The discovery of oil, the gold rush, the industrial revolution and countless other examples of periods of excess wealth
These are all factors that drove down the value of goods & services via finite windfalls, negative externalities and production optimizations. Tapping an oil well is basically finding consumer goods in the ground and passing them around, with a bit of value sapped via supply chain inefficiency.
Currency is only a tool for distributing those goods & services, no more no less. You can’t give people “more money” unless there’s surplus goods to be had and a demand for them. If there’s not you’re just devaluing your currency.
I bring up excess houses and cars because they’re the most obvious and extravagant examples of inflating consumption for no benefit. 50 people can ride one bus or you can burn more resources to build 50 cars to marginally improve their lives. We should be thinking critically about the opportunity cost of 8 billion cars vs 160k busses.
It is only natural for a government to do what it can to minimize the effects of inflation
It should be the government’s job to ensure goods and services are fairly and humanely distributed and that labor is being directed toward that goal. Tailors shouldn’t be punished for working themselves out of a job, but we also shouldn’t be artificially inflating consumption just to keep their factories running. That path can only be sustained by irresponsible growth and aiming for X% inflation is a tool to encourage that.
These are all factors that drove down the value of goods & services via finite windfalls, negative externalities and production optimizations. Tapping an oil well is basically finding consumer goods in the ground and passing them around, with a bit of value sapped via supply chain inefficiency.
Currency is only a tool for distributing those goods & services, no more no less. You can’t give people “more money” unless there’s surplus goods to be had and a demand for them. If there’s not you’re just devaluing your currency.
A day of labor is worth a day of labor, full stop. In 0 BCE that produced 1/4 of a shirt and today, through complex supply chains and efficient tools, it can produce 4000. But there’s a hard ceiling on the market for shirts (scaling with the number of backs). Unless you grow that market (more shirts per back or more backs), there’s no reason for the labor. This applies to every good and service. [Fun fact, there are something like 100 billion garments made every year. Those tailors should already be out of work for 5+ generations ]
I bring up excess houses and cars because they’re the most obvious and extravagant examples of inflating consumption for no benefit. 50 people can ride one bus or you can burn more resources to build 50 cars to marginally improve their lives. We should be thinking critically about the opportunity cost of 8 billion cars vs 160k busses.
It should be the government’s job to ensure goods and services are fairly and humanely distributed and that labor is being directed toward that goal. Tailors shouldn’t be punished for working themselves out of a job, but we also shouldn’t be artificially inflating consumption just to keep their factories running. That path can only be sustained by irresponsible growth and aiming for X% inflation is a tool to encourage that.