> but government spending alone does not cause inflation
I didn't say that, either. I was clearly talking about deficit spending.
I didn't say that, either. I was clearly talking about deficit spending.
I wish people would stop adding words to my statements, and then arguing based on the added word.
In this case, "directly".
> In fact, before 2020, there is no modern economy where you could clearly point to and say "the government overspent, and caused massive inflation".
Did you forget the 1970's United States?
Expanding on that, from 1800 to 1914 the US had zero net inflation. Zero. We've had inflation ever since. What changed in 1914? The switch to a fiat money system, which enables endless deficit spending.
The same thing happened with every other country that switched to fiat money. Yes, I know about Japan, but not much about it. I did read that they have no GDP growth. The lack of inflation could be because people simply stash their money in the bank, keeping the excess money out of the economy.
How else is someone supposed to interpret "That has to happen. The government cannot deficit spend for free. The cost is inflation" and "It is a law of nature."? Now it's not direct, but happens through the ether. I can also argue inflation happens whenever my dog sees his shadow.
We've gone from "It's a law of nature" to "only when the government does deficit spending" to "only when the loans aren't paid back" to "it's not direct".
>What changed in 1914? The switch to a fiat money system, which enables endless deficit spending.
What's the argument here? That the Unites States should revert to producing cotton? That the United States should return to having a smaller economy than 1920's India? The amount of economic change between 1914 and now; as well as the intentional effects of inflation on US investment absolutely dwarfs any comparison you are trying to make. Zero net inflation is not a desirable thing on it's own. This is a luddite argument; in lieu of actually providing evidence that hyperinflation is a direct consequence of deficit spending, you've simply argued we should to return to living like cavemen. It's like seeing a car crash and pointing to the invention of the Model T as the downfall of modern society.
If the economic laws are so clear cut as you claim there shouldn't be ambiguity; and yet here we are as you struggle to even clearly explain why the "laws of nature" were so clearly upended in 2008.
This is simply false [1].
[1]: https://www.minneapolisfed.org/about-us/monetary-policy/infl...
Also, I don't mean exactly zero. It's an inconsequential difference spread out over more than a century compared with 1914 to today.
My take on it is that it's like physics - if you conduct an experiment and determine that the laws of physics don't apply, you've either made a mistake or our understanding of physics is all wrong. Which is much more likely?
My take on the 2009-2021 not causing huge inflation is there was something else going on. Two possibilities:
1. quantitative easing deferred the inflation to the future. There's been a lot of talk in the last few months about it putting the whole financial system onto another precipice.
2. That it did cause inflation - it's just that it compensated for massive deflation caused by the banking collapses.
Or maybe the 25% inflation we see today is just a delayed effect.
(Yes, I know the official rate is 7.5%. But everything I buy seems to have gone up 25%.)