[steins]

Facepalm.

I normally love Mark Cubans blog, but this is a terrible idea. If a company cant afford to keep employees it shouldn't hire them. This would be almost as bad as the bailouts were.

This would send inflation skyrocketing.

What happens to all of those small companies that don't have the connections or legal know-how to get the government money? They go out of business because they would not be able to afford the new inflated cost of hiring.

What happens to the people who can barely scrape a living out of their current wage when the inflation this would cause sends food prices sky rocketing?

[knowtheory]

Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P

Because if you look at the data, current inflation doesn't seem to be out of line with inflation prior to the 2009 economic collapse:

http://www.fintrend.com/inflation/inflation_rate/CurrentInfl...

More to the point, the whole point of borrowing to invest, is that if done successfully, your business grows in a sustainable manner, and you can continue to pay that person money for the business you have built.

This is how business loans are supposed to work. You start with nothing, you get a pile of money, you build something that will earn that money back, and hopefully have built a stable company in the mean time that will continue generating wealth even after the terms of the loan come due.

This shouldn't seem foreign on a startup and entrepreneurship site.

[Anechoic]

>Would it send inflation skyrocketing the way that the stimulus sent inflation skyrocketing? :P

From what I've read, inflation isn't a problem in the current economic climate because even with the increased money supply, no one is actually spending any money (or more accurately, most consumers don't have the money to spend) so there is no reason for prices rise since demand is low.

I have no idea how Cuban's idea would affect inflation.

Of course this is HN, so for all the knowledgeable people out there, please correct me if I'm wrong.

[nl]

You are exactly right.

Inflation control is (like most economic problems) a balancing act. In my opinion way too much attention was paid to potential inflation problems in 2009/2010 instead of the real problem: unemployment.

[danenania]

There is actually rampant inflation. Global prices for food, energy, gold, and many other commodities are at or near all time highs. The reason this might not show up in some metrics is because we are also experiencing deflationary collapse in previously inflated sectors like housing.

[acslater00]

Nope. Gold prices are going up because people believe gold prices will keep going up, and keep speculating as such. It has no bearing or relationship to inflation, since most of what we buy is not made of gold.

Energy prices are 50% off their all time highs. When they were high, it was a demand story, not an inflation story. Likewise, with food.

In any event, even if all of those statements were true, that's not what inflation means. Inflation is not "things get more expensive", it's "money gets cheaper". There's a big difference.

Inflation is low. Very low. Too low, in fact. If inflation were a couple percent higher, and nominal GDP were also a couple percent higher, the economy would look a lot better than it does right now.

[tsotha]

This. Doesn't anyone around here shop for groceries?

[jeffool]

Correct me if I'm wrong, but wouldn't this be a sign of inflation if food prices were going up here, but not in non-dollar places?

Food prices are going up universally. It's not a matter of shopping for groceries, it's knowing how much other nations are paying.

[danenania]

It's not so simple when the dollar is the world's reserve currency. The US exports inflation.

[jeffool]

Well, consider me educated! Thanks!

[nl]

This would send inflation skyrocketing.

Wasn't cheap money from the Fed supposed to do this a couple of years ago?

I think it's time for people to start to accept that money supply alone doesn't cause inflation.

[danenania]

"Wasn't cheap money from the Fed supposed to do this a couple of years ago?"

It has done it. Food prices are at all time highs and causing global social instability. Gold is at an all time high. Energy and commodity prices are very high.

You are mistaking an inflationary depression for equilibrium.

[nl]

Food prices were increased prior to the financial crisis, dropped during it and during 2011 have returned to roughly 2008 levels: http://en.wikipedia.org/wiki/2007%E2%80%932008_world_food_pr...

There is a range of causes blamed:

Initial causes of the late 2006 price spikes included droughts in grain-producing nations and rising oil prices.[4] Oil price increases also caused general escalations in the costs of fertilizers, food transportation, and industrial agriculture. Root causes may be the increasing use of biofuels in developed countries (see also food vs fuel),[5] and an increasing demand for a more varied diet across the expanding middle-class populations of Asia

Oil is down in price since 2008, not up.

Increases in the Gold price isn't a measure of inflation, it's a measure of the lack of confidence in other investments.