A good if overly simplistic model of inflation & recession etc... is building a rocket in the game Factorio
The rocket isn't necessarily intrinsically useful for everyone but is important because it is the thing that pulls forward all the demand for the all the commodities and all the intermediate production.
Without the rocket there would be no factories, no jobs, no meaning. The factory MUST run to keep everyone's livelihoods going even though the rocket isn't relevant day to day. It also incentivizes things like innovation, efficiency, etc...
However, building TWO rockets at the same time puts such a resource demand that there start to be shortages and breakdowns. Parts of the factory start shutting down. People are left jobless. One of the most serious is if the factory breakdown cascades to the power system (e.g. money) which causes the entire factory to breakdown.
It's a tough job to figure out how to restart the factory incrementally. Meanwhile everyone is left jobless while this is being debugged.
So there's a balance between how many rockets have to be simultaneously built. If there's too little demand, the factories are idle. Capital rots and there are less jobs. If there's too much demand, then shortages and price spikes will cause an even more serious breakdown.
What gold/bitcoin/austrian philosophers understand is that the price of money HAS to reflect market reality. E.g. in a Factorio game all bottlenecks are important to production but if you mess up the energy bottleneck, then the whole thing breaks down. Having a hack like "manually move a few tons a coal every hour" and forgetting it once is catastrophic. The market conditions have been manipulated with buffer.
The Fed & other central banks are usually concerned primarily with the layers of production that affect the most people. E.g. food and gas are critical. However when the "power supply" is threatened they need to start doing things like bailing out banks even if it seems insane to be focusing on this when people can't afford food.
The rocket isn't necessarily intrinsically useful for everyone but is important because it is the thing that pulls forward all the demand for the all the commodities and all the intermediate production.
Without the rocket there would be no factories, no jobs, no meaning. The factory MUST run to keep everyone's livelihoods going even though the rocket isn't relevant day to day. It also incentivizes things like innovation, efficiency, etc...
However, building TWO rockets at the same time puts such a resource demand that there start to be shortages and breakdowns. Parts of the factory start shutting down. People are left jobless. One of the most serious is if the factory breakdown cascades to the power system (e.g. money) which causes the entire factory to breakdown.
It's a tough job to figure out how to restart the factory incrementally. Meanwhile everyone is left jobless while this is being debugged.
So there's a balance between how many rockets have to be simultaneously built. If there's too little demand, the factories are idle. Capital rots and there are less jobs. If there's too much demand, then shortages and price spikes will cause an even more serious breakdown.
What gold/bitcoin/austrian philosophers understand is that the price of money HAS to reflect market reality. E.g. in a Factorio game all bottlenecks are important to production but if you mess up the energy bottleneck, then the whole thing breaks down. Having a hack like "manually move a few tons a coal every hour" and forgetting it once is catastrophic. The market conditions have been manipulated with buffer.
The Fed & other central banks are usually concerned primarily with the layers of production that affect the most people. E.g. food and gas are critical. However when the "power supply" is threatened they need to start doing things like bailing out banks even if it seems insane to be focusing on this when people can't afford food.