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The ballooning money supply may be the key to unlocking inflation in the U.S.

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Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#61

Post by btilly »

foota wrote: post #33
scsilver wrote: post #28

Earlier quoted context omitted.

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.

I mean, to some degree I'm not sure how much it matters. If there's some delayed response to the asset inflation then it'll be concerning, but why are inflated asset prices an issues in and of themselves?

It means that if you don't already own those assets, then you have no hope of ever owning said assets.

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#62

Post by BitwiseFool »

as_keyof_typeof wrote: post #4

Is anyone (who is paid/lives in the US) concerned about the future value of USD? A lot of my friends are saying I should be investing in cryptocurrencies for future safety, but I don't see those as very stable, so I'm hesitant to put my savings into it.

I am, and have been dedicating about 20% of each paycheck directly into Bitcoin.

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#64

Post by pauldickwin »

rthomas6 wrote: post #44
scsilver wrote: post #28

Earlier quoted context omitted.

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.

Well, for stocks, the P/E ratio is also extraordinarily high, so it's not inflation there. At least not mostly. The stock market is just overvalued and there will be a correction at some point in the future.

I am just wondering if the PE ratio became extraordinarily high because high growth tech companies now are a major part of all of the large indices. Did you ever think about that?

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#65

Post by jariel »

disown wrote: post #31
whoisburbansky wrote: post #9

Earlier quoted context omitted.

Alternatively, it might turn out to be a pretty good counterbalance to China's tampering with their money supply to keep the yuan artificially much cheaper than it would be in a free market.

Everybody "tampers" with their money supply. And there is no such thing as a "free market". Not in currency, international trade, etc. All markets are controlled and manipulated. It's like every parrots what they hear. Edit: Oh god. Here comes the "CCP" nonsense. All countries have tight capital controls. And the tight capital control was part of the bargain for trade between china and the US. It's not like they did…

So this isn't helpful because a) there is 'tampering' but of different degrees and b) the 'freedom' of a market is also one of degrees.

Just because there's no such thing as a 'free market' doesn't mean that some are not more open than others.

The Euro is the 'least tampered' big currency arguably because they have 25 nations each of whom would scream if the other tampered, meaning almost by definition it has to have integrity. The USD somewhat less so, but in times of war or crisis it will be. China has a fully politicized currency.

The OPs point is actually valid - any weakening of the USD might more accurately reflect what currencies might look like within similar Fed regimes. So long as it's not a crash it might help the US to soften a little.

The paradox is, in a 'global' time of crisis ... people actually seek USDs! So when the US eventually tries to push that weird dynamic to a tipping point, which we are arguably already doing ...

Welcome to the New World Monetary Order - value can hardly be measured in currency because it's made up, so get your hands on something else ... like real-estate! Which would explain a few bubbles.

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#66

Post by nickles »

chrischattin wrote: post #52
foota wrote: post #33

Earlier quoted context omitted.

I mean, to some degree I'm not sure how much it matters. If there's some delayed response to the asset inflation then it'll be concerning, but why are inflated asset prices an issues in and of themselves?

Food, shelter and transportation aren't included in the CPI. Yet those things are essential for quality of life. Inflation is the reason you can't own a house and support a family on a single income anymore. There are a couple other indexes out there that track total cost of living that are pushing ~10% per year inflation right now.

> Food, shelter and transportation aren't included in the CPI.

This is wrong. Food, shelter, and transportation are all included in the basket used to compute CPI. [0]

> The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services).

[0] https://www.bls.gov/cpi/questions-and-answers.htm

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#67

Post by 0xfaded »

thisiscorrect wrote: post #26
imtringued wrote: post #20

Earlier quoted context omitted.

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?

Historically that would have been public works employment through infrastructure investment.

The government could have printed a bunch of money to build a giant nuclear is solar plant, and then have a revenue generating, publicly owned asset at the end of it. Instead the government printed the money to prop up existing asset prices.

Just like increasing a company's cap table, there's nothing wrong so long as the new money is converted into a new asset of value that remains in the company's balance sheet.

In fact, a well managed money printing event should dilute private wealth and replace it with public wealth, which is the sort of green new deal I support.

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#68

Post by darawk »

scsilver wrote: post #28
apsec112 wrote: post #12

People 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.

Asset prices are being inflated by the low risk-free rate. That's why you see asset prices rising while CPI remains flat.

Re: The ballooning money supply may be the key to unlocking inflation in the U.S.

#70

Post by rllearneratwork »

rory wrote: post #34
rllearneratwork wrote: post #18

Earlier quoted context omitted.

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

All the things you enumerated are included in the fed's calculation of CPI. Are you arguing their weightings are bad?

yes
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