I’m beginning to think that Saturday Morning Breakfast Cereal has something against economists:
In my defense, I do not behave like this, although I may feel the need to point out that Monopoly is realistic in that rents go up once someone has a monopoly on a property… come to think of it, however, I haven’t gotten an invite to a game night in a while. Thanks guys.
So, is the board-game playing economist correct? This is yet another point of contention among macroeconomists- many believe that increasing the money supply stimulates production in the short run, but in the long run only results in inflation, though some believe that increases in the money supply have no effect on production and only lead to inflation, and a few others believe that changes in the money supply have sustained real effects on the economy. (For more on this, poke around on the interwebs for money neutrality.)
Glad we’ve cleared that up. At the very least, most economists agree that in the long run, changes in the money supply are reflected only in changes in price levels and not in changes in the overall real size of the economy. In other words, if the Fed increases the money supply by 10%, this is eventually going to just lead to everything being 10% more expensive rather than actually having more widgets and gizmos being produced. This would imply that scary SMBC economist guy is correct in at least one way, though he makes the situation sound much more ominous than I just did. Why is this?
SMBC economist guy isn’t just talking about regular run-of-the-mill inflation, he’s talking about hyperinflation, which is generally defined as inflation of 50% or more per month. It’s pretty easy to see how a society would be pretty screwed if prices increased by 50% every month- savings would become more or less worthless in terms of purchasing power, it would be very difficult to plan for the future, no one would want to invest in production in your messed up economy, a whole lot of people would follow Glenn Beck’s advice and buy gold rather than invest in anything that is actually productive, etc. So yeah, hyperinflation might not actually necessitate the use of monopoly money as sustenance, but it’s not good.
Okay fine, I am beginning to somewhat understand the lack of game-night invites. But, but…I bring cookies…hello? Anyone? Sigh…at least I have Gizmo:
(Editor’s Note: Gizmo is sitting on Parkology the Enviromentally Educational Board Game. I have no idea why I own this- I think it was left behind by a former roommate. As one who is not particularly board-game inclined, my choices were either that or the Sex & the City Trivia Game, also not purchased by yours truly. I don’t dislike games, mind you, I’m just more of, say, a Rock Band kind of gal…)