Money Printing: Supply & Demand Miss match
What happens when Central Banks and Governments around the world print trillions of dollar equivalents at the same time that the global supply chain is heavily disrupted?
1.3 billion Indians were recently put under lock-down, thus joining an increasing number of countries around the world which have already done the same.
We already hear that mine after mine after mine is being shut down in Canada and Latin America etc.
All this begs the question…
How messed up are the supply chains and existing supply at the moment?
Printing trillions of dollars when supply chains are working and the spending habits are somewhat normal (money distributed over a wide range of goods) could have very different affects compared to what we are seeing now.
When will, if possible, the consumer spend money like there wasn’t a killer virus roaming the streets?
Will the US consumer buy the same goods and services with for example $2,000 of newly printed money in their pocket as he/she would in “normal” times?
Is the normal range of goods and services even present, and if so, how long will it be present?
What if even a fraction of people use the printed money to chase a rising gold price?
When will people feel safe to spend money on stuff the usually did like for example going to the gym, restaurants and/or cinemas?
What if consumers are scared enough that they use the money to pay off mortgages and/or hoard stuff instead of spending it across the whole range of sectors that are currently dying?
Will the powers that be print more and more money in response?
What happens when the consumer sentiment switches and people start spending the money?
I guess my main question simply is:
What happens when you do “helicopter money” and the populace are either unable or unwilling to bid on the same range of goods/services that they would under “normal” conditions?
An extra $2,000 in the hands of a “few” gold/silver bugs could for example lead to even more pressure on the physical gold and silver market.
We simply have no idea how different people will behave if they are given a check during a time when there is a killer virus roaming the streets and markets have collapsed.
What we could see: Printing of money… Not stimulating enough… Print more… Not stimulating enough… Print more… Suddenly deflation turns to inflation and then to hyper inflation.