Economists only: What is the downside of printing and distributing trillions of dollars in an environment in which inflation is nil and demand is low? Who loses and when? @joshgans
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It's still going to be a matter of who is in position to access the most money, at the earliest point... People who are politically connected.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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In a sense yes. Look we know that if we have no money, the economy functions poorly. Same if everyone keeps it in their mattresses. So we can get away with printing to make up the difference. Keeps prices stable. There is a limit though.
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Doesn’t it somewhat depend on how quickly V rebounds? i.e does this create significant pent up demand that then causes inflation when the economy reboots because the Fed can’t reduce the money supply fast enough? Or that uncertainty continues to dampen investment for longer.
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Money is just a placeholder for value of goods and services, creating more money will always lead to the diminishing of the value the people’s money already, HOWEVER
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Deflation can also exist and economists really dislike it. Pumping money into the economy artificially leading to no inflation means if we hadn’t done so deflation would have occurred
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Until things open up again and then look out.
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Exactly. Currently velocity is low but when things open back up velocity will increase and bam, hyperinflation.
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The broad rule is we like to keep prices stable (not going up or down). Printing money can help do that as can taking some out of circulation. Think of it more as active management. This wasn’t done in the Gr Dep and it was bad news!
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How can we avoid inflation in the near future when people start spending money again?
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I'm sure your models are perfect. But just in case, I'm long gold.
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