You’ll hear answers about the USD being the world’s reserve currency, and maybe that does help, but I think the real answer is that we will see hyperinflation eventually. The math eventually must catch up with us.
I think it is flawed math if you completely ignore substantial parts of the equation. AFAIK leading analyses in leading economic scientific journals have discussed the excessive spending of inflationary countries as the and only root cause for the inflation.
But, these leading papers often don’t even mention that the worlds biggest economies at these times (e.g. US) have cut ties and imposed economic sanctions on these countries just before the excessive spending and hyperinflation started.
How are these countries then able to buy goods on the international market denominated in USD, if they are basically cut off from the US Dollar monetary system? It’s almost as if an excessive shock of raised import prices propagates to a general increase in prices. This would mean economic sanctions imposed by the US on to Chile put them into a crisis, not their socialist government from back then with its spending programs.
But wait, that would not fit into the narrative so let’s just claim that these countries short term reaction to these shocks (print enough money in hopes to stabilize the economy) is the cause of the shock and hide it behind a wall of math that nobody wants to look at anyways.
Excuse me, I don’t have the classics at hand now so I can’t point sources.
Well I agree that the initial cause may not be the printing of the money itself, but it is hard to deny that “print enough money in hopes to stabilize the economy” is not a problem. It takes a bad situation and makes it worse. Because even if the US and Chile are having issues and Chile then prints 1 million for all its citizens and then comes to my county and they all say we have a million now we want to spend in your country it doesn’t really work. I think my point is it is two separate matter yes there was something crippling their economy ie sanctions but printing money still was the cause of inflation. Another option would be look at what is causing sanctions and work to resolve that.
If there are more of something, its worth is less? If I gave a trillion dollars to every person in the nation, you think bread would still cost a dollar?
Clearly you would agree that some amount of money printing would cause inflation. At what number of dollars would we cross the threshold? $600 per person? $2000 per person? $10,000 per person? $100,000 per person? etc etc.
When I say “the math must catch up with us”, all I’m saying is that if we kept doing stimulus forever, at some point it will start to matter.
Velocity is low/zero, and so the product will be small/zero.
People have been going on about inflation for literally a decade, since QE1 started under Bernanke:
> We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
So we have a testable hypothesis: the inflationistas have been yelling about this for over a decade, and the (e.g.) Keynesians have been saying 'we'll be fine given the conditions'.
Given the (empirical) results, I'll continue to follow the Keynesians. If at some point they end up being wrong, then I'll re-consider (assuming they don't self-correct and figure out why their models got it wrong).
