No no, you’re overthinking it. You’re applying economics 101, which has a lot of assumptions that don’t hold true in reality. For example, wages don’t increase with inflation. We’ve actively watched buying power decrease over the last 3 decades.
Here’s the simpler model. If there’s a hundred toys to buy in the world, and $100 in the world, one toy cost $1. If a bank know loans an extra $10, because they can due to reserve requirements, now there’s $110 in the world and still a hundred toys. So now a toy costs $1.10.
And the reason it’s a flat tax is because now every dollar worth ~.9 toys, and this punishes the poor who can now barely afford what they need to survive.
Economics classes only work because they wrap the ideas in lots of assumptions, like the concept that we have a functioning economy. It’s like physics 101 with no friction on surfaces and no wind drag.
I appreciate your response but I think you are applying Economics 101 haha :P
Monetarism hasn’t held up historically and doesn’t even take employment, growth, savings, price stickiness or export/import into account. Besides, we are talking about government spending, not private sector.
More money in circulation means more taxes - the money gets taken back out. And taxes can always be increased when the economy gets a lil too hot (we are nowhere near that). The picture you are painting onoy holds up when we have full employment and all businesses are at capacity, which is not how things look in most economies right now. More money results in businesses getting more revenue, which they can invest and use to hire more workers. No inflation, just growth and more employment.
The fact that buying power has decreased over the last decade is true but not because of inflation. It’s because neoliberalism has allowed capital to claim all of economic growth for itself. Before neoliberalism, higher profits could be captured for workers by strong unions (broadly speaking)
The kind of inflation that decreases purchasing power is a price shock, which has caused most of the inflation in the last few years. This has indeed impacted the poor most, but this kind of inflation also has nothing to do with an expanding monetary supply.
I really recommend researching MMT or demand-side economics.
No no, you’re overthinking it. You’re applying economics 101, which has a lot of assumptions that don’t hold true in reality. For example, wages don’t increase with inflation. We’ve actively watched buying power decrease over the last 3 decades.
Here’s the simpler model. If there’s a hundred toys to buy in the world, and $100 in the world, one toy cost $1. If a bank know loans an extra $10, because they can due to reserve requirements, now there’s $110 in the world and still a hundred toys. So now a toy costs $1.10.
And the reason it’s a flat tax is because now every dollar worth ~.9 toys, and this punishes the poor who can now barely afford what they need to survive.
Economics classes only work because they wrap the ideas in lots of assumptions, like the concept that we have a functioning economy. It’s like physics 101 with no friction on surfaces and no wind drag.
I appreciate your response but I think you are applying Economics 101 haha :P
Monetarism hasn’t held up historically and doesn’t even take employment, growth, savings, price stickiness or export/import into account. Besides, we are talking about government spending, not private sector.
More money in circulation means more taxes - the money gets taken back out. And taxes can always be increased when the economy gets a lil too hot (we are nowhere near that). The picture you are painting onoy holds up when we have full employment and all businesses are at capacity, which is not how things look in most economies right now. More money results in businesses getting more revenue, which they can invest and use to hire more workers. No inflation, just growth and more employment.
The fact that buying power has decreased over the last decade is true but not because of inflation. It’s because neoliberalism has allowed capital to claim all of economic growth for itself. Before neoliberalism, higher profits could be captured for workers by strong unions (broadly speaking)
The kind of inflation that decreases purchasing power is a price shock, which has caused most of the inflation in the last few years. This has indeed impacted the poor most, but this kind of inflation also has nothing to do with an expanding monetary supply.
I really recommend researching MMT or demand-side economics.