I spat out my coffee this morning when a CNN news reader commented that because of the 5 trillion that was handed out to people last year, people will be able to fight through this inflationary period. I think we aren't too far away from "thank goodness that the regime printed trillions of dollars for everyone so we can fight through the Putin price hike!"
Yep... putins relatively fresh war is guilty for a year of price increases due to massive printings of money... CNN!
Otherwise, what i find most sad is, that people are cheering the printing of money (because they get handouts), but "in the end" (which is very soon after the handouts), they lose the same amount of money in price hikes everywhere due to inflation, and large corporations (so the ones that get the "free money" from the people to sell them stuff) profit in the end.
Also the propaganda machine is helping the pumping-up the prices... first they talk about the higher prices of everything because of this and that (covid, putin, war,...), people then expect higher prices, and even if the current wholesale prices are still low, the sellers will raise them, because the media told the people that the prices will go up, people blame putin (and not the stores), and why not take advantage of the situation?
You might get some gauging and people taking advantage of things, but I do believe that it will correct in relatively short order. The entire beauty of the free market system is that anyone making "too much" will have that margin taken away by someone willing to do it for less profit.
I just wish economists like Krugmen would revisit some of their previous articles about how printing trillions of dollars and passing it out won't cause inflation. Those articles were parroted by so many people and for the party that demands "accountability" they certainly know how to bury things and move on to another problem they have the best solution to.
> they lose the same amount of money in price hikes everywhere due to inflation
This point only makes sense if you assume that the price hikes wouldn't happen without the handouts, and that those people would have been able to stay in a dignified life (food, housing) without that buffer.
Big assumption!
Your point about the rhetoric around prices is exactly right. Pretty obvious, only looking at corporate profits vs price increases.
I am not an economist, but here is my theory on the whole thing (would love to hear if there is a flaw with this reasoning!):
The fundamental problem is that a wealth of a society is determined by its productive capacity. A society with more homes, more cars, more phones, more food, more clothes, more university classrooms, more hospitals and doctors, more medicine, (you get the picture)... more good and services is wealthier.
A society with more dollars but without the corresponding increase in all of those things is no wealthier.
You can magic up trillions of dollars and hand them out to each and every individual currently alive in the US or for that matter the planet. Give each person a billion dollars. You still would not suddenly end poverty, or hard ship or hunger or anything else.. that money is still used to buy the goods and services which are being produced at the same rate as before.
When we distributed trillions of dollars over the last couple of years while simultaneously having lockdowns for covid, we not only added money to a system without adding corresponding productive capacity. We did the opposite.. we reduced the number of homes being built and maintained, we reduced the number of clothes being manufactured, we reduced the amount of education we provided, we reduced the amount of health care provided, we reduced the number of vacations and restaurant meals that were provided, we reduced the number of cars being made (you get the picture)... we created a backlog of unmet demand.
The prices would likely have gone up even without the money printing due to this backlog of unmet demand, the additional money in the system just made the price rises bigger.
