Alternatively, ask how the vast monetary overhang, created over the past two years, is going to be dissipated.
If not frozen in place as savings, or used to pay down debt, or miraculously promoting new production, it will continue to raise prices until its real value levels out.
If not frozen in place as savings, or used to pay down debt, or miraculously promoting new production, it will continue to raise prices until its real value levels out.
https://twitter.com/agurevich23/status/1482093309052866562
Unspoken in that last is the added complication that the rising tide will NOT lift all boats at once. Cantillon effects will create undeserving winners. Relative price distortions will misdirect capital & effort. Secondary credit booms(& busts) will be seeded.
Additionally, policy responses will typically aggravate the disease. Taxes, subsidies, price caps, rationing - all are likely PLUS a fisc so readily backstopped by the CB will plug budget gaps with MORE money creation & also try to buy off unemployment waves. Vicious circle time.
@threadreaderapp please unroll
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