It has long been a rule of thumb to have $1 million saved for a comfortable retirement; but, thanks to inflation, the youngest generation of workers likely will need three times as much. According to...
If a rich person gets money, what evidence do you have that they would spend it or invest it?
Is this your argument, that the stimulus of trillions of dollars has no effect because they just sit on it?
The whole reason for the program is to give the recipients more y to spend, not just shits and giggles. Even if they just deposited it into a bank account, the bank reinvests the money into stocks, bonds, and loans.
There is evidence, if you really need to see the numbers, the FRED website tracks the exact money supply, including reinvested deposits.
Capitalists are middle men who sell our labor + a product back to us at a higher price. If they don’t need cash right now, they will raise prices and sell fewer units at a higher rate to maximize the margin (on durable goods).
If you could just raise prices and make more money, they wouldn’t have kept inflation to 2% for decades.
Raising prices can reduced volume and lose money, so businesses limit it. Recently, the money circulating has increased, and businesses that raise prices can keep sales up.
Consider your labor and pretend you are fairly compensated right now. If the money supply increases, do you demand, or at least deserve, higher wages? If so, why?
Of course, because I want to keep getting the same share of the total credits that I did before. If I’m getting less of the pie then I’m getting a pay cut.
Imagine a microeconomy, a small isolated village. One day the local currency changes and you go from making 2% of the currency to 1%, but the absolute number doesn’t change. You still make 20 coins per day, but the total money supply has grown. That’s a paycut in purchasing power.
The entire point of giving one group more % the money supply is so that they can command more of the resources that currency trades for. To think they just do that for no reason is naive.
Since the financial crisis banks have taken deposits and reinvested them at the Fed or other banks. Purchases of stock do not necessarily raise prices either. Prices can fall on heavy volume and rise in light volume.
That’s a paycut in purchasing power.
Only if prices rise. Consider that this island only sells widgets in this currency. Will they raise prices because the money supply has increased? They were “maximizing” profit before, but now the money supply is different and the employee on the island still makes 20 coins. Will selling widgets at a new price point get them more money?
The money they pay for the stocks goes to the person who had it before, that’s how this money flows into the economy. That person then spends the money on something, that was the point in selling.
A transaction for stock is the same as any other transaction. It terminates once money is exchanged. You do not extrapolate what happens after. When I pay my check at a restaurant does the cook run out the door to spend my money or does it go in the register?
I saw your other posts and wanted to point out a few key points.
fiat money has no intrinsic value. Doubling or tripling the supply doesn’t change it’s value. Halving it doesn’t make it suddenly more valuable.
commodity based currency, like a gold standard, does have intrinsic value. Finding new supplies of gold will reduce the intrinsic value of all gold, so it would see a change from the money supply changing all else equal.
you mention it several times in other posts - it is the circulation of money that can (not necessarily) cause inflation. Imagine I sell $10 of goods at market and go home, vs selling $10 of goods then buying $10 of groceries. Money supply is irrelevant to the inflationary effects, so long as there is sufficient currency to account for all goods that are currently traded.
post housing crisis, the US money supply increased tremendously during QE, yet inflation was low. Monetarists shrug, but the simple reason is money supply doesn’t cause inflation.
Have you read Capital? It goes through money and velocity pretty thoroughly early on and I think addresses some pretty big assumptions econ classes tend to present.
fiat money has no intrinsic value. Doubling or tripling the supply doesn’t change it’s value. Halving it doesn’t make it suddenly more valuable.
If you double the currency, and each dollar has the same value, then you’ve doubled the total value available to each person
Of course that’s nonsense, money printing doesn’t create value.
So the only way to actually make it make sense is that the total value stays the same, and doubling the currency means each unit has half the value it did before.
How do you think each dollar can have the same value if there’s twice as much? That would mean there’s more value just from money printing, which again, is nonsense.
Have you read Capital? It goes through money and velocity pretty thoroughly early on and I think addresses some pretty big assumptions econ classes tend to present.
I’ve read volume 1, and Marx doesn’t imply you can print more money and keep the purchasing power the same after.
Is this your argument, that the stimulus of trillions of dollars has no effect because they just sit on it?
The whole reason for the program is to give the recipients more y to spend, not just shits and giggles. Even if they just deposited it into a bank account, the bank reinvests the money into stocks, bonds, and loans.
There is evidence, if you really need to see the numbers, the FRED website tracks the exact money supply, including reinvested deposits.
If you could just raise prices and make more money, they wouldn’t have kept inflation to 2% for decades.
Raising prices can reduced volume and lose money, so businesses limit it. Recently, the money circulating has increased, and businesses that raise prices can keep sales up.
Of course, because I want to keep getting the same share of the total credits that I did before. If I’m getting less of the pie then I’m getting a pay cut.
Imagine a microeconomy, a small isolated village. One day the local currency changes and you go from making 2% of the currency to 1%, but the absolute number doesn’t change. You still make 20 coins per day, but the total money supply has grown. That’s a paycut in purchasing power.
The entire point of giving one group more % the money supply is so that they can command more of the resources that currency trades for. To think they just do that for no reason is naive.
Since the financial crisis banks have taken deposits and reinvested them at the Fed or other banks. Purchases of stock do not necessarily raise prices either. Prices can fall on heavy volume and rise in light volume.
Only if prices rise. Consider that this island only sells widgets in this currency. Will they raise prices because the money supply has increased? They were “maximizing” profit before, but now the money supply is different and the employee on the island still makes 20 coins. Will selling widgets at a new price point get them more money?
The money they pay for the stocks goes to the person who had it before, that’s how this money flows into the economy. That person then spends the money on something, that was the point in selling.
A transaction for stock is the same as any other transaction. It terminates once money is exchanged. You do not extrapolate what happens after. When I pay my check at a restaurant does the cook run out the door to spend my money or does it go in the register?
I saw your other posts and wanted to point out a few key points.
Have you read Capital? It goes through money and velocity pretty thoroughly early on and I think addresses some pretty big assumptions econ classes tend to present.
If you double the currency, and each dollar has the same value, then you’ve doubled the total value available to each person
Of course that’s nonsense, money printing doesn’t create value.
So the only way to actually make it make sense is that the total value stays the same, and doubling the currency means each unit has half the value it did before.
How do you think each dollar can have the same value if there’s twice as much? That would mean there’s more value just from money printing, which again, is nonsense.
I’ve read volume 1, and Marx doesn’t imply you can print more money and keep the purchasing power the same after.