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Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

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Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#21

Post by Geee »

addicted wrote: post #14
choxi wrote: post #6

A lot of people say there’s no such thing as asset inflation [1] and I find that very confusing. Hypothetically, if we add $1T to the economy and everyone invests it into stocks, is that not inflation? I guess economists say it’s not, but it feels like a pedantic argument about assets being “overpriced” not “inflated”. I think our current method of measuring inflation against the CPI is nonsense, the basic premise th…

If you wanna redefine inflation away from economists mean to a more colloquial meaning of the word then sure, that’s inflation. But it also doesn’t tell you anything.

How doesn't it tell anything? To me it tells that the rich are getting richer, and the poor are getting poorer. It's a scam basically.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#22

Post by marricks »

choxi wrote: post #6

A lot of people say there’s no such thing as asset inflation [1] and I find that very confusing. Hypothetically, if we add $1T to the economy and everyone invests it into stocks, is that not inflation? I guess economists say it’s not, but it feels like a pedantic argument about assets being “overpriced” not “inflated”. I think our current method of measuring inflation against the CPI is nonsense, the basic premise th…

The general public cares a lot more about the price of bread than the price of Google's stock, so I'd say economists are reasonable on this one.

If and when that money injection moves around to affect the price of bread will be quite important though.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#23

Post by ta988 »

Geee wrote: post #21
addicted wrote: post #14

Earlier quoted context omitted.

If you wanna redefine inflation away from economists mean to a more colloquial meaning of the word then sure, that’s inflation. But it also doesn’t tell you anything.

How doesn't it tell anything? To me it tells that the rich are getting richer, and the poor are getting poorer. It's a scam basically.

Everybody knows the captain lied.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#24

Post by choxi »

kgwgk wrote: post #9
choxi wrote: post #6

A lot of people say there’s no such thing as asset inflation [1] and I find that very confusing. Hypothetically, if we add $1T to the economy and everyone invests it into stocks, is that not inflation? I guess economists say it’s not, but it feels like a pedantic argument about assets being “overpriced” not “inflated”. I think our current method of measuring inflation against the CPI is nonsense, the basic premise th…

> There’s changes in manufacturing, quality, brands, and market demand that aren't accounted for in the CPI. https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...

Interesting, thanks I didn't know about this. I'm still struggling with "If we add $1T to the economy and TSLA goes up 500%, how do we calculate the actual change in TSLA's intrinsic value?" I still don't see how the CPI is factoring this in, do you?

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#25

Post by zz865 »

choxi wrote: post #6

A lot of people say there’s no such thing as asset inflation [1] and I find that very confusing. Hypothetically, if we add $1T to the economy and everyone invests it into stocks, is that not inflation? I guess economists say it’s not, but it feels like a pedantic argument about assets being “overpriced” not “inflated”. I think our current method of measuring inflation against the CPI is nonsense, the basic premise th…

> A lot of people say “there’s no such thing as asset inflation” [1] and I find that very confusing.

I think most people agree there is a lot of asset inflation. Your link doesn't match your quote either.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#27

Post by zeckalpha »

nabla9 wrote: post #10

This is very confused "Internet economics" take on the issue. Money in band account that is not used is just a number. As Fed puts more money into the economy, the velocity of money decreases as the money is used less. https://fred.stlouisfed.org/series/M2V Federal Reserve can increase and decrease effective money supply as it pleases. Money supply does not determine the prices as we have learned over last two decade…

Instead of M1, would this make more sense as a currency adjusted chart, with USD against a basket of non-USD currencies (or gold)?

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#28

Post by xwdv »

So basically, if the Fed wasn’t printing money the rich’s wealth would have far greater intrinsic value, and they could be content with hoarding cash or making less risky investments, because there is little to no inflation to fight against.

But because of all the money printing, they have to run in place just to stand still, so they funnel their money into assets like stocks, which the general public also invests in and gets a benefit from the rising stock price. Meanwhile, the actual day to day items that the general public relies on to live that are tracked by the CPI are mostly unaffected by this.

Brilliant!

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#29

Post by zeckalpha »

core-questions wrote: post #20
Wolfenstein98k wrote: post #4

Oversimplified, but a very good visual representation of the scale of recent money-printing. MMT is being tried in realtime, even as the debate roundly defeats it.

Have you seen any solid, readable critiques anywhere I could read?

Ray Dalio has been writing a series on this.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#30

Post by atombender »

YuriNiyazov wrote: post #3
sf_rob wrote: post #2

Why would you adjust for usd money supply? The only reason my (uninformed) self sees is that it’s arbitrary but fits a fiscal Hawk narrative. Fwiw I’m worried about inflation, but this seems uninteresting.

The claim is that there is an asset bubble. In other words, stocks and real estate are being inflated, whereas the products that constitute the traditional measure of inflation (basket of goods with bread milk and eggs in it) are not. This attempts to show the “real” inflation so to speak.

CPI does show significant inflation [1] among things like dairy (3.8%) and meat/fish (5.1%). But it's offset by lower energy prices and airline fares. As a result, the overall increase from Jan 2020 to Jan 2021 was just 1.4%.

[1] https://www.bls.gov/news.release/pdf/cpi.pdf

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