Should ALBA Be Inflationary?
Should the Scottish national currency be inflationary? Or should we follow a different system?
Expanding the money supply can have both benefits and drawbacks. Some of the potential benefits include:
Stimulating economic growth:
An expansion of the money supply can lead to increased spending, which can stimulate economic growth by increasing demand for goods and services.
An expansion of the money supply can lead to increased hiring, which can help reduce unemployment.
If we are experiencing deflation (a decrease in the general price level), expanding the money supply can help increase the price level and alleviate deflationary pressures.
However, there are also potential drawbacks to expanding the money supply, including:
If the money supply is expanded too rapidly, it can lead to inflation (an increase in the general price level).
Misallocation of resources:
An expansion of the money supply can lead to an increase in the demand for goods and services, which can lead to an allocation of resources away from their most efficient uses.
Decreased value of money:
If the money supply is expanded too rapidly, it can lead to a decrease in the value of money, which can reduce the purchasing power of consumers.
It's important to note that the benefits and drawbacks of expanding the ALBA supply depend on the specific circumstances of an economy, and policymakers must carefully consider these trade-offs when making decisions about the money supply.
ALBA believe the supply should be inflationary, but we should only inflate the currency to pay for essentials like the government.