How the price regulation system of an economy works explained for dummies.
In the system we have a total of 3 dollars, equally divided between John, Peter and Michael.
The total of goods and services in that economy is three apples.
Therefore according to the price regulation system each apple would be worth 1 dollar, and this is the purchasing power of John, Peter and Michael.
John 1$ -> 1 x apple
Peter 1$ -> 1 x apple
Michael 1$ -> 1 x apple
Now we are going to print money as the good communists like, we print 3 extra dollars and we distribute them equally among John, Peter and Michael:
John 2$ -> 1 x apple
Peter 2$ -> 1 x apple
Michael 2$ -> 1 x apple
Since productivity has not increased sufficiently and there are still three apples in the set of goods and services, each apple is now worth two dollars.
Well, this is bullshit, printing money is worthless.
O no dear friend, now comes the precious Cantillon effect.
I, as a good communist, distribute the 3 dollars that I have created out of nothing to my friend John, leaving the system as follows:
John 4$ -> 2 x apple
Peter 1$ -> 0.5 x apple
Michael 1$ -> 0.5 x apple
Wonderful, Peter and Michael now understand the effects of inflation, before they could buy 1 apple and now only half an apple. On the other hand, John, the bankers' friend, can now buy 2 apples without having done anything at all.
Cyph3rp9nk
npub1ln…arrnt
2023-01-13 11:16:21
in reply to nevent1q…a8ct
Author Public Key
npub1lnms53w04qt742qnhxag5d6awy7nz6055flnmjkr6jg39hm86dlq7arrntPublished at
2023-01-13 11:16:21Event JSON
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"content": "How the price regulation system of an economy works explained for dummies.\n\nIn the system we have a total of 3 dollars, equally divided between John, Peter and Michael.\n\nThe total of goods and services in that economy is three apples.\n\nTherefore according to the price regulation system each apple would be worth 1 dollar, and this is the purchasing power of John, Peter and Michael.\n\nJohn 1$ -\u003e 1 x apple\nPeter 1$ -\u003e 1 x apple\nMichael 1$ -\u003e 1 x apple\n\nNow we are going to print money as the good communists like, we print 3 extra dollars and we distribute them equally among John, Peter and Michael:\n\nJohn 2$ -\u003e 1 x apple\nPeter 2$ -\u003e 1 x apple\nMichael 2$ -\u003e 1 x apple\n\nSince productivity has not increased sufficiently and there are still three apples in the set of goods and services, each apple is now worth two dollars.\n\nWell, this is bullshit, printing money is worthless.\n\nO no dear friend, now comes the precious Cantillon effect.\n\nI, as a good communist, distribute the 3 dollars that I have created out of nothing to my friend John, leaving the system as follows:\n\nJohn 4$ -\u003e 2 x apple\nPeter 1$ -\u003e 0.5 x apple\nMichael 1$ -\u003e 0.5 x apple\n\nWonderful, Peter and Michael now understand the effects of inflation, before they could buy 1 apple and now only half an apple. On the other hand, John, the bankers' friend, can now buy 2 apples without having done anything at all.",
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