Is increasing the money supply a "Supply-Side" economic tactic

[Oville]

The point of increasing the money supply theoretically would be to allow banks to give out loans to businesses so that they could theoretically hire more workers or make more general investments in their business. Isn't this pretty much the concept behind giving massive tax cuts to higher income people. Cut taxes on business and top earners and they'd have enough money to hire workers and invest more in their businesses. On top of that increasing the money supply can potentially have a negative effect on the Demand-Side of economics because it holds the potential of decreasing the purchasing power of the currency. I'm bringing this up because increasing the money supply is usually looked upon as a liberal economic tactic often championed by economists like Paul Krugman and Joseph Stiglitz.

Your thoughts...

 

[bigmac]

You really considered this forum to be a good place to ask this question breh?

 

[Domingo Halliburton]

The point of increasing the money supply theoretically would be to allow banks to give out loans to businesses so that they could theoretically hire more workers or make more general investments in their business. Isn't this pretty much the concept behind giving massive tax cuts to higher income people. Cut taxes on business and top earners and they'd have enough money to hire workers and invest more in their businesses. On top of that increasing the money supply can potentially have a negative effect on the Demand-Side of economics because it holds the potential of decreasing the purchasing power of the currency. I'm bringing this up because increasing the money supply is usually looked upon as a liberal economic tactic often championed by economists like Paul Krugman and Joseph Stiglitz.

Your thoughts...

it's not the same as tax cuts for rich people because rich people just end up saving the money/ buying more stocks.

increasing the money supply actually helps pick up production in downturns.

edit: I misread your thread title supply side economics is associated with getting out of the way of producers and people who to invest. i.e. less regulations and less taxes.

 

[DEAD7]

Inflation benefits those who get their hands on the money first. Big banks and big businesses, to be exact. Both of which have a firm hold on the Republican party and the Democratic party.
Our fiscal policies reflect that.

That said, inflation... excuse me, "quantitative easing" is just a tax, that doesnt require legislation. Supply side economics has nothing to do with what we are seeing.

As far as I can tell anyway.

 

[Oville]

it's not the same as tax cuts for rich people because rich people just end up saving the money/ buying more stocks.

increasing the money supply actually helps pick up production in downturns.

edit: I misread your thread title supply side economics is associated with getting out of the way of producers and people who to invest. i.e. less regulations and less taxes.

Ok, but one of the other criticisms of supply-side economics at least in this modern global economy is that by giving tax cuts to businesses, business owners can pocket the money OR not even invest in their own country. They could use that extra money from loans to build factories in third world countries where they can hire workers in a third world country for dirt cheap. The same can theoretically happen by just filling banks with money so business owners can invest. If businesses don't invest in their own country than increasing the money supply is a failed investment because in that case, workers are theoretically just subsidizing American big business.

 

[Domingo Halliburton]

Ok, but one of the other criticisms of supply-side economics at least in this modern global economy is that by giving tax cuts to businesses, business owners can pocket the money OR not even invest in their own country. They could use that extra money from loans to build factories in third world countries where they can hire workers in a third world country for dirt cheap. The same can theoretically happen by just filling banks with money so business owners can invest. If businesses don't invest in their own country than increasing the money supply is a failed investment because in that case, workers are theoretically just subsidizing American big business.

sure. most of your banks can't even invest outside of the US. unless they're investment banks. those sleepy regional banks aren't investing in Russian credit swaps. they have a bunch of money lying around so they loan it out to businesses.

another by product of increasing the money supply is you lower interest rates (see now for an example) thereby theoretically increasing the demand for borrowing.

 

[Futuristic Eskimo]

Inflation benefits those who get their hands on the money first. Big banks and big businesses, to be exact. Both of which have a firm hold on the Republican party and the Democratic party.
Our fiscal policies reflect that.

That said inflation... excuse me, "quantitative easing" is just a tax, that doesnt require legislation. Supply side economics has nothing to do with what we are seeing.

As far as I can tell anyway.

If someone read your post in a vacuum, it would seem like you're describing a situation where a country was facing enormous inflation, when in reality inflation in the United States, even with QE, has been almost nonexistent. Deflation has been more of a concern. Do you think the Federal Reserve aiming for a target inflation of 2% is a bad thing? If you understand economics, you will know that a small level of inflation is necessary for growth.

 

[Meta Reign]

Let's just get to the meat here. . . Yes, Keynesian economics only benefits banks and huge corporations ultimately.

 

[DEAD7]

If someone read your post in a vacuum, it would seem like you're describing a situation where a country was facing enormous inflation, when in reality inflation in the United States, even with QE, has been almost nonexistent. Deflation has been more of a concern. Do you think the Federal Reserve aiming for a target inflation of 2% is a bad thing? If you understand economics, you will know that a small level of inflation is necessary for growth.

I dont think rule holds true in our current situation where the money being printed is being hoarded at the top.

 

[Futuristic Eskimo]

I dont think rule holds true in our current situation where the money being printed is being hoarded at the top.

This post doesn't even begin to counter what you bolded.

 

[DEAD7]

This post doesn't even begin to counter what you bolded.

I dapped your post cause I agree, im not trying to counter you... You are right controlled inflation is a good thing, I just think right now it is a bad idea as the money is staying at the top and not being loaned out/invested.

... this adds to the wealth gap.

 

[Futuristic Eskimo]

I dapped your post cause I agree, im not trying to counter you... You are right controlled inflation is a good thing, I just think right now it is a bad idea as the money is staying at the top and not being loaned out/invested.

... this adds to the wealth gap.

I couldn't think of worse incompetence than a central banking allowing deflation to happen during an economic downturn without doing anything about it. With the economy as fragile as it is currently and taking into account the reckless lending that occured in the 2000s that led to the crisis, it isn't surprising that banks have been extremely conservative with their lending practices recently. The credit market is healing but it takes time. You're criticisms have more to do with the overall structure of the economy leading to wealth gaps which is really a separate issue from the Fed's policies. It is true though that wealthier people have benefited disproportionally from the dramatic increase in the equity markets, but they're not the only ones. Lots of people have a stake in the market.

 

[Crakface]

The point of increasing the money supply theoretically would be to allow banks to give out loans to businesses so that they could theoretically hire more workers or make more general investments in their business. Isn't this pretty much the concept behind giving massive tax cuts to higher income people. Cut taxes on business and top earners and they'd have enough money to hire workers and invest more in their businesses. On top of that increasing the money supply can potentially have a negative effect on the Demand-Side of economics because it holds the potential of decreasing the purchasing power of the currency. I'm bringing this up because increasing the money supply is usually looked upon as a liberal economic tactic often championed by economists like Paul Krugman and Joseph Stiglitz.

Your thoughts...

But banks dont give out more loans to small businesses, they give out more money to investments that end vanishing into thin air.

 

[Kritic]

speaking of QE...

Former Federal employee: "I'm sorry America, QE was a Wall Street bailout"

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

http://www.hangthebankers.com/forme...m-sorry-america-qe-was-a-wall-street-bailout/

 

[IAmGettingAMailOrderBride]

I wish they would do a stimulus package for those who earned less than $90K