You understanding of macro economic theory is abysmal

Posted on: March 2, 2022 at 20:36:08 CT

Inflation occurs when the money supply grows more rapidly than the supply of goods and services. More money chasing the same amount of goods and services causes their prices to increase, i.e. inflation.

The classic and proven cure for inflation is to reduce the supply of money, essentially reduce the amount of money that the Fed is pumping into the economy.

Build Back Better will be financed by deficit spending. Government bonds will be sold to generate the funds to pay for its programs. Those bonds will be bought primarily by the Federal Reserve because the private sector won't buy them. See who bought the government bonds that financed the Covid relief spending.

The result is the money supply increases faster than the goods supply and the price of goods will increase. The supply of money will increase faster than the increase in goods, hence the price of goods increases. That's the classic definition of inflation.

Enacting Build Back Better might well increase the disposable incomes of many Americans, but it will cause the prices of the goods and services they need and have to buy to exist to increase more rapidly than their incomes. The net result is their standard of living declines.

The bottom line is enacting Build Back Better is counter productive in that it may increase incomes but prices will increase more rapidly.