Billionaires are necessary because they take money out of circulation, providing some deflationary pressure to the monetary system. If we were to distribute all their wealth, we’d have such high inflation that the entire economy would collapse.
- A Reddit brained economics teacher
We can safely say that the productive capacity of China has risen as well. Hence the amount of goods has matched the amount of wages in the system. Goods remain cheap relative to wages because Chinese supply chains can meet the demands.
This is completely unlike examples of hyperinflation where government has injected cash into an economy that does not have the capacity to ramp up production. E.g. printing more money to give to starving welfare recipients doesn’t increase the production of food. Hence inflation.
What’s hilarious about knfrmity’s teacher is the idea that the billionaires are sitting on piles of cash. They own assets. Those aren’t that liquid. Distribution of their wealth would put more assets onto the market, not more cash. Hence it’s not going to be a cause of inflation.
The determinant being productive capacity rather than money supply here. It is those who ultimately control the means of production that help set the prices.