Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

cnbc.com

Post reply on HN
Print view View original

141–150 of 319 posts

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

#141

Post by User23 »

SonOfThePlower wrote: post #107
JSavageOne wrote: post #95

Earlier quoted context omitted.

Functionally there's little to no difference between what you've described and what is colloquially known as "money printing". You've essentially just redefined "money" to include U.S. treasuries and mortgage-backed securities, and then stated that it's just an asset swap and not money printing. You can use whatever terminology you want, but at the end of the day, the Federal Reserve is creating money out of thin air…

No, FED does not print money - bank reserves are not legal tender. If they had printed money, inflation would have skyrocket. My only question is why banks agree to this deal: exchanging U.S. treasuries for bank reserves (which they only can use as a collateral for lending) ?

The Bureau of Printing and Engraving prints money, but Federal Reserve Notes are in fact a claim on bank reserves. It's just when you deposit them at your bank you don't get reserves, they instead create a bank deposit for you and a liability for them and then add the reserves you just gave them to THEIR account.

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

#142

Post by marvin »

jgalt212 wrote: post #104
smallnamespace wrote: post #77

Earlier quoted context omitted.

Bank reserves are counted in M2, but US Treasuries and other highly liquid assets aren't. The fact that these are functionally the same to a bank is ignored (or deliberately obscured). I mean, this is just common sense: if M1 or M2 expansion were printing money, then a rapid doubling of M2 should cause CPI inflation. But it doesn't.

I think you're sort of trying to have it both ways here. The Fed has been printing money for 12 years in hopes of increasing CPI. But real people, who buy the stuff in the CPI basket, don't have M2, so no CPI bump. It took a long time for central banks to realize this. And even astute minds like John Paulson got tripped up on this one. Starting in 2009, he bought as much gold as he could because he feared rampant CPI…

To get CPI up, why don't they just deposit money straight into ordinary people's bank accounts? I think that would do the trick.

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

#143

Post by blackflame7000 »

triceratops wrote: post #89
blackflame7000 wrote: post #81

Earlier quoted context omitted.

No you just need to be ingenuitive and solve a problem the world needs solving. Look at Jeff Bezos 30 years ago.

To buy a house, just start one of the largest companies in history. Easy-peasy.

You can literally buy a house by making a YouTube video now a days. It kinda is easy-peasy. Go look at all those TikTok stars. Your ancestors lived in caves be thankful you can even live in a house. It would be much harder to do that without Banks like the FED.

The problem is that you think you need to solve a grand problem instead of inventing something simple like a post-it note or a makeup tutorial. You seem to somehow believe that incumbents ALWAYS win. That is not true. Ingenuity with a superior product is what upends the market, shifts and creates new wealth.

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

#144

Post by neffy »

smallnamespace wrote: post #77
neffy wrote: post #74

Earlier quoted context omitted.

I'm sorry, that is flat out incorrect. They are printing asset and liability money this time around. Observe: https://fred.stlouisfed.org/series/M2 The is (give or take money market funds) the total sum of money in US bank accounts. Compare and contrast with 2008 for example, where the asset money creation was restricted to the asset side because it was used to take dodgy loans out of the banking system and put them…

Bank reserves are counted in M2, but US Treasuries and other highly liquid assets aren't. The fact that these are functionally the same to a bank is ignored (or deliberately obscured). I mean, this is just common sense: if M1 or M2 expansion were printing money, then a rapid doubling of M2 should cause CPI inflation. But it doesn't.

Bank reserves are strictly M0.

As for inflation -- it's a really slow system that we're looking at here, the inflation depends on where the money ends up, hence the stock market behaviour, but over time it will cause inflation elsewhere.

We look back at historical periods like Weimar, like 1929 as if they happened instantly. But to the people trapped within those moments, they happened day by day, slowly playing out. Irving Fisher is notorious not because he called an end to the crash in 1929, but because he repeatedly called an end to the stock market crash for the next two years.

It would take 3 years for the immediate effects triggered by the US crash in September 29 to play out, and arguably another 20 or more years for the longer term ones. The US money supply actually started shrinking 6 months before the crash as it happened. This is all just the beginning.

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

#146

Post by keeganpoppen »

diob wrote: post #60
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.

Right, I've posted this before, but long term wealth building is becoming too expensive for the average person. The only reason food hasn't become too expensive is wealthy people don't have a reason to go out and buy up all the food. They do, on the other hand, have reason to go out and invest. This is, however, starting to fall apart for goods that don't normally have reason to be bought up. In other words, folks wi…

> The only reason food hasn't become too expensive is wealthy people don't have a reason to go out and buy up all the food

sometimes i get the idle premonition that if they started trying to do this tomorrow they could do a shockingly good job, to the point that you could almost claim that the only thing holding together social order at this point is that they are not. not saying i believe this-- i don't even really lean this way ideologically-- but it is kind of a sobering thought because it seems plausible (well, to me at least). maybe this has been true at other points in history as well and things have gone fine...

and i don't mean in the "hire people with guns" sense, but literally just people following the letter of the law

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

#147

Post by User23 »

smallnamespace wrote: post #49

The Fed is only creating bank reserves, which does not create more money. Therefore, the Fed has not been printing money. When the Fed buys assets (government bonds, Fannies, etc.) from a bank, the bank gets back 'bank reserves', which are just a number in the bank's Federal Reserve account somewhere. Those reserves can't be lent out. The bank can make no change to its lending, because it's a one-to-one swap (highly…

Everything you say is correct as I understand things, but some elaboration is in order. "Printing money" is a factually inaccurate rhetorical term meant to emotionally manipulate people with visions of Zimbabwe or Weimar Germany, but fact is that under current law the Federal Reserve and the US Treasury can work in concert to add net financial assets to the private sector's aggregate balance sheet without new fiscal policy. For example while the Fed isn't buying public company equity directly yet, the bond market provides a transmission mechanism for a company to create otherwise worthless or at least discounted equity and sell it at face value to the Fed. Sure from a balance sheet perspective it all balances, because that's how bookkeeping works, but as a practical matter it means more money available to the private sector.

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

#148

Post by [deleted] »

freeone3000 wrote: post #115
SonOfThePlower wrote: post #107

Earlier quoted context omitted.

No, FED does not print money - bank reserves are not legal tender. If they had printed money, inflation would have skyrocket. My only question is why banks agree to this deal: exchanging U.S. treasuries for bank reserves (which they only can use as a collateral for lending) ?

Inflation (in the consumer goods sense) only happens when the value of money goes down for the average person. The price of lettuce isn't going to rise because the fed isn't buying lettuce with faerie money, they're buying securities. And the stock market has gone up and to the right, despite all logical indicators on the ground indicating it should go solidly opposite. Securities are hugely inflated.

[deleted]

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

#149

Post by kube-system »

dahfizz wrote: post #76
alexjray wrote: post #23

The 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?

You only think the situation in America is bad because that's all you hear about. The current Federal Reserve balance sheet is 7 Trillion dollars, or 35% of the US GDP[1]. The current Eurosystem Bank balance sheet is 7.9 Trillion dollars, or 43% of the EU GDP[2]. If you're worried about pumping money into the economy, then USD is a much safer investment than EUR for you. [1] https://www.federalreserve.gov/monetarypol…

Japan's central bank's assets are 690 trillion yen... Their GDP is 505 trillion yen. 136% of GDP. Ouch.

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

#150

Post by david927 »

snarf21 wrote: post #38
alexjray wrote: post #23

The 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?

As long as we are the world's reserve currency we can do practically whatever we want.

I think what you're seeing is the end of that.
Post reply on HN