I just posted an article showing how badly thousands of people need to relearn basic math. Both posts are about the same image, however, it seemed suitable to split these two different subjects into two different posts.
If somebody could give $4.3 million dollars to every citizen in America, it wouldn’t help at all. If anything it might be harmful to many.
Price Inflation
Practically all consumer goods would rise in price by tens of thousands of dollars ,if not more, within an extremely short period. Stores might have to close for a day to readjust their prices so that they do not become the losers in the bout of increased nominal incomes.
Many other markets would have to quickly readjust their prices as well, and they all would hope they correctly predict the amount each dollar decreases in value. If not, then they might lose actual profits.
Additionally, every consumer would have to adjust their expectations for what prices should be, and they would also be risking spending more on an item in real income than what they would have paid for it before the massive price inflation.
Contracts
There would be strife in many workplaces. The employers and employees could not have expected such a great amount of inflation when they negotiated contract terms. All contracts would have to be renegotiated, and this might cause temporary unemployment for some while negotiations are held.
Creditors
Those who lent money to others, e.g. banks and loan companies, would be the absolute worst off from this sudden increase in prices. They may have loaned out $40,000 to somebody pre-redistribution, but after redistribution $40,000 plus interest would have less purchasing power than before. This would lead to real losses.
The idea of giving every single person a set amount of money to lift every impoverished person out of poverty is absurd. The increase in nominal incomes would push up prices of goods and essentially cancel out the supposed benefits.
Be First to Comment