> Normally, an increase in money supply would cause consumer goods to increase in price, since more people are able to buy them
This isn't actually true, though it's a widespread belief (quite a number of pundits kept making incorrect predictions after the global financial crisis).
Where the logic goes wrong is that an increase in money supply doesn't automatically translate into higher disposable incomes. (And higher disposable incomes don't automatically translate to higher effective demand, though in practice they usually do if you the increase in income isn't extremely unequally distributed.)
You are right, not all money supply increases are equal. However, I have thought about this more in the context of proposals around UBI or other wealth redistribution ideas. The common complaint about them is around just what you talk about, that distributing wealth to poor people will increase disposable income and cause inflation from not being able to keep up with increased demand.
I wonder how much of that is true in our modern economy. Between our incredible latent productive capacity and the sizable chunk of our economy that consists of non-rivalrous goods, I wonder how much of the increased demand we could absorb without causing inflation to rise substantially. For example, how much would food prices go up if poor people had more money? We can produce a lot of food, and the demand for additional food is not limitless. Some of that money would go towards digital goods like Netflix and video games and other digital goods, which are non-rivalrous.
Of course it would have an effect on inflation, but I am just wondering how much.
Proclamations of certainty around UBI are common, but the only intellectually honest position is that we simply do not have enough empirical data to tell with a useful level of confidence how a UBI would affect inflation.
Also, I believe that the only way to collect that empirical data is to implement a UBI at a sufficiently large scale and see what happens.
There really is no reason why you wouldn’t be able to pair government intervention on the demand side (i.e. UBI) with government intervention on the supply side. Simply introduce quotas about supply (e.g. that shops cannot throw away more than 1% of the food they sell), and/or limits on non-productive assets (e.g. freeze rents & Netflix subscription). I’m sure there are many smarter interventions than I was able to come up in 30 seconds as wel.
I've spent a lot of time in volunteering for the food bank in my area and the local grocery stores generally give food away right before it goes bad. They're already incentivized to do this because we give them tax write-offs.
Welcome to the Soviet Union! They tried exactly that and failed spectacularly at it. Centrally planned economy simply does not work, it's a law of nature.
This isn't actually true, though it's a widespread belief (quite a number of pundits kept making incorrect predictions after the global financial crisis).
Where the logic goes wrong is that an increase in money supply doesn't automatically translate into higher disposable incomes. (And higher disposable incomes don't automatically translate to higher effective demand, though in practice they usually do if you the increase in income isn't extremely unequally distributed.)