• queermunist she/her@lemmy.mlEnglish
    11·
    2 months ago

    So, there’s gonna bailouts eventually.

    The reason printing money doesn’t always cause inflation is because growing the money supply also increases economic activity by providing liquidity for productive investment, and growing the economy itself creates even more demand for liquid currency.

    But what happens when you print money that doesn’t do anything productive? Instead, it’s just for paying down debts.

    🤔

    • ☆ Yσɠƚԋσʂ ☆OPEnglish
      10·
      2 months ago

      This gets to the heart of modern financialization and class-based wealth erosion. What happens when new money is used for unproductive purposes like paying down financial debts is that the money floods into stocks and real estate, inflating asset prices and enriching the capitalist class who own them.

      Meanwhile, the working class, whose wealth is in wages and savings, faces the delayed consequences of higher costs for housing and goods without the capital gains to offset them. As a result, their real wages stagnate leading to a silent wealth transfer. It socializes risk and debt through public currency dilution while privatizing the gains as capital appreciation for asset holders. The wealth of the working class is eroded by the systematic inflation of the asset universe they need to live in, funded by the very liquidity created to stabilize the system. The financial economy booms while the productive economy and real wages languish which is what we’re seeing happening right now. This is a structural feature of an economy where capital allocation serves owner profit over broad-based productive capacity.

      • queermunist she/her@lemmy.mlEnglish
        8·
        2 months ago

        Not only wages drop, but the dollar reserves of every other country also drop. In the short term this will hurt the economies of a lot of different countries because they are so dependent on dollars, but in the longer term they’re going to dump dollars for alternatives.

        Then, as foreign demand for dollars decreases, inflation rises even further. As inflation rises further, foreign demand for dollars decreases even further. There’s presumably some kind of floor here, somewhere? It’s going to be a looong way down.

  • Soulphite@reddthat.comBanned from communityEnglish
    10·
    2 months ago

    Dang, trump bankrupting other peoples businesses by proxy. New record achieved. Next up, bankrupting an entire country.

    Edit: He’s on track…