Comparing inflation in 21st century vs inflation in 20th century
Submitted by deng on Thu, 02/07/2013 - 17:24in
Inflation has been used - rightly, or wrongly - to estimulate the economy. The logic is that as people have more money they will start purchasing cars, computers, services, etc. and factories,workers,IT people will in turn be reactivated starting the economy. After the economy has restarted money printing can stop.
Even if, arbuably, this policy worked in the past in modern times this will not work. Government starts printing money, now people have more money and they will spend it in cars that come from overseas, computers produced in china, services outsourced somewhere else. The economies of Asia, Europe, Latin America.. will benefit but the local benefit would be marginal at best.
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True
You can't stimulate an economy you don't have. Our problem is that America doesn't make much of anything anymore, at least not much with a high profit margin. That is to say as a service oriented economy the average gain is much less than as an industrially oriented economy. Any additional "stimulation" will end up stimulating producers, of which we are not.
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