Sachin on Nostr: Price inflation or deflation should naturally reflect the supply and demand of goods ...
Price inflation or deflation should naturally reflect the supply and demand of goods and services.
Monetary inflation distorts this by artificially increasing the money supply, leading to resource misallocation.
Prices don’t revert to a mean. Continuous monetary expansion shifts the baseline, permanently distorting prices and capital allocation.
In practice, recipients of new money benefit more than the later ones as inflation rates are different for them.
Centrally planned, artificially low interest rates suppress time preference, fueling excessive borrowing and unsustainable investments. When the inevitable correction happens, malinvestments are exposed, and a recession follows - not as a random cycle, but as the direct consequence of monetary expansion and cheap credit.
Recessions aren’t solutions. They are the painful but necessary liquidation of distortions caused by prior monetary manipulation.
Monetary inflation distorts this by artificially increasing the money supply, leading to resource misallocation.
Prices don’t revert to a mean. Continuous monetary expansion shifts the baseline, permanently distorting prices and capital allocation.
In practice, recipients of new money benefit more than the later ones as inflation rates are different for them.
Centrally planned, artificially low interest rates suppress time preference, fueling excessive borrowing and unsustainable investments. When the inevitable correction happens, malinvestments are exposed, and a recession follows - not as a random cycle, but as the direct consequence of monetary expansion and cheap credit.
Recessions aren’t solutions. They are the painful but necessary liquidation of distortions caused by prior monetary manipulation.