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Dglgmut

Shortcomings of Keynesian Economics

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There's no Economics forum, so I thought this might be the best one to post in. This is actually a question, or a request.

So there is an Austrian idea that inflation of the money supply will necessarily cause inflation. I don't think this is actually true, as just because money is out there doesn't necessarily mean it's being spent. So velocity has more of an impact on inflation than the actual supply (of course increased supply could very well increase volatility).

But the real question for me is, rather than focusing on where the money is going, where is the wealth, or the value, going? How has inflation been kept in check despite the money supply being jacked up by the trillions?

I believe economic stimulus is a crock, that leads to malinvestment and moral hazard, but what is the real cost to everyday people? The threat has always been inflation... but again, how has that been avoided for so long? Just because people are still holding USD?

Thanks for any explanation of this!

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Hi Calvin.

Austrians hold that expansion of money supply in excess of economic growth is inflation. They do not use “inflation” for higher prices, they use “inflation” for expansion of money supply in excess of economic growth. Higher prices they just call higher prices. I don’t think any of them hold that inflation must every time right away lead to higher prices.

Productivity of labor is always growing and I think its extent can be covered-up, somewhat. The implication is that prices of most goods and services should have dropped substantially over the past few decades when instead, because of inflation, they have held steady or even risen.

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Well, the consensus among Austrians is that massive price inflation is coming, and they definitely connect it to the size of the money supply. But I'm just curious about how that inflation will start. Is it more extreme inflation of the money supply that they anticipate? Or is all the money that's already out there being held onto, and will turn into a game of hot potato at a certain point?

 

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4 hours ago, Jon Letendre said:

Trump is crashing the dollar, the Fed, the banks, the entire system, intentionally, that’s how it is going to start. You are watching it start.

Now, see...this is where the Q conspiracy gets interesting and frustrating to libertarians, Objectivists, and basically free-market types..
The bailouts, etc, on the surface, would seem to betray everything Trump has said about American "never being a socialist nation." But we all know, by know, that the world isn't going to become a "Galt's Gulch" overnight. And we know that the powers that be, the Deep State, etc, aren't just going to hand over power after hearing a logical argument or Galt's speech. (Which is why the "Gulcher" had to go in, gun's ablazin' to rescue Galt...) So something like the Q plan to overturn the Deep State would be needed. Yet, it's hard to take on faith. Thomas Massie's efforts today were both noble and futile, but understandable from a principled, free-market perspective. But if Q is right, and that Trump is doing something else that we don't know about...well, that goes to my analogy elsewhere on the forum to the "Assignment: Earth" episode of STAR TREK, where Kirk had to make a choice between trusting the enigmatic Gary Seven or acting on what was in front of him...both sides, two sets of good guys getting in the way of each other in fighting an "invisible enemy"...

Anyway, here's the latest going round the "Q continuum" about what Trump is supposedly doing re: the bailout package, how it's not what it seems...

https://twitter.com/StormIsUponUs/status/1243645254294790148?s=20

https://twitter.com/StormIsUponUs/status/1243645872329678848?s=20

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