Both Presidential candidates’ fiscal plans are likely to result in continued increases in the U.S. debt-to-GDP ratio, necessitating increasing amounts of debt monetization in order to prevent bond yields rising. Biden’s proposals in particular would require extraordinary amounts of money printing to finance and real GDP growth would likely be further undermined by increased government…
Deflation is seen by economists as a threat to economic growth as falling prices undermine aggregate demand as consumers hold off purchases in anticipation of lower prices. However, deflation is simply the mechanism by which equilibrium is restored amid the reduced availability of money or increased availability of goods due to economic growth. Depending on…
Mainstream economists use the word demand as a stop gap in lieu of a more detailed understanding of the dynamics driving increases and decreases in output. While individual consumer preferences determine which goods are produced, how much consumers are willing and able to spend has virtually no impact on economic output as a whole. Rather…
There is a widespread lack of understanding among economists and investors regarding what actually drives changes in inflation rates over the short and long term. In this article, we hope to provide clarity on the subject, explaining a number of important concepts. In particular, the importance of money demand and how it helps explain the…