I simply present this stylized gobblygook to signify I do not understand it much at all. I worry about Inflation, not from expansion of the money base, but from the acquisition of debt. It is not the actual injection of Stimulus which need be worried about, but the failure to fund that Stimulus in the first place; and the said effect of Inflation from it. Acquiring debt has the effect of lowering the value of Wages in the linear economy, while increasing the value of Profits and Rents. The reason for the benefit of the later lies in the purchase of additional productive product–non-immediate Consumption usage. Physical Product gains value under Inflation; it being cheaper to have acquired productive resource at an earlier time.
The problem with Debt comes from artificial increase in the Price of Consumption in relationship to other competitive linear economies; those who are bidding for the same Product and Resource. Such competition causes both linear economies to pay more for that Product and Resource than simple operation in a singular economy, and debt creates dispersion across linear economies. This dispersion allows the lower Debt acquisition to advance greater bidding against the debt-ridden nation, and increases the overall bid ratio higher. This means that the Price goes up for All, but with the lesser-debt nation having greater bargaining power, and paying lower Price for the Product–even though the Sale price is identical. I know that it is a hard Concept to follow, but think of its as the less debt-ridden country ability to force the more debt-ridden country to pay at the top of their dispersal range, without themselves having to pay above the Mean.
See, I told you that I did not understand this stuff. Debt-ridden countries have Consumption to maintain lifestyle, which forces them to spend their Savings, while less debt-ridden nations can afford to maximize their lifestyle, without sacrificing their Investment potential. The higher bidding caused by the greater entrance into the markets leads not only to higher Pricing and Inflation, but the erosion of Wages in the debt-ridden nation. I await my colleagues’ contempt for my poor choice of ideation and theory. lgl