President* Biden appears bent on pumping untold amounts of money into the economy, and predictably people are raising concerns that this will cause significant inflation, and even hyper-inflation.
But those worriers are thinking about money in the old, ‘economic’ sense, because they haven’t read the fine print. (With the size of modern bills, who has the time to actually read them?)
The plan is to introduce COVD relief, infrastructure, Green New Deal, and other spending in the new ‘Bidenomic’ sense.
That is, instead of setting up a situation where more money will chase the same goods, Bidenomics works by having the same money chase the same goods. Not the same amount of money, but the same actual money.
An example will help make this clear. Suppose you go to a sandwich shop, and order a sandwich. When it comes time to pay, you give the vendor $10… which he then hands back to you, so you can use it again the next day.
See? The same money chases the same goods. So no inflation!
Of course, there are refinements that will have to be made. Recognizing that businesses need some profit to remain open, the Fed will set a standard profit margin of, say, 5 percent (rather than the 100% profit that is now assumed as part of the standard narrative).
This changes the example in this way: You give the vendor $10 for that sandwich, and he gives you $9.50 back. Now you can spend that $9.50 somewhere else, and get $9.03 back. You can spend that somewhere, and get $8.57 back. And so on.
It’s actually very similar to the commonly accepted idea of fractional reserve banking.
So we can all relax, knowing that Bidenomics will keep inflation under control as we spend our way to health and prosperity.
