Wed. 10/04/28
.post #88
[url=Spot the error - #21 by Smiling_Dave]
Let’s go back a bit earlier to the “bread market” scene, while keeping in mind that, because inflation is theft, there are losers AND winners. Does this scene accurately portray all the economic actors?
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The old lady represents the losers.
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The teenagers neither win nor lose, because as soon as they get the new money, prices rise. The hidden assumptions here are:
(a) Everyone’s stock of money increases simultaneously;
(b) Everyone (including bread merchants and their suppliers) is aware that the windfall is universal. -
Where is the winner? Presumably, it’s not even a human being, but some metaphorical “monster,” who just “gets pleasure” by showering everyone with new money. But from where does he get it?
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Then, the ECB is portrayed as some benevolent and altruistic entity that keeps both the inflation and deflation monsters in glass jars, where they can’t run amok. The ECB is the crimefighter, the good guy.
What’s wrong with this picture?
Basically, everything except #1.
In #2, both assumptions are false. In addition, they contradict the old lady, whose stock of money doesn’t increase. In reality, some people get the new money earlier than others, and they are the primary beneficiaries. Anyone who spends the new money before prices inevitably rise is a “winner.” Others, like the old lady, are “losers.”
The video fails to distinguish between fractional-reserve inflation, which is limited by the reserve ratio, and central bank-created inflation, which is theoretically unlimited…which brings us to #3 and #4.
In a sense, there is an “inflation monster,” but it doesn’t give new dollars away “for fun”; it lends new dollars for profit.
To whom? To governments.
From where does it get this new money? It “creates” it by pushing buttons on a computer keyboard and crediting government accounts.
Is the ECB “fighting” this monster? No; it is this monster! Any central bank legally empowered to “monetize” government debt is an inflation (and deflation) monster.