It used to be that the political parties out of power at the moment decried deficit spending for political advantage.
They haven't been "fiscally conservative" for at least a generation. I'm not sure that they ever were, as such... but I'm not a big scholar on last-century policy.
Their distinguishing characteristic is, nothing to do with policy as such. They're strongly defined by their followers, who believe in a preordained natural order, and will follow anyone who pays lip service to that. Representatives, in turn, present whatever collection of claims gets them enough followers, and make up the slack with whatever tools they can bring to bear (gerrymandering, voter suppression, etc.). Representatives themselves, have no particular guiding principles other than self-promotion.
They seem to reject externalities, and disregard the effect of relationships between people or groups (let alone anything in the abstract, like corporations and markets). It makes them look very selfish; actually on a personal level, they aren't, but it's also limited to that up-close, typically familial range.
Now it appears everyone is jumping on the short-term gravy train. "Spend Money" is the mode o' the day. In the very short term a cash infusion may make you feel "flush" but prices catch up eventually, and it's a one-way ratchet.
Inflation is coming. Plan your personal financial life with it in mind.
Inflation is a long solved issue. The fed controls interest rates and money supply to regulate inflation, and it's that simple, as far as I know. It is exactly at times like these when that apparatus is needed most, to smooth out the bumps from recessions, bubbles -- especially emergencies like last year's.
It's strange that some people demonize the practice (especially such mechanisms as "quantitative easing"); I suppose it fits into the "natural order" above? I doubt that such people really believe we
should undergo devastating boom-and-bust cycles, damn the consequences; they just don't see the causality, or they think it's the wrong way around and will lead to positive feedback (nevermind it's been effective
negative[i/] feedback for the better part of a century).
Spending, is something the government has almost unlimited capability for; as long as the economy continues to grow, revenues can always be made back. It might take an extraordinary time to do so -- some war debts have taken over a century to settle -- but that's something only an entire country can do, for us. Good luck finding a lender for a >100yr maturity, personal loan!
A currency has value only because 1) society agrees it conveys wealth, and 2) there's a restricted supply of it. If you suddenly flood the economy with 100X as much currency, the perceived value of those two pieces won't change but their price - expressed in that currency - will increase by 100X because it takes 100X as much of that currency to transfer the same amount of wealth between buyer and seller.
...Is someone printing that much money? They probably shouldn't, though they may have a reason (likely a bad reason) for doing so.
Hyperinflation is completely intentional, as far as I know. Weimar Germany did it to discharge war reparations; Zimbabwe did it to tighten dictatorial power.
As long as we have an open, liberal government, we will have these stabilizing mechanisms in place (as mentioned earlier). It's not an abuse of power, no one personally gets the deposit from the fed when they increase the money supply (nor pays them back when they reduce it!). Well... shouldn't anyway, but last year's hasty unchecked loans are a prime example of why government must be open to public scrutiny, with oversight bodies in place and empowered (as they were, very specifically and intentionally, disabled last year).
This is why hard assets are popular in times of rampant inflation. There's an old story about the currency in some country being so worthless that a guy used a wheelbarrow to carry enough of it to the store to buy a loaf of bread. It wouldn't fit through the door so the guy left it outside, confident it was so worthless that no one would bother stealing the money. When he came back out, his money was in a huge pile on the ground - and someone had stolen the wheelbarrow!
He'd just as well be disappointed to hear that, in the time it took him to get to the checkout line, it inflated enough that he could no longer afford the loaf...
But again, apocalyptic circumstances, and only due to apocalypses even the government isn't large enough to handle -- or that it intentionally practices in order to screw everyone over.
Note that rampant inflation is only possible with fiat money - money backed by nothing inherently valuable. If your coins are made from precious metals their value can never drop below the value of the metal each coin contains. If your paper/cloth scrip is freely exchangable for gold or silver (think: gold and silver certificates) its value can never drop below the equivalent amount of that precious metal. But when coins are made from zinc, aluminum, etc. and your scrip is not redeemable for precious metals, its "value" can be freely manipulated by (at least) the issuer.
Well, no. Metal is useful to a point, but the value of gold is greatly overstated compared to its value.
Doesn't matter what your money is, it obeys the same economic laws.
Ancient Rome, at one point, coined so much money that they diluted their own value; as well as growing the money supply, composition was diluted from mostly silver, to mostly copper. (I don't remember the specifics of this, like over what period it happened, alas. Should be easy to find on a search.)
The Mali empire (~1300) was unimaginably wealthy. "Musa [the emperor] is said to have brought several tonnes of gold to Mecca when he made a pilgrimage there in 1324, deflating the value of gold across much, if not all, of North Africa."
The California Gold Rush had a similar effect:
https://www.smithsonianmag.com/history/gold-rush-california-was-much-more-expensive-todays-dot-com-boom-california-180956788/And, rest assured, it will happen again in the near future, when abundant PGMs rain down from the sky -- as asteroid mining start up. (Interestingly, gold isn't very abundant in asteroids, making it an okay store of value in the mean time, I would guess. Personally, I'm stoked as hell and can't wait to see iridium pipe in the McMaster Carr catalog for relatively affordable prices. That shit would be useful as hell, if it weren't so rare down here!)
Historical examples abound; value is simply what everyone thinks it is, regardless of material. So it's quite convenient to use something completely irrelevant and meaningless, like paper, or digital bits!
Tim
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