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Excuse Me For Pointing Out That Free Money Does Not Combat Inflation

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35 comments on Excuse Me For Pointing Out That Free Money Does Not Combat Inflation

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More Free Money 

In an effort to ease inflation pain, Spain Announces a $10.6 Billion Giveaway Package

Spain on Tuesday announced 10 billion euros ($10.65 billion) worth of measures to ease the pain of inflation in the third major package this year, bringing total aid to 45 billion euros since early 2022.

The package includes a one-off bonus of 200 euros for about 4.2 million households with annual incomes up to 27,000 euros and the extension of tax cuts for energy bills into the first half of next year, Prime Minister Pedro Sanchez told reporters. 

The package follows similar announcements in March and June that included direct aid, tax cuts, soft loans and rental controls.

Sanchez also announced 12-month extensions on subsidies for train travel for commuters and limits on rental increases.

Inflation Reduction Items 

  • Free money
  • Rent controls
  • Soft loans 
  • Train subsidies
  • More deficit spending

Hooray!

Unfortunately, that combination certainly will not ease inflation.

Free Money California Style

On June 30, Governor Newsom Signed Budget Putting Money Back in Californians’ Pockets (emphasis by Governor Newsom)

“Cha-ching! You just received a deposit.” 

Global inflation. Rising costs. It’s hard out there and we know it. So, we’re giving you $9.5 billion back. MILLIONS of Californians– 23 million to be exact – will benefit from up to $1,050, as soon as October! See if you qualify on the new Middle-Class Tax Refund calculator here.

Free Money Results In 

Please note that Ahead of Recession, California Faces a $25 Billion Budget Problem With Ongoing Deficits

Expect more tax hikes on of the most overtaxed US populations. 

Someone has to pay for all this free stuff. 

Cha-ching! 

This post originated at MishTalk.Com.

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Mike Shedlock

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35 Comments
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Oldest Most Voted
Casual_Observer2020
Casual_Observer2020
3 years ago
The free money is for the investor class. It’s just masked as being for the people.
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BDR45
BDR45
3 years ago
All my friends still live in California. (I moved out 6 years ago) and they see nothing wrong with their government……… I don’t proselytize, and I don’t criticize their decision, but I am astounded at the amount of delusion that reigns among the population there.
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Casual_Observer2020
Casual_Observer2020
3 years ago
Reply to  BDR45
That’s odd. Most of mine live in Texas or Florida. I don’t begrudge people making their choices. I’m stunned by the delusion they have as well.
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prumbly
prumbly
3 years ago
We will print money and hand it out to ease the impact of the inflation caused by the previous time we printed money and handed it out. Beautifully circular.
Can anyone see where this is going?
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BDR45
BDR45
3 years ago
Reply to  prumbly
Yes, default, one way or the other. But I am really beyond caring anymore. I just value my friends, my animals, and what is left of our relatively stable empire………apparently, soon to be a radioactive wasteland if we keep goading Ukraine…
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Six000mileyear
Six000mileyear
3 years ago
Yields on the 10 yr US bond have started climbing again, despite the stock market selloff. The yield curve remains in an inverted state. These tell me there is a liquidity/solvency problem with investors unwilling to lend for short term and finally selling their 10 year bonds for a loss to pay bills/margin calls. Crypto and Tesla are leading the market crash.
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PapaDave
PapaDave
3 years ago
“Expect more tax hikes on of the most overtaxed US populations.

Someone has to pay for all this free stuff.”

Agree.
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BDR45
BDR45
3 years ago
Reply to  PapaDave
Agreed!!!
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TheWindowCleaner
TheWindowCleaner
3 years ago
50% discount/rebate policy is the way to implement price deflation beneficially into profit making economic systems. It gives conservatives, libertarians and liberals exactly what they want most.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  TheWindowCleaner
I say 120% discount/rebate policy.
Get what you want for free and have a little bit leftover for later.
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Dean2020
Dean2020
3 years ago
You mean you can’t help a heroin addict recover by giving him more heroin? Wow… I would have never guessed!
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Billy
Billy
3 years ago
Reply to  Dean2020
The problem is that the heroin addict will vote for more heroin every time.
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Webej
Webej
3 years ago
They have to appear to come to the rescue of large swathes of the population, or they will lose power !
Normally, all the largesse [counterfeit money] is bestowed on bond-holders and other wealthy speculators who know how to leverage free money. Now it is going to the consumer pummeled by their past policies, everybody is screaming bloody murder.
Of course the end game is economic entropy: deflation in asset prices, underwater pension plans and government budgets, inflation in consumer goods and services, as deflation rips away increasing swathes of the zombie formerly productive sector and investments go on hold, except for the MIC and public sector enterprises (education, health care, etc).
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Maximus_Minimus
Maximus_Minimus
3 years ago
Reply to  Webej
The money is not going to consumers. The broke Spanish government just has to borrow more than before. The money is going to Blackrock and Co., but the plebs will cheer it and vote for it. That’s the connondrum of puerile democracy.
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MBA SOFA
MBA SOFA
3 years ago

Train tickets are now free in Spain. The effect: people reserves many free tickets a day for multiple destinations, then choose the trip. Most trains go empty, but if you need take one, you can’t. Beware socialism!

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BDR45
BDR45
3 years ago
Reply to  MBA SOFA
It’s human nature to take advantage of “free’ stuff, but that is really sad.
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Sunriver
Sunriver
3 years ago
These ‘inflation busting policies’ are:
1) To prevent civil unrest.
AND/OR
2) To preserve asset valuations for the affluent.
Certainly, we are at the end game of fiat currency. Crypto will not replace fiat, so what is left? Gold?
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  Sunriver
Wampum.
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Doug78
Doug78
3 years ago
Yes, the package is some free money for low-income people to offset higher energy costs mainly. 200 Euros per household is not much but it helps for those who drive to work as opposed to big-city dwellers who can bicycle to work.
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Zardoz
Zardoz
3 years ago
Addict reasoning.
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Lawyermoody
Lawyermoody
3 years ago
Basic economic thought has left the building. Money — if it will retain its value — must remain relatively scarce. Money which retains its value will provide those who hold something worthwhile in the future. The lesson: money is the vehicle to move wealth into the future. If government provides more money, the future value of money will be diluted. This is theft — stealing the value of money to use sometime in the future.
In earlier years citizens took a dim view of politicians who promised too much. These wise citizens voted those politicians out of office. Free money paid to us to get politicians more votes is very expensive.
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Scooot
Scooot
3 years ago
Reply to  Lawyermoody
“the future value of money will be diluted.”
This has always been the case, it’s just a question of how quickly. Too quick, like now, and everyone notices, at 2% per year, not so much.
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BDR45
BDR45
3 years ago
Reply to  Scooot
I am astounded that people think 2% inflation is acceptable. Maybe we will be glad that it is reduced to 2%, but the underlying delusion that 2% is normal must be some kind of conspiracy against most of us, except for the very rich who invest and their investments greatly outpace 2%. inflation. Even though I don’t think a gold standard would hold up for very long, maybe we should re think the quaint concept of a stable currency.
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Salmo Trutta
Salmo Trutta
3 years ago
Reply to  BDR45
It’s shades of Jekyll Island. The ABA controls the banking system, not the FED.
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Maximus_Minimus
Maximus_Minimus
3 years ago
Reply to  BDR45
We should rethink the concept of all-knowing benevolent central banking.
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Scooot
Scooot
3 years ago
Reply to  BDR45
“I am astounded that people think 2% inflation is acceptable.”
I agree, I hope I didn’t leave the impression i think it’s acceptable.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  Lawyermoody
In earlier years citizens took off the heads of the wealthy and politicans.
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Dave
Dave
3 years ago
Perhaps this is a dumb thought, but either the government “spends” it or the people do. I guess what the government spends it on will be different than what a citizen does and what the citizen spends this on will be goods and services — assuming these funds would not be spent the same way as the government. The idea of giving out more money to combat inflation is pretty funny.
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Captain Ahab
Captain Ahab
3 years ago
Reply to  Dave
The assumption underlying taxation is the government knows better than you do what to do with your money. The problem with the assumption is ‘value’. For every dollar you spend, you derive ‘value’ equal to, or greater than a dollar–you would not spend the dollar if value was less. For every dollar the government spends, the ‘value’ is typically less than a dollar. The net result is a drain on the economy.
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Matt3
Matt3
3 years ago
These policies make sense as long as you understand the the goal is NOT to end inflation. For the politicians, inflation isn’t really a problem. Social unrest caused by inflation could be a problem. Giving away cash can deter this problem.
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Lisa_Hooker
Lisa_Hooker
3 years ago
Reply to  Matt3
defer not deter
It always comes back.
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HippyDippy
HippyDippy
3 years ago
Just noting how, just like every other time in history, whatever any government does will cause the opposite of what it says it will do. And since my good buddy Einstein (we share the same barber; as in none since he’s been dead for awhile), said insanity is doing the same thing and expecting different results; it’s obvious if you believe in letting someone else run your life; you’ve got to be absolutely bonkers!
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Captain Ahab
Captain Ahab
3 years ago
Reply to  HippyDippy
“The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.‘” President Ronald Reagan, August 12th, 1986.
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Too much BS
Too much BS
3 years ago
Ark keeps sinking. All the animals have taken to the life boats. Will it survive 2023 ?
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Mish
Mish
3 years ago
Reply to  Too much BS
Love that idea. May use it.
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