Reflation

When the economy is down, some economists say it’s time to “reflate” the economy. Tom Brady is not one of them...and not just because he’s not an economist, if you catch our drift.

Reflation is when the government increases the money supply, reduces taxes, or both, in order to stimulate the economy. Along with the Keynesian notion of today, reflation assumes that spending, spending, spending is the answer, and that people will spend more if they have more money. When recessions hit, everyone’s afraid, so they end up saving more than spending, which just makes the recession even worse. Ironic, isn’t it?

Reflation is a broad term, encompassing both actions of the central bank (monetary policy, like raising the money supply) and Congress (setting tax law). It’s called “reflation,” because it’s less about what specifically is happening and more on the effect it will have, i.e. inflation.

When there’s the same amount of value in a system, but more dollars, that decreases the value per dollar. With more dollars and the same amount of stuff, prices increase. Inflation-nation.

Still, reflation isn’t a dirty word (like Deflategate). It implies that the government is trying to recover price levels to the previous long-term trendline, and not far above in the short-term, like with normal inflation. In their eyes, it’s justified...a “catching up” to where we were before more than anything else.

But the real question is: what do Tom Brady’s eyes say?