Reddit Economics Network

This might be a stupid question, but if so I'd love a simplified answer as to why. Because I was looking at a video talking about EA's issues with among other things stocks at the moment, it got me thinking whether or not there is a way around it? Could a company simply not sell stocks and therefore not have to worry about that? Or is it a necessity once a company gets big enough? If a big company wanted to avoid needing to "keep the line going up" is there a way to do this without people panicking and tanking your value as a commodity?

Quick question. Are tarrifs applied to only incoming products or will products already on the shelves have a 25% markup tomorrow? Sorry if this is dumb question or if I'm asking the wrong sub. TIA!

Absolutely not an economist, but stock buybacks just sound like a scam from where I’m sitting. A company using funds to artificially inflate their stock price seems like a great deal for them and a terrible deal for everyone else.

Am I missing something fundamental in my understanding?

Is there a benefit to stock buybacks for the larger economy? They seem like they do nice things for the C-suite and stockholders, but beyond that?

What would the likely consequences be if the Economics Fairy swooped in and banned them overnight? Would that be a net positive, negative, or neutral for the average American?

Today PresidentTrump stated: "You know, the United States in 1870 to 1913, all tariffs. And that was the richest period in the history of the United States, relatively speaking."

Is there any truth to this?

Was America better off under a system of Tariffs rather than Income Tax?

I was thinking on how I would solve the housing crisis. One of my idea was inspired by the USSR. They built a bunch of cheap panel houses as a stop gap to solve the housing shortages they were experiencing. Though since communism doesn't work they never were able to replace the stop gaps with something better quality.

I would do something similar but make the apartments higher quality, be a mix of luxury, normal and economic so most essalones go down. I would flood them in areas that have housing shortages and sell them on the open market so the program turns a profit and market signals don't get messed up.

What would be the possible downsides to this? Would it cause economic issues?

So in short:
The Fed could use the revenue to pay down government debt during economic booms and just returns it to the taxpayers during downturns.

So I read this about inflation

"The sticky-price rule says that to minimize the cost of changing prices, the inflation rate should be 0%. Inflation's interaction with the tax code suggests an inflation target of about 0%. The recession-fighting rule says that we should aim for slightly positive inflation, so as to have room to cut interest rates in a recession; maybe target an inflation rate of 4% or so." - https://pastebin.com/p0AEbSnS

I’ve been thinking about ways to achieve both of these goals simultaneously. While I understand that this idea might not be politically feasible, I'm more interested in exploring any fundamental issues with the plan itself.

Here’s how I envision it working:
Let’s say X% of all taxes are earmarked for the Federal Reserve, which then has the discretion to either use the funds to pay down government debt or return them directly to the taxpayers who originally paid them. (So, no redistribution—essentially, it would be as if the taxes were never collected in the first place.)

I am so confused as to how anyone wins here. If you want to reduce the amount of administrative costs, I could see a ramping down of particular agencies or particular policies. But wholescale implementation seems like it's causing chaos.

Surely, some things are still valuable for a gov't to do. But if you don't have people around with years of domain knowledge, how do you build any properly operating processes/agencies without expertise?

If all of these federal employees are laid off and gov't payments to those getting grants or operating on gov't contracts aren't paid, then there's even more people out of work. I don't know how a society can absorb this potential volume.

If people don't want to work for or with the gov't due to fear of not being paid, and other countries also don't want to do business with us due to tariffs and due to losing faith in us honoring our promises or being flaky/thuggish, where is the win in that?

If regulations are removed from lots of big industries, how do they ultimately win (or their leaders become more wealthy/powerful) if there are economic problems in the US and people stop buying, foreign countries don't want to do business with our businesses...etc.

All this being said, I'm a neophyte with little knowledge of economics. So my "ifs" might be flawed. How does this work? No way I'm parsing this do I see a net positive here. It's looking like the US could end up being a very large Cuba.

I understand that tariffs are mostly political theater, and it would probably be best to avoid both options altogether. However, it got me thinking—if the goal is to boost exports and increase consumption of domestic products, wouldn’t currency devaluation be the better choice between the two?

I cant find an answer to this question. Aren't many (or all?) Chinese products subject to Trump-Biden 25%-100% tariffs? I presume they are not going to be replaced by 10%. So does it mean that there were certain tariff-free goods and they will be all tariffed now?

Is this an acceptable inflation rate?

As the title asks, what are the potential side effects of a government raising or lowering rates according to the whims of some person in the government as opposed to responding to market conditions? Have there been historical examples in the past?

I heard Paul Krugman talking about the trend of growing wealth inequality on a Substack Live this morning and then saw this alarming Reddit post - https://www.reddit.com/r/economicCollapse/s/Dpr0rdQD1Z

Not sure of their source of data, but I did a cursory search and it seems to checks out, I’ve just never seen it graphed this way:

https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#range:1989,2022;series:Before_Tax_Income;demographic:nwcat;population:all;units:median

https://equitablegrowth.org/the-distribution-of-wealth-in-the-united-states-and-implications-for-a-net-worth-tax/

I read they are expecting 10%, so 200k on the unemployment numbers. When are they specifically added to the unemployment numbers and what do you postulate the impact to the overall hiring situation will be?

will we have more stuff to buy in Mexico? find new people to sell to?

Hello. I am currently reading Basic Economics from Thomas Sowell. I have now read the chapter about inflation and am still a bit confused. I tried looking for other sources that explain monetary inflation but haven't found a satisfying answer. All sources I have read describe monetary inflation as follows:

The government doubles the money. People now have double the money but prices are also doubled because people now buy more stuff which increases demand which in turn increases prices.

So far, so plausible. But when everyone has double the money while paying for doubled prices shouldn't everyone still have the same standard of living as before? Everthing is more expensive, yes. But everyone also has more money.

What bugs me is the implication that when the government prints more money it is equally distributed under all citizens. What I find much more plausible is that the government prints the money for itself in order to finance government affairs. These affairs require resources that otherwise have alternative uses and increase the demand for these resources. The price for those resources now increases and so do the prices for products that require these resources. So everyday products also get more expensive while the citizens still have the same amount of money as before, but now it has less purchasing power.

So, is the "real" problem of monetary inflation printing more money that is concentrated in the government instead of being distributed equally? Or would the purchasing power of money still decrease when the money would be distributed without the amount of products increasing?

Thank you in advance and sorry for my unidiomatic English. My native language is German.

Economics noob here. Sorry if it's a terrible question.

I've heard that diamonds are artificially scarce because one company controls the supply or something along those lines and it got me thinking: hypothetically, if one small group of people or one person owned 85% of the money supply, would that be super deflationary? Since each diamond is worth more, wouldn't each dollar be worth more? Conversely, if wealth was VERY evenly distributed, wouldn't that be super inflationary?

Again, I haven't taken more than high school economics. This just happened to pop into my head during my morning coffee. Thanks!

I know economists love to overcomplicate this, but at its core, inflation seems to come down to the expansion of the money supply. Sure, rising prices are what we feel, but isn’t that just the effect? And if the Fed has never actually reduced the global money supply in any meaningful way, how does deflation ever happen?

And what’s so special about 2%? Why not 0%? Wouldn’t a stable currency be better for everyone? The only explanation that makes sense is that steady inflation benefits those who already have assets—banks, the wealthy, the government. Wages stay behind, debts get devalued, and the system just keeps churning.

Yes, I know the Fed has ‘tightened’ before (2018-2019, for example), but did that actually reduce the money supply, or just slow down its growth? Did it do anything other than shake markets for a bit before they turned the printers back on?

And on that note—why would deflation be so bad? If prices actually fell, wouldn’t that mean people’s money gained value instead of losing it? Or is the real problem that deflation makes it harder for debtors (aka governments, corporations, and banks) to keep the game going?

So what am I missing? Or is this just one of those things where I’m supposed to accept the ‘models’ and not ask why we need permanent inflation in the first place?

Sorry if this post comes off assuming or arrogant. In the end I am asking due to lack of knowledge.

Everyone's talking about how his tariffs threats are meaningless beciase it will result in a trade way but what happens if he targets a single nation eg India, or Brazil..

Will that country's economy crash?

In the past a dominant currency was always used because it made international transactions far more convenient, the downfall of the dollar is often mentioned these days since the US chose to weaponise it.

Which makes people wonder what currency will become the new global one, China has the means but they don’t seem to have the will plus it would go against their trade model.

Brics is already doing internal trading with their own currencies while slowly dropping USD, which makes me wonder, why can’t a multi currency world trading system work?

In the past it was inconvenient but now thanks to the internet and central bank cooperation it really should be extremely easy to trade using different currencies, you need some, you can auto connect to a central bank and instantly get some for your trade.

Instead of needing to hold USD what if all transactions instead went through national central banks, which also helps remove the leeches in between aka middleman private banks. If central banks are interconnected when someone needs to make a trade with another country the money could simply go through both of these countries central banks.

So in the age of internet, what are the challenges to multi currency trading (ignoring the obvious regulations that will need to be set up for it to work)

Lets consider three scenarios.

1. 25% tariffs on Canada and Mexico, and 100% on BRICS.
2. 25% tariffs on everyone, except 100% on BRICS.
3. 25% tariffs on everyone.

Trump is a bit unpredictable, so we really don't know what will happen. However, what do we think will happen for each of these scenarios?

For the first few years prices will increase, but this will create opportunities everywhere there aren't tariffs.

Will Africa be a potential winner in all of this? Will automation in US and Europe beat manual labour in Africa/Asia? Will this weaken or strengthen BRICS? Feel free to answer other questions not asked here.

Full disclosure: I am not an economist and I know very little about economics hence me asking this question here.

From the data I was able to find, Andhra Pradesh has a GDP per capita of 270,295 INR in the 2023-2024 fiscal year and is projected to have one of 307,000 INR for 2024-2025.

As of late 2024, India had a PPP conversion factor of 20.29 though now it is 20.66. If my understanding is correct, this means that one international dollar is worth 20.66 rupees. This would put the GDP PPP per capita at between 14,800 USD and 15,000 USD but there’s one major issue:

This figure(the conversion factor) is for India as a whole(rather than for individual states) so the actual value may be lower or higher for Andhra Pradesh depending on the cost of living, but I’m not sure which.

On one hand, AP has a per capita income 135% of the national average which might mean that the cost of living is higher but, in the other hand, it has a relatively low urbanization rate.

That being said, what would you estimate it to be based on your knowledge of economics?

$10,000? $12,000? $16,000?

I understand the common concept of less spending = less demand, etc. However, the US Funds rate influences a banks decision making on what a competitive and profitable rate that security should be serviced at.

Banks don't lend money for groceries and PlayStations, I'd assume these are items an average consumer would likely purchase with cash, maybe credit if they'd like.

With most mortgages and other bank loans being fixed rate. How exactly does raising the Funds rate address the price increases on staple and discretionary goods? The rates are locked so mortgagors still remain with the same purchasing power before the increases. Also, if consumers who were considering purchasing a home are no longer interested, wouldn't that mean they've now retained more of their income to use for more spending?

Just curious what item specifically the Fed is trying to have an impact on and it's causality in the market.

Thank you

So Trudeau threatens to retaliate against Trumps tariffs with ones of our own. Why? Liberals have argued that tariffs just damage your own economy, Americans would have to pay 25% more for Canadian imports. Sure, tariffs damage the Canadian economy too by shifting consumer demand. Less Americans will buy Canadian goods if it’s 25% more than American ones. Why then would it be sound policy for liberals to retaliate with tariffs of their own?

Can you recommend book or article from trusted and respected in scientific circles source about exonomical consequence of black plague of 14th century. I want not only known historical narratives but rather real consequences in numbers and institution changes. If you have link to book about justianian plague or anything related to topic in asian part of world I'm also interested. It's not homework or so I'm adult so book can be as difficult to understand in both math and theory as you want.

Like the shortage of eggs and rising egg prices in the US. Can't the govt source eggs cheaply from other countires, sell it in reasonable prices and use the profits to create some fund for local eggs producers benefits?

Im no economist, but it feels like there is a sentiment that there is a very fine line keeping this economy machine going, and maybe due to new policy changes, finally possibly leading to a collapse? It feels like any small inconvenience, (deepseek ai just last week) makes everybody panic. Would people be willing to keep investing in a downwards economy?

What degree of minimum training is necessary to make a job count as semi-skilled labor instead of unskilled labor?

Also, if a job that doesn’t practically speaking require a lot of training is gate-kept behind a bachelor’s degree then does it make it a skilled laborer job even if it can practically speaking be done by a semi-skilled or unskilled laborer?

I’m especially interested in what economists have learned in terms of monetary policy, handling recessions, and inflation.

If there was mass famine and unemployment in the USA would the billionaires lose their wealth because there would no longer be people other than equally wealthy people buying their services?

What if their wealth was tied in speculation rather than material resources?

Would their wealth fall like a house of cards as the people beneath them became poor?

Or would it be like medieval times where billionaires just become like Kings and trade with other billionaires? Would it be like a dictatorship in Africa where a family rules the country and everyone else lives in poverty?