Keynesianism: Blessings for the powerful, burden for everyday life

Keynesian economic policy is often praised as a panacea against recessions and crises. But their actual impact on the lives of ordinary citizens is less rosy than governments and economic experts believe. The basic idea that government demand keeps the economic wheel on the move ignores the consequences for those households who every euro twicehave to turn. The truth is: whenever governments act like a Keynesian model, inflationary pressure is growing on those who are already struggling.

State demand – the engine for price increases

When politicians increase government spending, the overall economic demand is artificially fueled. The effect appears positive on paper: Farms are being used, consumption and investments are increasing. But as soon as demand exceeds supply, the price pressure begins. Companies adjust prices upwards. The result is noticeably increasing living costs, especially with thingsof daily needs. The affluent groups can cope with it – but for average households this means a gradual loss of purchasing power.

Money glut and spiral of consumption – too much of a good thing

Expansional fiscal policy and a loose monetary policy in combination lead to the money supply increasing and the money circulating faster. The result: prices continue to come under pressure. Even middle-income groups notice that with additional money, more goods are not automatically created in the market. You can see this in particular where supply chains are stuck and goods are not sufficientare available. The result is a situation in which inflation does not result from the creation of money alone, but also from the over-demand for products.

Companies pass on costs

Inflation and cost increases are usually not a problem for companies – they simply pass on the new prices to the customers. Everyday life is making everyday life more expensive for normal consumers. What was previously considered affordable is now outside the monthly budget. If you have no reserves and no possibility to negotiate prices, you pay the bill for Keynesian impulse programs directly.The price spiral is the most effective for people who have to use a large part of their income for consumer goods.

Reinforce bottlenecks: Expensive import goods and delivery problems

In a globalized economy, many goods are tied to international supply chains. When states control demand based on the Keynesian model, bottlenecks quickly arise because the increased demands cannot be covered by production. The scarcer the preliminary products, the higher the prices rise – and the costs are passed on from top to bottom. average earnerare more heavily burdened than everyone else, since their budget leaves almost no leeway for price increases.

Self-enhancing inflation

Inflation is also a mental phenomenon: If consumers and businesses expect everything to be more expensive, they raise prices anticipatory. In the end, this drives consumer prices further up; The middle and lower incomes are always the losers because they get less in real terms than the statistics suggest.

Unequally distributed inflation load

While assets such as real estate and stocks are gaining nominal value, the majority of the population with low or middle incomes suffers from real losses. Inflation hits people unequally. If you have money, you can invest your assets in an inflation-proof manner, and those who have little will see less in the wallet every month. Keynesian politics reinforced by the concentration on demand thisSocial burden – and especially if the programs are not accompanied by long-term offer.

The price: declining purchasing power and social frustration

Keynesianism is a panacea in theory, but in practice it is a source of structural stress for all those who have to make do with fixed expenses and low wages. Real purchasing power is shrinking, consumption becomes luxury, and social tension is growing. Those who are most important for economic stability are most affected by price increases – aParadox, which is often veiled in public discourse. As long as Keynesian economic policy only stimulates demand instead of strengthening supply and cushioning price risks, inflation will not be a statistic for ordinary citizens, but will be a tangible reality – every day, at every cash register and with every new month on the bank statement.