General Discussion

gristy

(10,667 posts) Wed Mar 18, 2020, 06:23 PM Mar 2020

So our government is printing money, but means of production and distribution are diminished

So we have more cash chasing fewer goods. Does this not mean inflation, at least in the short term? What are the counteracting forces that will limit inflation?

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8 replies

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So our government is printing money, but means of production and distribution are diminished (Original Post) gristy Mar 2020 OP

Inflation depends a lot on a figure called Velocity of Money. roamer65 Mar 2020 #1

velocity, expectations, and more . . . empedocles Mar 2020 #3

.. roamer65 Mar 2020 #4

thanks for that link gristy Mar 2020 #5

Note that traitortrump has spent trilliions of fiat money, yet no inflation - yet empedocles Mar 2020 #2

It's the trillions Aquaria Mar 2020 #7

Once you've had it, you likely will become a very valuable employee. Hoyt Mar 2020 #6

Note that the price of oil has dropped over 50% in a couple of weeks VMA131Marine Mar 2020 #8

roamer65

(36,745 posts)

1. Inflation depends a lot on a figure called Velocity of Money.

Reply to gristy (Original post)

Wed Mar 18, 2020, 06:27 PM

Mar 2020

Cash at rest tends not to be inflationary, but as it’s velocity increases so will inflation.

empedocles

(15,751 posts)

3. velocity, expectations, and more . . .

Reply to roamer65 (Reply #1)

Wed Mar 18, 2020, 06:30 PM

Mar 2020

roamer65

(36,745 posts)

4. ..

Reply to empedocles (Reply #3)

Wed Mar 18, 2020, 06:31 PM

Mar 2020

https://thismatter.com/money/banking/money-growth-money-velocity-inflation.htm

Velocity went into the shitter after the Great Recession and never really has come back. That is indicative of a dying, damaged economy.

gristy

(10,667 posts)

5. thanks for that link

Reply to roamer65 (Reply #4)

Wed Mar 18, 2020, 06:38 PM

Mar 2020

reading now...

empedocles

(15,751 posts)

2. Note that traitortrump has spent trilliions of fiat money, yet no inflation - yet

Reply to gristy (Original post)

Wed Mar 18, 2020, 06:29 PM

Mar 2020

Aquaria

(1,076 posts)

7. It's the trillions

Reply to empedocles (Reply #2)

Wed Mar 18, 2020, 07:08 PM

Mar 2020

Not the fiat money that's the point.

We'd be in even worse shape if we used commodity money, because commodities are finite. That tends to lead to greater inflationary pressures, not fewer.

Hoyt

(54,770 posts)

6. Once you've had it, you likely will become a very valuable employee.

Reply to gristy (Original post)

Wed Mar 18, 2020, 06:57 PM

Mar 2020

Assumes immunity and blood tests to confirm immunity.

VMA131Marine

(4,140 posts)

8. Note that the price of oil has dropped over 50% in a couple of weeks

Reply to gristy (Original post)

Wed Mar 18, 2020, 08:03 PM

Mar 2020

That’s going to put a major deflationary pressure on the economy given who much prices are tied to the cost of energy. I know energy prices are typically excluded from core inflation calculations but I don’t think we have to worry about inflation in the near term, even with a large stimulus package.

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