Quote:
Originally Posted by Luciom
No it can be just a couple of months when given as cash to consumers with high propensity to consume and otherwise low on cash.
Unclear why you think it would lag that much , if you give money to people who already spend their whole income (like most middle-low americans do), they spend it immediatly and price pressure comes in 3-6 months max, where supply is tight. See housing, restaurants and so on.
There is immediatly extra money chasing the same goods and services available before. That's inflationary immediatly.
It's things like tax breaks to the wealthy that aren't necessarily inflationary, because those increase savings of people who already don't spend all their income.
What u speak of is just a quick burst of inflation IF everyone spend all the money at the same time and it would just be very temporary AND if no sellers would have much surplus inventory in their stores for example.
But you will still have higher inflation on a longer period due to a natural economic cycle.
U give again tons of money to people, oil goes to 125$ for 6 months for example
What will happen?
High oil prices -> higher fertilizer prices -> higher cost base foods (cereals,grains etc) -> time to grow -> with that base food feed cow, pork, etc -> they grow -> etc.
that cost is transmitted on a much larger time frame then 3 months and will be felt , even after all the momentary spur of money consumer had been spend , a year or 2 later in many different field of consumption .
So yes inflation lag by a fair margin in the real economy .
And no , rich people spend that money but u see the inflation right away since they buy financial assets and that is immediate ( no production needed in buying shares) .
Yes rich spend and u see inflation in financial asset since its pretty hard to spend millions of dollars on goods and services when you already have everything u need from the real economy.
But that inflation isn’t felt in the real economy , doesn’t mean it doesn’t exist tho .
So what did we see in 2020 ?
Every financial assets went high quickly (2020) and high inflation started end 2021 through 2022 in goods and services (18-24 months) .
What a coincidence isnt ?
And yes as long us government creates deficit, inflation still will be there and sustain the economy .
Fwiw I’m not saying is a good thing now.
Too much of something is has bad as too little .
Last edited by Montrealcorp; 05-02-2024 at 07:17 AM.