Asklemmy

43396 readers

1329 users here now

A loosely moderated place to ask open-ended questions

Search asklemmy 🔍

If your post meets the following criteria, it's welcome here!

Open-ended question
Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
Not ad nauseam inducing: please make sure it is a question that would be new to most members
An actual topic of discussion

Looking for support?

Looking for a community?

Lemmyverse: community search
sub.rehab: maps old subreddits to fediverse options, marks official as such
[email protected]: a community for finding communities

~Icon~ ~by~ ~@Double_[email protected]~

founded 5 years ago

MODERATORS

[email protected]

How can money be both devalued and expensive? (lemmy.ml)

submitted 1 week ago by [email protected] to c/[email protected]

17 comments fedilink hide all child comments

An acquaintance who works in finance said that the USD was devalued during COVID but hasn't yet experienced much inflation except in household goods because money is still expensive. What does that even mean? How can money be expensive? And how does that differ from being valued/devalued?

I would think "money is expensive" means something along the lines of "there isn't much liquid cash", but I thought the money injected into the economy was liquid cash.

Would someone more into finance/trading than me explain how this is possible? Thanks!

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 20 points 1 week ago (1 children)

Usually "expensive money" means that it's hard to borrow.

"Devalued" refers to purchasing power. "How much food will $1 buy me?"

They're describing different things. In terms of the economic relationships that result in the current scenario, I'm not even going to try. Ignoring that we don't really know and a lot of traditional economics rely on the assumption that actors are rational (which we now know is absurd), I'm far from an expert in macro-economic theory. Systems are complicated.

[–] [email protected] 4 points 1 week ago (1 children)

Ah, I see. So being "devalued" is like mixing base metals in your gold coins, while "cheap money" is like loaning out the treasury. Both contribute to inflation, but in different ways.

[–] [email protected] 1 points 1 week ago

Not quite. Cheap money is more that a loan doesn't cost that much money to pay back. It isn't the treasury loaning out the money, but individual banks judging based on inflation.