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by nichohel 1348 days ago
The "signal path" is simply the presence of more money, which means that purchasers have more money to pay.
1 comments

That is a bit of an oversimplification. The presence of money is no sufficient, that money must be in circulation. For example, they can print all the money they want, if they just toss it all in a big bank account and never remove it, there will be no inflation.

That was a big reason why printing a lot of money in the past did not contribute to a lot of inflation: most of that money ended up sitting in the accounts of a few big institutions, who then did not end up spending it on anything.

This time around, we both gave that money directly to people (who then spent all of it), but also were dealing with global supply issues, an energy crunch, a food crunch, etc. Everyone had more money to spend, but there were less things to spend it on, leading to dramatic price increases.

You have a sort of a point; what I should have said was, 'The "signal path" is simply having more money in the hands of buyers, which will then necessarily cause an increase in prices.'
> The "signal path" is simply having more money in the hands of buyers, which will then necessarily cause an increase in prices.

So from that point on, the mechanism is supply & demand right? Buyers with money increase demand, therefore the prices increase.