| json_metadata | "{"app":"Musing","appTags":["money"],"appCategory":"money","appTitle":"Why sending more bills is not the solution for a country that is in serious economic crisis?","appBody":"<p>A simple analogy can illustrate the point.</p>\n<p><br></p>\n<p>Imagine you are in a convenience store along with ten other people. In the convenience store the following three products are for sale (the figures can be of any currency you can think of):</p>\n<p><br></p>\n<p>Water bottle, 250 ml .: $ 10</p>\n<p><br></p>\n<p>Box bread package, 400 g .: $ 35</p>\n<p><br></p>\n<p>Alkaline batteries, size AAA, pack of 4: $ 50</p>\n<p><br></p>\n<p>Now, each of the people in the store brings in the portfolio between $ 20 and $ 25.</p>\n<p><br></p>\n<p>The store has in the inventory only five units of each product.</p>\n<p><br></p>\n<p>What can people who are currently in the store buy?</p>\n<p><br></p>\n<p>Not much. Perhaps a bottle of water or if they cooperate among several, could buy box bread or a pack of batteries.</p>\n<p><br></p>\n<p>Now imagine that an official of a populist government arrives and hands full gives each person the amount of $ 100.</p>\n<p><br></p>\n<p>What is the safest thing to happen ...?</p>\n<p><br></p>\n<p>(a) The owner of the store immediately raises the prices and tells them: the water bottle is now worth $ 25, the box bread: $ 90 and the batteries $ 100.</p>\n<p><br></p>\n<p>(b) The owner of the store does not increase the prices, but at that moment all the people buy everything and the products are not enough for each person to take what they need.</p>\n<p><br></p>\n<p>Now imagine that immediately, 50 people are presented, each with $ 100 that officials of a populist government have just given them ... what would happen? The shop owner goes up even more prices or there are no more products to sell.</p>\n<p><br></p>\n<p>It is the same with economic activity.</p>\n<p><br></p>\n<p>The economic reactivation can not happen only by injecting money into the system, there must necessarily be an increase in the production of goods and services. Otherwise, as other users mentioned in their answers, inflation is generated (the shopkeeper raises the prices); or there are not enough satisfiers in the economy.</p>\n<p><br></p>\n<p>Economic growth, despite what the monetarists say, is much more complicated than just controlling the speed or availability of money.</p>","appDepth":2,"appParentPermlink":"f3y5tbdl5","appParentAuthor":"fahadk222","musingAppId":"aU2p3C3a8N","musingAppVersion":"1.1","musingPostType":"answer"}" |
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