A link to a claim on reddit with no citation. Not saying it's wrong but it's certainly not a quality post.
Here's an alternative: https://www.cnbc.com/2020/08/05/the-ballooning-money-supply-...
That should probably be the submission's link.
The ballooning money supply may be the key to unlocking inflation in the U.S.
21–30 of 319 posts
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#22People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
Yeah, maybe a gallon of milk did not increase that much. But did you see prices for houses? for education? for cars? for entertainment? even high-end electronics? Yes, for all those categories there are other (even more important) factors than inflation, but overall, we see a growth much larger than CPI
The prices for these things did not go up because the fed gave people stimulus checks to pay for their daily needs.
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#23The fed has pumped 2.3 trillion dollars into the economy in the past six weeks....
I don't see how the dollar won't crash eventually. Why would foreign countries still buy US bonds?
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#24People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
Why would this money increase inflation? It wasn't earmarked for consumer spending in the first place.
This exactly. Money was pumped into a deflationary environment.
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#25People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
Yeah, maybe a gallon of milk did not increase that much. But did you see prices for houses? for education? for cars? for entertainment? even high-end electronics? Yes, for all those categories there are other (even more important) factors than inflation, but overall, we see a growth much larger than CPI
I'm having a hard time parsing your comparison; the prices for houses and education are out of control, the prices of cars rise rapidly but are mostly driven by the evolving conception of what cars are, entertainment and electronics seem historically cheap. Was your intent to say that all of these have rapidly increasing prices?
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#26People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
Why would this money increase inflation? It wasn't earmarked for consumer spending in the first place.
How do you, or the Fed in this case, earmark where a dollar goes? Paying interest in excess reserves is the only mechanism I've heard for them to keep money "locked up." Will that continue forever? What's the point of increasing the money supply if not to let it circulate?
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#27The fed has pumped 2.3 trillion dollars into the economy in the past six weeks.... I don't see how the dollar won't crash eventually. Why would foreign countries still buy US bonds?
Because the dollars have not been permanently pumped into the economy, and the world has faith that the Fed will shrink its balance sheet.
Printing money and lending it out, and then burning the money when it's repaid, is very different than printing money and using it to buy goods and services.
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#28People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
The people who continue to jumble up inflation by its consumer defenition with the huge expanding of the amount of us dollars are only shooting their own wealth and anyone who listens to them's wealth in the foot.
All you have to look at is stocks and home real estate to see that assets are ballooning no matter how cheap a dozen of eggs stays.
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#29People keep predicting inflation, but it remains stubbornly below the Fed's target rate of 2%, which is itself low compared to 20th century averages. https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
CPI is not inflation. In fact, even CPI itself is not the same as it was before... According to 1980 CPI metrics, today's consumer price inflation is closer to 10% per year.
If you consider stocks and other assets, real inflation is even higher. Banks just manipulate the numbers and statistics to make things seem better than they are.
Hiding the inflation numbers is lucrative because it gives banks a free pass to print more money.
The elite love tech stocks, cryptocurrencies and other assets which are in limited supply because they provide a mechanism to absorb and delay CPI inflation. Those limited supply assets just soak up most of the newly printed currency so that it doesn't leak into the economy and cause CPI increase... That's why P/E ratios of tech stocks are ridiculously low. But it's just delaying the inevitable CPI inflation.
Eventually the value of stocks become completely detached from earnings to the point that it's no longer possible to justify the valuations based on earnings (or even the most optimistic future earnings).
This is why Bitcoin and other pure scarcity assets like Gold and Silver are great because investors have absolutely no expectation of deriving earnings from these and they can never go bankrupt... There is no price point beyond which the value of these scarce assets cannot be justified.
Bitcoin, other cryptocurrencies and other scarce non-productive assets can always be justified at any price point because their entire premise is that the monetary system is a pyramid scheme. The higher the price of Bitcoin, the more justified it becomes in its assertion that the system is a pyramid scheme and the higher its valuation.
Re: The ballooning money supply may be the key to unlocking inflation in the U.S.
#30The fed has pumped 2.3 trillion dollars into the economy in the past six weeks.... I don't see how the dollar won't crash eventually. Why would foreign countries still buy US bonds?
Because what's the alternative to US treasuries? Everything else in the world is either more unstable or offering zero yield.