Does printing new money to pay for things cause inflation?

[bripat9643]

The same place the first 1000 people got it.

We assumed they already had it. You've proven nothing. If you double the size of the economy, then everything doubles.

 

[Toddsterpatriot]

Anybody?

Primary Credit is banks borrowing from the Fed at the Discount Window.
Sorry.

Back to your original claim.....How do $20s "going to the Fed" become debt?

 

[Toddsterpatriot]

We assumed they already had it. You've proven nothing. If you double the size of the economy, then everything doubles.

Don't tell me, tell the guy who thought he was making a point.......

Does printing new money to pay for things cause inflation?

This is often discussed in a variety of ways. I remember a few years ago there was this idea floated that Obama could order the mint to create two $10 trillion coins, then have them deposited into the federal reserve to pay off the debt. The pandemic emergency payments and unemployment benefits...

www.usmessageboard.com

 

[bripat9643]

It sounds counterintuitive, much like burning wood to reduce global warming.

It's just plain false.

Economists have argued these issues ad nauseum.

 

[Woodznutz]

It's just plain false.

Economists have argued these issues ad nauseum.

The economy has a mind of its own, and educates economists about the economy, not the other way around. It's like a bar of soap that keeps slipping out of their grasp.

 

[bripat9643]

The economy has a mind of its own, and educates economists about the economy, not the other way around.

So you believe there are no laws of economics?

 

[Woodznutz]

So you believe there are no laws of economics?

Of course, but we've largely disregarded them. Some people can borrow their way to prosperity, but most cannot.

"Money answereth everything", but sometimes the answer is wrong.

 

[Bootney Lee Farnsworth]

Of course, but we've largely disregarded them. Some people can borrow their way to prosperity, but most cannot.

"Money answereth everything", but sometimes the answer is wrong.

Borrowing is not necessarily the problem. It's unwise spending that usually prevents prosperity.

 

[Woodznutz]

Borrowing is not necessarily the problem. It's unwise spending that usually prevents prosperity.

True, especially when buying food. Probably the biggest unnecessary transfer of wealth from the average family to the food industry.

 

[Dadoalex]

Not really.

Gee. How convincing.
40 years of economic evidence and history put to the lie because you said "not really."

BWAHAHAHAHAHA

 

[g5000]

Directly from the Treasury.

In other words, it would be printed.

So back to my original question.

What do you think would happen if the Treasury printed another $30 trillion?

 

[CrusaderFrank]

So then pulling money out of the economy would have the opposite effect?

That's how the Federal Reserve caused the FDR Depression

 

[CrusaderFrank]

If banks quit loaning out money for cars, whats going to happen to the price of cars?

The price does a Kamala

 

[busybee01]

Increasing M1 is always a factor in increasing inflation.

Basic economics supply and demand.
Creating more money without increasing productivity (supply) means you've more dollars chasing a flat supply.
Prices, naturally will go up.

For the last 10 years or so the increases in M1 (and artificially low interest rates) have been offset by increased productivity.
The increasing productivity is now being offset by the trillions pumped into the economy under Trump and Biden.
Thus, more money chasing fewer goods.

Inflation.

The FED is acting to reduce M1 by increasing interest rates.
This will slow the economy possibly to the point of recession.

There are no free lunches.

When the economy is good, raise taxes. It is a blunt instrument but will serve to keep the economy from getting too hot. It also keeps the deficit and inflation down.
When the economy is slowing, lower taxes, at least temporarily. It will pump money into the economy but will add to the deficit and inflation.

You can look at the deficit as a percentage of the GDP as a lagging predictor of the inflation rates. The larger the deficit, more money printed to cover it, more money means more inflation.

As things sit, because of the huge deficits in 20/21 I think this round of inflation will last well into 23.

You are mixing your concepts up. When the government deficit spends it has nothing to do with the Fed. Only the Fed can create money. They can buy bonds from third parties which is paid for with printed money. Again worth noting that the extra money has slowly been withdrawn. It was essential for people so they could pay their bills.

The inflation is a result of the lack of competition in many industries. These are the sectors that are seeing the largest amount of inflation. The financial statements confirm this as most companies are massively beating their previous profits. What we need are new anti-trust laws to break up these oligopolies or regulate them. The problem is that Republicans and Democrats are obsessed with tech companies. Tech companies are not causing inflation.

 

[busybee01]

After the money is 'printed' it goes to the Fed, where it becomes debt.

The Fed does the money printing not the federal government.

 

[Bootney Lee Farnsworth]

True, especially when buying food. Probably the biggest unnecessary transfer of wealth from the average family to the food industry.

Higher "Education" is giving the food industry a run for the money.

 

[sartre play]

The biggest beneficiaries of Fed policies were big businesses. They received trillions of dollars from the Fed. That dwarfs the amount of money that individuals received. In addition, income inequality grew even more quickly during the pandemic. Around 6 trillion dollars flowed from the lower and middle class to the wealthy. The emergency payments and unemployment benefits allowed people to stay afloat when people were being laid off in record numbers.

Here is another thing to consider. The payments ran out beginning in May of last year. That meant ordinary people were getting less money. By your reasoning, inflation should be down.

The thing we need to look at is how much competition there is in a particular industry. When we have near monopolies or oligopolies, companies have the power to raise prices. The meat industry is a oligopoly and prices have increased rapidly. Ranchers are saying they are not getting a whole lot more money so where is the money going to? Meat companies are enjoying record profits. Look at a industry where there is competition. Look at televisions. I shop at Walmart quite a bit. The prices initially rose but have since come down to pretty close to where they were originally.

Right now CEOs are bragging they can raise prices with impunity. Their financial results show that. Despite their claim they are merely passing on their increased costs, but they are showing huge increases in their profits. This is clear proof that they are raising prices to increase their bottom line not to pass on increased costs. According to a Fed poll of oil executives, around 60% say that shareholders are the ones that are stopping them from drilling not politicians.

Interesting, Thanks, tend to lean this direction, Get bogged down in the confusing information so called economic experts provide.

 

[busybee01]

Oil price uncertainty is the biggest reason.

Investors are stopping companies from drilling not politicians.

 

[Toddsterpatriot]

Gee. How convincing.

For the last 10 years or so the increases in M1 (and artificially low interest rates) have been offset by increased productivity.

^
No kidding. Very convincing.......

40 years of economic evidence and history put to the lie because you said "not really."

If you can show that productivity has increased as much as M1 over the last 10 years.....go ahead.

I'll help you start.

M1

View a measure of the most-liquid assets in the U.S. money supply: cash, checking accounts, traveler's checks, demand deposits, and other checkable deposits.

fred.stlouisfed.org

Looks like M1 went from about $2.2 trillion on March 5, 2012
to about $20.6 trillion on Feb 28, 2022.

Let's see your offsetting increased productivity over the same period.

 

[Toddsterpatriot]

That's how the Federal Reserve caused the FDR Depression

Actually, massive bank failures caused the money supply to contract and the Fed failed
to counteract that reduction in money supply.