But… that’s what happens when everyone gets a bunch of buying power without increasing the amount of things to be bought.
How about “What would happen if every American could have, magically created for them, durable goods with a current market price of $1 million?” You’d still get weird market effects, but at least you’d have a bunch of stuff!
You can’t inject $300,000,000,000,000 into the economy and then not have inflation. That number is so much larger than our current money supply that doing it effectively makes the dollar worthless.
Just look at yourself above. No inflation. Then people go on spending sprees with their new money. Except the new money didn’t magically create new goods, did it? So you have lots of new money chasing the same supply of goods, so what does that mean for supply and demand? It means…wait, do prices go up or down? Hard to say, right? Up, I guess? And what do we call it when the prices for everything go up? Is there some name for that phenomenon, or have economists neglected that?
Oh, and then with all that free money, people quit their jobs and retire and celebrate with a vacation. What does that mean? Fewer people working? Does fewer workers mean more goods and services produced, or less?
So not only do we have more dollars chasing the same amount of goods and services, we actually have decreased supply of goods and services. Except all those people who thought to themselves, “Hey, I’m a millionaire now, gonna quit my jerb and sit on the beach sippin Pina Coladas” are going to change their mind pretty fast when a Pina Colada costs $10,000. A million dollars doesn’t go very far after a round of hyperinflation, so the guys who saved their money are idiots. Oh wait, I thought we couldn’t have inflation? So we’ll have that other thing that’s not inflation, but it’s what happens when the prices for everything rises.
If you want to give a million dollars worth of goods and services to everyone in America, you can’t just hand them all a million dollars and stand back. You have to actually create goods and services valued at 300 trillion dollars. And given that the US GDP in 2017 is something more like 18 trillion (which is a big number!), that seems a big much. Even if we doubled our GDP overnight somehow, that only gives everyone in America something like $50,000 in value, aka our per capita GDP. Don’t quit your day job. Especially since everyone will have to work twice as hard and produce twice as much to provide that much value. Double our GDP means double our output.
If you’re wondering about change on an individual basis rather than global economics, it’d be a disaster. The typical American philosophy trends more towards “stop me from being stupid” rather than “show me how to be smart” which is why we have the term “debt crisis.” Everyone would end up pretty much where they are now, on a larger scale.
Same thing would happen if some magic spell made everyone over their ideal weight lose the excess poundage. They’d wind up back where they started because their choices wouldn’t change.
You would lose all the cheap labor over night. It would suck, and the value of money would go down over night. Prices of goods would sky rocket.
No you wouldn’t lose all your low wage workers. Sure, they are now millionaires. So what? A million dollars doesn’t buy what it used to. You’d be like a millionaire in pre Euro Italy where a decent lunch cost 5000 Lira.
So don’t quit your day job.
And then all those low wage workers would have to work again. They’d just be making more money. Money that is worth less.
Just so you know, that’s more money than exists in the world today (assuming we don’t get into funds invested in derivatives). 
All the world’s stock markets are only worth around $80 trillion, with all the money currently owned by all the people in the world coming out to a mere $199 trillion. So, I guess if you took away all of the money from everyone else in the world, all the value of the stock markets throughout the world, and all of the debt, you could give each adult American a million dollars. What would happen? Well, the entire world’s financial systems and trade, including that in the US would collapse if you managed somehow to do it. I’d be sure to give those Americans cash btw…at least they could burn the bills for heat during the apocalypse.
Anyone doing a job they did not love or felt obligated to perform would quit (inflation or not inflation, it would take long enough for other effects to take hold for people to make stupid decisions based on their bank balance). Anyone working odd jobs, doing temp work, or other kind of non-employment, would give themselves a vacation. Things would grind to a halt and then chaos would ensue.
But that is caused by the problem of hyperinflation making your old salary worthless, so what’s the point of working for the equivalent of pennies? So how much will your employer have to pay you for you to keep working? It’s a good question because nobody will know what things will look like after the price revolution. And of course with savings and debts wiped out lots of businesses will close down, which leads to further business failures, which lead to still more business failures.
This is a major problem during hyperinflation, nobody knows what things should cost and you never know if you’re getting an amazing deal or getting ripped off.
How would an employer pay you anything (unless out of his personal $1 million?)? In order to get this level of money without just fiat making it (which would make the money worthless), you’d have to take most of the world’s money supplies. There just isn’t hundreds of trillions of dollars out there.
Of course there are trillions of dollars out there, we just created 300 trillion of them, remember?
Of course the rally answer is that the OP was confused about the order of magnitude. Bill Gates can’t give everyone in America a million dollars because only has 80 billion, which is a big number but only big enough to give 80,000 people a million dollars.
And of course the perennial misconception that billionaires have billions of dollars in bank vaults somewhere. We say Bill Gates is worth $80 billion because that’s the number we get when we multiply the number of Microsoft shares he owns by today’s stock price. Same with all the other billionaires.
I’m not sure if I’m on topic here, but if the outcome of every American being well off, is system collapse or massive inflation, isn’t that proof that the system is based on keeping most people poor?
No, that isn’t proof that the ‘system is based on keeping most people poor’…it’s based on a system where ‘money’ actually has to have a value based on production (or, I suppose, the worldwide perception of value in the dollar), and the old saw about governments just being able to ‘print’ all the money they want is flawed. Basically, there isn’t enough value in the US to inject hundreds of trillions of additional dollars into the system. You’d need to, first, have hundreds of trillions of dollars of new production and value first. Even worldwide there just isn’t that much ‘money’ because there isn’t that much value…not unless we get into funds invested in derivatives, where there are (theoretically) a quadrillion or so dollars in the system.
Exactly right, and this is something it’s hard for people to understand. Money is just a score-keeping system. Adding more money doesn’t add more goods and services. If you want more goods and services you have to increase production. Handing out money just means you have more money and the same amount of goods, which means the money is worth less, which is what we call inflation. Money only has value if it can be exchanged for valuable goods and services, increase the supply of money and all you’ve done is increase the amount of money needed to buy those goods.
As far as “keeping most people poor”, that’s not what’s happening. What’s happening globally over the last few decades is that billions of people have been lifted out of extreme poverty. Most of the poor in most of the world are much better off today than they used to be.
However that’s not the case in the United States, where incomes for the bottom 80% have pretty much stagnated for decades, while incomes for the top 20% have risen, and incomes for the top 1% have really risen, and incomes for the top 0.01% have skyrocketed. And this is due to both globalization of manufacturing, and automation of manufacturing. Chinese factories pay workers a lot less than American factories, and American factories produce much more than they used to, but with radically fewer workers.
Anyway, in a capitalist system it’s not like the 1% are better off the poorer the 99% are. Who’s gonna buy all your stuff? The more money everyone else has the more money they have to buy your products.
Economies are based on scarcity. One person has more of x than they need and wish to have y, another person has more of y than they need and wish to have x. So two people agree to swap a little x for a little y. But that only works as long as both parties don’t have enough of something. A Crotchety Old Prospector wandering about in the Sonora without a drop of water might be willing to trade a gold nugget for a bucket full of ice, but Nanook of the North wouldn’t give a half-chewed piece of whale blubber for one because he is literally surrounded by the stuff.
The same goes for rectangular pieces of green paper. As long as people are willing to trade rectangular pieces of green paper for goods and/or services and there are relatively few rectangular pieces of green paper to go around, people will be willing to trade those goods and/or services for a small number of those rectangular pieces of green paper. But if rectangular pieces of green paper are as common as the leaves on trees, then you are going to have to hand over either many, many rectangular pieces of green paper or something else entirely that is rare and valuable before before you can get your hair dressed or your phone sanitized.
No.
The outcome of printing a bunch of money is systemic collapse, because if you don’t keep the money supply in line with actual goods, all you get is massive inflation and a messed up economy.
If you could magically make goods and services for everyone, we’d all be well-off, and there’d be no systemic collapse. There’d be a massive upheaval of sorts, but we could in fact all be rich.
If you look at todays first-world poor people compared to even reasonably-well-off people 1000 years ago, they are in fact vastly more wealthy by almost any measure. They live longer, they have better food, better entertainment, better shelter, shorter work hours, more things…
I get that we can’t print more money, as that would devalue the currency, but it was said up thread if everyone had the money to pay their bills/mortgage the prices would rise and no one would be better off.
So are we saying there is literally not enough resources to go around and if we had less people there would be enough ( food water housing etc)
Or if we had less people and the same resources, prices will always rise as a function of people having g the ability to pay…there by leaving some poor, ie with out all they need.
(I rewrote it twice…reread it six times. And it reads like I’m stupid, being difficult, or I’m a little kid that wants to add zeros.to all the one dolar bills so we can all be rich):smack:
Except most of our wealth isn’t from “resources”. The limiting factor isn’t how many rocks we can dig out of the ground to transform into iron to transform into steel to transform into bridges and skyscrapers.
If there were a sudden plague and every other person on Earth dropped dead, the survivors wouldn’t all suddenly be twice as wealthy.
And that’s because the goods and services we consume as part of the economy don’t just drop out of the sky, they are created by human beings. Other human beings are the most important resource in our economy.
Sure, there are certain physical limiting factors. There’s only so much land, only so much coal, only so much molybdenum. But a particular plot of land can be extraordinarily productive farmland or barren wasteland, and the difference is the human capital used to make that land productive.
The good news is that our natural resources and human capital are used in extraordinarily wasteful ways. Why is that good news? It means that all we have to do is be just a tiny bit less wasteful and inefficient. I mean, 30 years ago millions of kids in China grew up as starving peasants. Today millions of kids in China are growing up as proletarian factory workers. Tomorrow millions of kids in China could grow up to be doctors, engineers, teachers, and scientists. And we here in America are going to be much better off with those Chinese doctors and engineers than we would a country full of starving peasants.
So my point is, making our fellow human beings more productive–by having them by engineers and scientists rather than peasants and factory workers–is the only way to increase our wealth. Getting rid of people isn’t the answer, adding more people isn’t the answer, making human beings more productive is the answer.
Perhaps more importantly, there isn’t $325 trillion in the entire world. That number is literally greater than not only all of the U.S. money that exists, but of all the legitimate money in the entire world if you converted it into U.S. dollars.
[QUOTE=BobBitchin’]
So are we saying there is literally not enough resources to go around and if we had less people there would be enough ( food water housing etc)
[/QUOTE]
No, not exactly. There is no shortage of resources based on the number of people there are, as plainly shown by the fact that there are many times more Americans now than there were in 1800, and yet Americans in 2017 are vastly richer than they were in 1800. There are more people in the world now than there were in 1800, too, and yes, the average person is much richer now than they were then.
If half the people in the world suddenly vanished, sure, you could get a bigger house with a pool… in the short term. This is an observable fact; after the Black Death and other massive plagues burned out there was a brief uptick in living standards. It never held up, though. Eventually the added wealth derived from greater supply would dry up because wealth is generated by human effort. If half the houses in the world are empty, well, what’s going to happen is they’ll fall apart, and they won’t constitute wealth anymore, and you’ll only have half as many construction workers to build new houses.
Where you get the idea that “The system is based on most people being poor” is kind of baffling. It is rather instantly obvious that in the world’s richest, most successful countries, most people are not poor, and indeed most people would be considered insanely well off by the standards of the past. Countries where most people ARE poor are generally awful. So, clearly, the strategy of keeping most people poor doesn’t work.
[QUOTE=BobBitchin’]
I get that we can’t print more money, as that would devalue the currency, but it was said up thread if everyone had the money to pay their bills/mortgage the prices would rise and no one would be better off.
[/QUOTE]
Because if you just give them the money to do so by fiat you haven’t created any new wealth.
No, there are literally trillions of dollars of resources available to one degree or another. There are mountains of iron out there, for instance. How much good does that do you if you need some steel for a car or nails for your roof, however? In the solar system there are probably quadrillions of dollars in resources ‘available’…but they don’t do you or I much good until and unless someone figures out a way to go there and get them, then use them to make or do stuff that adds value to the economy. Having fewer people actually would take away value from the system as a whole, because it’s people taking rocks or trees and making them into stuff we can use that adds value. I’m struggling here to think of a good analogy that will make this easier to grasp.
How about this? If I take a pound of ground meat and some spices and a bun and cheese, and know what I’m doing I can translate those raw materials into something a person is willing to trade, say, a half an hour of their work for in exchange in a medium that we together corresponds to a half an hour of work (say, $5). If I take those same resources and just dump them on a grill and burn the shit out of them, then I haven’t made anything anyone would trade a half an hour (or even a minute) of their time for in exchange. If I just say that tree leaves are equal to a half an hour of work but there is no work or anything else behind it or anything of value, why would I create a burger to exchange with you for something that is wholly manufactured and has nothing behind it? The government can and does create money…but that money represents something ($X represents Y amount of labor). People exchange their work for a certain amount of dollars and then can use those dollars to exchange for the work and production of others. That way I don’t have to trade you a cow for a ton of grain, or a pair of goats for an iPod. If, however, the government just creates a ton of money without anything behind it, so to speak, then it means that each dollar represents less and less work or production. I mean, if I work for, say, $10/hour in an economy of $18 trillion (the current US GDP), what’s my $10 an hour going to be worth if the US decides to create $100 trillion out of thin air without anything behind it? How about the $360 trillion from the OP?
Maybe one of the economist 'dopers can explain it better. Sorry, I am but a quasi-humble network engineer, and me no know economics goodly.