipping costs. That is clear inflation caused by policy that is ongoing now. None of that is caused by printing money.

The repetition of “printing money causes inflation” is not explaining what I believe is the main cause of inflation now, and that is an intentional destruction of a working energy policy by shutting down oil leases and pipelines and phony sanctions on russian oil and increased oil imports at higher prices.


145 posted on 06/15/2022 12:17:05 PM PDT by RaceBannon (Rom 5:8 But God commendeth his love toward us, in that, while we were yet sinners, Christ died for )
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To: Michael.SF.

Lol


146 posted on 06/15/2022 12:44:57 PM PDT by Rusty0604 (" When you can't make them see the light, make them feel the heat." -Ronald Reagan)
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To: BiglyCommentary

And you don’t have any moral limit to inflation.


147 posted on 06/15/2022 12:55:45 PM PDT by Redmen4ever
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To: BiglyCommentary

Yes.


148 posted on 06/15/2022 12:57:51 PM PDT by Redmen4ever
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To: RaceBannon

Supply and Demand.

More demand for the goods.

More of a demand increase than a supply increase, the price goes up.


149 posted on 06/15/2022 1:01:05 PM PDT by Freedom of Speech Wins (A)
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To: Redmen4ever

“And you don’t have any moral limit to inflation.”

An answer to that can be very long.
Is the inflation documented and fully disclosed public information? If no, flat out immoral stealing of citizens wealth by the goverment through skulduggery. If yes, then then how are they being immoral, especially if the people voted for politicians who would have inflationary policies? They are doing the will of the majority of voters and fully disclosing the details. In that case I think the people are the immoral ones, not the FED.

I have a huge problem with socialist entitlement programs and the people vote for polz yhat will implement them. Hard 10 Commandments violation - Coveting thy neighbors stuff.


150 posted on 06/15/2022 1:43:42 PM PDT by BiglyCommentary
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To: RaceBannon

“The repetition of “printing money causes inflation” is not explaining what I believe is the main cause of inflation now, and that is an intentional destruction of a working energy policy “
Add:
Demand/supply supply chain snafus.
Weather related price increases.
Contagions raging.
...

The answer is: ALL THE ABOVE!


151 posted on 06/15/2022 1:47:43 PM PDT by BiglyCommentary
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To: RaceBannon

Bond traders take huge clues from the oil markets because long term bonds are very sensitive to inflation. The price of oil casts an extremely wide net on prices. Truck, car, place, boat fuel,i.e. transportation costs, electric rates, plastics, fertilizer, building heating costs, road building materials, (insert another 100,000 things here).


152 posted on 06/15/2022 1:53:47 PM PDT by BiglyCommentary
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To: BiglyCommentary

we agreed


153 posted on 06/15/2022 3:46:41 PM PDT by Redmen4ever
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To: RaceBannon

‘the increase in dollars should make oil cheaper, right? Cuz if oil is sold in dollars, then there is cash to buy oil.’

As inflation is the discussion, the glut of cash makes the dollar less desirable, worth less in comparison to the scarcer product, oil, being purchased.
You can’t fuel your vehicle with cash, or eat cash, no matter how much you have. Those who sell oil or food would need wheelbarrows full to cover their costs in turn.


154 posted on 07/11/2022 8:50:56 AM PDT by JackFromTexas (- Not For Hire -)
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