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by blablabla123
1186 days ago
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But banks also had much more relaxed capital requirements. > It's about supply and demand. The USA has been printing up dollars like crazy since the beginning of the Covid pandemic. Indeed it's about supply and demand. The inflation is largely caused by a physical supply shortage. The current banking problems are separate from that and because some (smaller) banks didn't have to comply with Basel III and all. |
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Of course that is the case. That is almost always the case. Too much money means people have more money to buy physical stuff, and there is always a shortage of stuff, supply chain or not. Even if all the computer chips and everything was manufactured in the USA for cars, there would still be a shortage of cars.
The physical supply shortage is caused by too much money in the system, not by supply chains or anything else.
If people didn't have as much money, then there would not be as much demand for physical supplies, and everything would adjust. "Sorry, I don't have money to buy a car." That means one less car is needed for total inventory. It adds up when 1 million people don't buy cars that would have if they had the money.
But there is so much money supply that people are bidding up the price of goods. The homeless are not contributing to the physical supply shortage, because they have no money. More money = more demand.
Read about any crash and you will see the same exact situation. Read about the Spanish Price Revolution - the Spanish hauled so much gold and silver in from the New World that it massively increased money supply, and the value of gold and silver went way down. Prices then go up relative to the money. Not only did Spain suffer, but it spread across Western Europe. Too many people with too much money chased too few goods.