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RedditIsShit9922 t1_iu6ucwu wrote

Spending money to fight inflation...

Same nonsense in Germany.

How about only supporting the people who actually need support? Nah just spend hundreds of billions, thus making inflation even worse.

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addictedtolols t1_iu755l6 wrote

if spending made inflation worse then japan should have earth shattering, empire ending inflation since the 90s. but japan is one of the most deflationary places on the planet alongside south korea and eventually china

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Various-Way-7219 t1_iu82x83 wrote

Because there's no spending in Japan. Japan has lowest broad money growth since 90s.

Japan central bank is just straight up buying bad bonds and stocks from public and private sectors to keep them afloat. BoJ cannot do anything with these on their books. These are now essentially out of economy.

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r448191 t1_iu7vgsb wrote

Spending doesn't make inflation worse. Printing that money you're spending makes inflation worse.

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RedditIsShit9922 t1_iu8ckpd wrote

Spending the money means higher debt. Inflation is fought with higher interest. You think it is a good idea to have high debt when interest is rising?

And when the government gives the average Joe more money, then this will make inflation worse in our current situation. The current inflation is a result of there being high demand, lots of money but not enough production/transport to meet the demand. If the people had less money, they would buy less. Thus demand would shrink and inflation would be reduced. But with more money, people will want to buy even more shit.

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Scar589 t1_iu8enuj wrote

I wish I could upvote this a million times.

Edit: u/r488191 is correct though. You both are. If you spend the money you already have it won't affect inflation as the amount of money in circulation stays constant. But if you print (like u/r488191 pointed out) or borrow (like you pointed out), the supply of money grows and so does inflation.

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RedditIsShit9922 t1_iu9tjyu wrote

Right, but demand is also an issue. The state using the money to reduce debt will result in less demand than giving money to everybody.

I am not against support from the government by the way. It just frustrates me how undifferentiated this support is. Here in Germany, literally every citizen gets this inflation support, including freaking millionaires.

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