The economy isn't a zero-sum game; some decisions are better than others at improving average living standards.
The scenario here is where deflation - or deflation expectations - is causing harm to the economy because everybody is delaying purchases waiting for the price to fall. It becomes a vicious circle of decreasing prices and decreasing employment. The experts, correctly, decide that the money supply needs to increase to break this cycle.
In this scenario, the only question is: who should get the newly-created money?
The goal is to make more people active again, i.e. increase employment (in productive industries)
Replies (2)
If people are delaying purchasing decisions it’s because thats what is best for them in their circumstances. I constantly delay buying more chairs because i don’t need them right now but i do spend on food fuel and shelter that i do need. If people lose their jobs it’s because they are doing something unnecessary or wasteful. They should do something else rather than be propped up by money printing. What is an example of a country where they print lots of money and standards of living and purchasing power increases?
I'll choose my words carefully, because it's possible that we'll fall into a very repetitive trap of making the same arguments that have been made around these topics for centuries 😃
I assume you accept that economics is not a zero-sum game? For example, living standards have improved pretty consistently over centuries, for example with technology and process improvements?
Neither of us think that a central planner can make perfect decisions, but we agree that governments can make harmful decisions?
Is that okay so far?
