I more or less agree with your point. But it’s hardly fair to make a comment in a thread about a specific topic then get upset if people discuss it in the context of that topic.
I’m not upset, I’m just bringing up the topic of how leftist politicians shouldn’t pride themselves on budget balancing because it’s harmful to welfare in the long run. I’m aware I’m the one bringing up the topic.
Agreed, but inflation doesn’t correlate with currency issuing. The vast majority of inflation in developed nations comes from supply shocks and from private companies using their market power to raise prices unilaterally. You’re living through this today, prices are rising dramatically because of energy supply shock consequence of the US attacks on Iran. Even Trump admits to this, yesterday himself he said he doesn’t care how this war affects the finances of Americans.
That’s true in this case, but we have to look at the long term. Even now, the US pays about $1 trillion per year just on interest on the debt. That is a huge chunk of the budget going towards something completely unproductive. As the debt increases, the share of interest payments will go higher unless interest rates are reduced but that will only kick the can down the road if the budget is not fixed to stimulate more productive activity.
As we continue down this road, there will come a time when there is little to no confidence that the US can pay back its debt and the US would be unable to sell its debt unless they significantly increase interest rates to entice investors. When that time comes, the US will have to print an even greater amount of money just to keep up with payments because so much of the budget is going towards unproductive activity that does not generate meaningful additional revenue. With confidence reducing in the US’s ability to pay back debts, that also means reduced confidence in the US dollar itself, making it worth less.
You’re right that the amount of US dollars issued is not enough to cause inflation on its own, but in this case it is a symptom of the problem of bad allocation.
I more or less agree with your point. But it’s hardly fair to make a comment in a thread about a specific topic then get upset if people discuss it in the context of that topic.
I’m not upset, I’m just bringing up the topic of how leftist politicians shouldn’t pride themselves on budget balancing because it’s harmful to welfare in the long run. I’m aware I’m the one bringing up the topic.
Runaway inflation is also harmful to welfare in the long run.
Agreed, but inflation doesn’t correlate with currency issuing. The vast majority of inflation in developed nations comes from supply shocks and from private companies using their market power to raise prices unilaterally. You’re living through this today, prices are rising dramatically because of energy supply shock consequence of the US attacks on Iran. Even Trump admits to this, yesterday himself he said he doesn’t care how this war affects the finances of Americans.
That’s true in this case, but we have to look at the long term. Even now, the US pays about $1 trillion per year just on interest on the debt. That is a huge chunk of the budget going towards something completely unproductive. As the debt increases, the share of interest payments will go higher unless interest rates are reduced but that will only kick the can down the road if the budget is not fixed to stimulate more productive activity.
As we continue down this road, there will come a time when there is little to no confidence that the US can pay back its debt and the US would be unable to sell its debt unless they significantly increase interest rates to entice investors. When that time comes, the US will have to print an even greater amount of money just to keep up with payments because so much of the budget is going towards unproductive activity that does not generate meaningful additional revenue. With confidence reducing in the US’s ability to pay back debts, that also means reduced confidence in the US dollar itself, making it worth less.
You’re right that the amount of US dollars issued is not enough to cause inflation on its own, but in this case it is a symptom of the problem of bad allocation.