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.
Printing money dilutes it’s value. More money chasing the same quantity of goods and service drive up their prices.
Uh, too much money chasing too few goods?
WORK PRODUCT
When you take money from someone and give it to someone else to spend (which is exactly what government spending is) there is no WORK PRODUCT the person receives for his money.
So the second person get to spend that money (he didn’t earn) on the same amount of existing goods. So, more money chasing fewer products = price increase.
Anything the government does to disturb supply and demand breaks everything.
It’s easy, for this case. If you have a static supply of goods, but print a bunch of extra money and hand it out to people to buy those goods, they’ll bid up the prices...hence inflation.
Government gets the money to spend either from raising taxes (thus taking money that would otherwise be going to the private sector) or by issuing debt. Where does it get the money to issue new debts? Oh, well you see the Treasury just creates it out of thin air. Thus there is YET MORE money chasing the same amount of goods in the economy. The result is inflation.
Yes, that too. In fact that’s probably more important at this point.
$4 trillion in ‘quantitative easing’ started the ball rolling.
Quantitative easing was (literally) printing money out of thin air.
The government sent tons of money directly to the public. CARES Act. Son of CARES etc. Direct stimulus payments, PPP loans, huge unemployment payments.
The purchasing of power of existing dollars declines in proportion to new money created in excess of the production.
I love it! Short and to the point, Thank you.....
A fixed amount of goods is balanced by a fixed amount of money.
By increasing the money supply the value of each unit of money is made less valuable compared to the number of goods, which has remained the same. So it takes more money to purchase the same amount of goods because the money has become less valuable.
Is that you Janet?
Why governments like inflation...
Thomas Sowell
@ThomasSowell
Inflation is in effect a hidden tax. The money that people have saved is robbed of part of its purchasing power, which is quietly transferred to the government that issues new money.
8:39 AM · Jun 10, 2022
The more you allow something, in this case dollars, to flood the market the value goes down. When the dollar goes down in value, it’s called inflation.
If I give you $1 million for nothing and you go to an auction (the free market) to buy things, you would be willing to pay more for the things at that auction.
Your action just increased the price of things for others.
Regulation is not production. Nothing is being produced. Swarms of officers is not a product.
I’ve always wondered how the extra money that’s printed gets into circulation. They print the money, and then what? Do they hand it out to banks? Do they absorb it into the government’s funds, and feed it into the economy by spending it?
It doesn’t have to.
If the dollars are removed from the economy by taxation then inflation will not result.
So, the real culprit is deficit spending where money is created out of thin air and results in increased demand.
Democrat 101: They assume people are gullible stupid, and they often are right.
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