> The Fed prints money by giving free gifts to banks. That is, QE for $500 billion means banks are $500 billion richer.
This is a straw man, $500 billion in loans (normally above market value for collateral) means banks could be anywhere from 0-500 billion dollars richer but they are certainly not poorer.
>The first person to get a new dollar has an unfair advantage, since they can spend it before the rest of the economy knows about the extra dollar.
Have you seen the stock market lately? Investors have done well in this new easy money economy and until that money trickles down they certainly have it much easier than they otherwise would.
>Inflation is a deterministic function of the money supply. There wouldn’t be inflation if we didn’t create more money.
In the long run this is true. Especially the second statement, it's almost trivial to prove: Imagine an island with 10 dollars in circulation. The amount of goods produced doubles, and everyone is able to trade and consume all the goods. The price of the goods must necessarily be cut in half on average, so that the 10 dollars are able to pay for all the goods.
> This is a straw man, $500 billion in loans (normally above market value for collateral) means banks could be anywhere from 0-500 billion dollars richer but they are certainly not poorer.
It's not universally a strawman. I've had people propose to me, in all apparent seriousness, that we should just take the QE funding and give it to individuals instead.
> Have you seen the stock market lately? Investors have done well in this new easy money economy and until that money trickles down they certainly have it much easier than they otherwise would.
I've seen this theory, but it fundamentally doesn't make sense. Money is fungible; there's no trickling barrier dividing the money supply into "investment dollars" and "consumption dollars". (It is of course true that monetary policy can affect asset prices in other ways.)
> In the long run this is true. Especially the second statement, it's almost trivial to prove: Imagine an island with 10 dollars in circulation. The amount of goods produced doubles, and everyone is able to trade and consume all the goods. The price of the goods must necessarily be cut in half on average, so that the 10 dollars are able to pay for all the goods.
This isn't so, because you're missing the critically important concept of the velocity of money. If everyone buys and sells things twice as often to match the doubling in total production, prices won't need to be cut. It may help with the intuition here to imagine playing a video of the island at 2x speed; the number of goods they produce in any given time interval will double, yet the total number of dollars in circulation won't change.
This is a straw man, $500 billion in loans (normally above market value for collateral) means banks could be anywhere from 0-500 billion dollars richer but they are certainly not poorer.
>The first person to get a new dollar has an unfair advantage, since they can spend it before the rest of the economy knows about the extra dollar.
Have you seen the stock market lately? Investors have done well in this new easy money economy and until that money trickles down they certainly have it much easier than they otherwise would.
>Inflation is a deterministic function of the money supply. There wouldn’t be inflation if we didn’t create more money.
In the long run this is true. Especially the second statement, it's almost trivial to prove: Imagine an island with 10 dollars in circulation. The amount of goods produced doubles, and everyone is able to trade and consume all the goods. The price of the goods must necessarily be cut in half on average, so that the 10 dollars are able to pay for all the goods.