[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.
When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.
We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).
I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.
