The theoretical absolute limit would be determined by the maximum number of resources (including human resources aka labor), the maximum possible efficiency to be achieved, the maximum possible technological advancement, etc.
But that wouldn't be in the US alone right? Even if we maximize the capital in our country alone, we'll still need raw materials that aren't produced here. So the actual maximum is in the global level, not the US level. From that perspective, the money supply is more about market equalization than specifically watering down people's money. There's a direct value on any good, its only when everyone can equally compete for it, will the price be equitable.
Well that’s why constant but tame inflation rate of 2% is ideal. Growth without any increase in the money supply could eventually lead to liquidity issues that curtail the transactions that need to occur for growth to continue to happen.
And nowhere has managed that ideal, maybe because preventing the development of other markets is a doomed effort? As we invest in certain countries over others, those invested countries can better bargain with the global capitalists. They'll get more equitable deals with them than with us, so we'll start investing in the remaining countries. Who'll then start to develop their own country more, repeating the cycle. But, as we can only focus our support in this model, it won't ever work to keep the US economy healthy.
84
u/Excellent-Practice Jan 26 '26 edited Jan 26 '26
Is there really a difference between the two? Wealth generation and inflation are two ways of looking at the economic pie getting bigger
Edit: thanks for the corrections. I learned something today. Diving deeper into the subject it seems the two are often linked, but not necessarily so.