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The Economic Light's avatar

How do all of the businesses that rely on people going to work WFH? Restaurants etc?? Most of your bullet points suggest more government spending,/subsidization which again is inflationary. The government will borrow more which will again increase the monetary base. Do you understand how this works?

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Gary Marshall's avatar

Kelton is an adherent of the 'rising oil prices cause inflation' crowd!!!

Not much of a surprise. Rising oil prices are a symptom of inflation, not the cause of it. A rising oil price, all things remaining the same, has a deflationary effect, not an inflationary effect. Let us say one earns $1000 per month and energy use comprises $200 of that amount. A rise in the price of energy such that one must spend $300 to obtain the same amount requires one to spend $100 less on other goods - aka a recessionary effect.

But the prices of many goods are rising such that ceteris paribus does not apply.

What is causing the general price rise? Well, government reaction to Covid throttled production and trade everywhere. Then government used central banks to print massive amounts of money to throttle it even more.

If one seeks an end to inflation, then one should let those who produce do so. Government, so inclined to limit and destroy production, should not even be involved other than to clear the government imposed roadblocks to production, to oil production, food production, trade, etc.

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