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Comment by wcoenen | Hacker News Reader

> started experiencing inflation again, because not enough of the money was spent on infrastructure

I don't get it. Why would more infrastructure spending protect against inflation?

I meant infrastructure as in production infrastructure. We have an economic narrative around here which amounts to - more production means more exports which means people will want to pay you in your currency, which increases the value of your currency which acts against inflation.

Investing in an economy increases production. If productivity increases, but currency circulation remains the same (or at least doesn't outpace productivity), the value of the currency will increase. This is only one of the various modes of inflation, but that's the idea w.r.t infrastructure spending.

I follow up until the last sentence. If the value of the currency increases, then that's deflation. So you explained reasonably lucidly why we should expect what I guess we agree didn't happen.

I was describing deflation on purpose, because deflation [is supposed to] happens after solid infrastructure investment.

My last sentence was misleading because I said "this is one of the various modes of inflation", but what I really meant was "this is one of the various modes of an inflationary/deflationary economy".

Think of how much time and money you save on water brought through pipes vs having to get all the water you drink, wash, and cook with is delivered by truck or animal. This is very common in poorer countries. Another example is that refrigeration is needed for vaccines. Think of how many expensive medical services would be needed in place of vaccines. We are seeing that right now with Covid.

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