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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.

#281

Post by x87678r »

skybrian wrote: post #253
x87678r wrote: post #239

Inflation has been here for a while, house prices have exploded, education and healthcare are unaffordable too. Sure TVs, cars and clothes have reduced in price so now they really make a tiny impact on your budget. The real problem is CPI isn't reflecting the real world.

The CPI reflects what people actually pay for and a lot of people manage not to pay current prices. Many people bought a house a long time ago so their cost is lower. Also many people went to college a long time ago and aren’t spending anything on it now. Also, many people are healthy, and if they’re not insured then they’re not paying for healthcare. This is about real people in the real world, it’s just not necessa…

That's true, CPI is high for young people, CPI is low for boomers.

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

#282

Post by mrep »

claudeganon wrote: post #198
SonOfThePlower wrote: post #172

Earlier quoted context omitted.

FED buys MBSes and bonds. FED does not buy neither lettuce nor stocks.

The Fed has already been buying ETFs, which is about a hair’s breadth away from buying stocks. I don’t doubt that they’ll buy stocks to prop up investors if the current stimulus proves ineffective.

Barely. They are only buying corporate bonds and the sum total of "Includes non-marketable U.S. Treasury securities, supranationals, corporate bonds, asset-backed securities, and commercial paper at face value" is 85.274 billion or a max of 1.2% of their asset sheet [0].

[0]: https://www.federalreserve.gov/releases/h41/current/h41.htm

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

#283

Post by david927 »

mrep wrote: post #278
anm89 wrote: post #242

Earlier quoted context omitted.

This is exactly right. People love to claim that we can print unlimited money because we are the reserve currency, yet the entire underlying collateral of the international trade system that preserves this is international us treasury repo markets (eurodollars), which becomes totally untenable as that becomes a negative carry position with real negative yields. The further we go down that line, the more attractive de…

And go where? European central bank assets are at 53.1% of GDP, Bank of Japan assets are at 125.7% of GDP, and the US FED is at 34.4% of GDP [0]. But hey, you could go with the chinese yuan, they "only have a 36% assets to GDP ratio" if you trust them. [0]: https://www.yardeni.com/pub/peacockfedecbassets.pdf

That's been the story for a while, right? It was the reserve currency. Where else are you going to go? And what I'm saying is that I think you'll see in the coming year or two how it plays out.

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

#284

Post by marvin »

marvin wrote: post #142
jgalt212 wrote: post #104

Earlier quoted context omitted.

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.

A follow-up, which was less obvious to me than it should have been: Are we sure that central bankers really want CPI inflation, when they choose not to use such an obvious path to it?

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

#285

Post by anm89 »

mrep wrote: post #278
anm89 wrote: post #242

Earlier quoted context omitted.

This is exactly right. People love to claim that we can print unlimited money because we are the reserve currency, yet the entire underlying collateral of the international trade system that preserves this is international us treasury repo markets (eurodollars), which becomes totally untenable as that becomes a negative carry position with real negative yields. The further we go down that line, the more attractive de…

And go where? European central bank assets are at 53.1% of GDP, Bank of Japan assets are at 125.7% of GDP, and the US FED is at 34.4% of GDP [0]. But hey, you could go with the chinese yuan, they "only have a 36% assets to GDP ratio" if you trust them. [0]: https://www.yardeni.com/pub/peacockfedecbassets.pdf

This is correct but it is not the whole picture. If all the existing options that look like the previous setup are bad, you might find that whatever setup we move to, does not look like the old setup.

There is no law of physics that there has to be one underlying global reserve fiat currency. That is basically a historical oddity that was a result of our huge creditor position vs Britain at the end of WW2.

Going forward look for a basket of currencies, which could include gold, and potentially even crypto. Of course this is speculation.

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

#286

Post by anm89 »

david927 wrote: post #283
mrep wrote: post #278

Earlier quoted context omitted.

And go where? European central bank assets are at 53.1% of GDP, Bank of Japan assets are at 125.7% of GDP, and the US FED is at 34.4% of GDP [0]. But hey, you could go with the chinese yuan, they "only have a 36% assets to GDP ratio" if you trust them. [0]: https://www.yardeni.com/pub/peacockfedecbassets.pdf

That's been the story for a while, right? It was the reserve currency. Where else are you going to go? And what I'm saying is that I think you'll see in the coming year or two how it plays out.

I personally see it being a slow death that drags out over a decade, not a big sudden event that happens in the next two years but I agree with your premise.

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

#287

Post by [deleted] »

blackflame7000 wrote: post #175
nitrogen wrote: post #170

Earlier quoted context omitted.

The people who are working in the post-it note and makeup factories want houses too, you know.

The argument wasn't that they had to invent something to buy a house, it was that it's not a hopeless situation where there is no class mobility. Someone substituted ASSETS for HOUSES for some reason but its not the same thing. ASSETS are what allow some people to have an advantage over others in business. So many babies on these forums whine about their inadequacies instead of bettering themselves. Making my imagina…

[deleted]

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

#288

Post by triceratops »

blackflame7000 wrote: post #143
triceratops wrote: post #89

Earlier quoted context omitted.

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 so…

I think you don't understand the difference between "anyone can" and "everyone can". For every hit YouTube makeup tutorial there are a thousand failures.

> You seem to somehow believe that incumbents ALWAYS win

Did you mean to respond to someone else? Where did I say that?

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

#289

Post by leetcrew »

FooHentai wrote: post #244
leetcrew wrote: post #219

Earlier quoted context omitted.

> Hoarders/scalpers are not aiding price discovery, they are manipulating the price by artificially changing supply or demand. They don't have to do so sustainably either. one could reasonably argue otherwise. let's take the example of toilet paper in the early weeks of quarantine. with or without the action of scalpers, such a massive shift in demand was going to cause toilet paper to go out of stock regardless. wit…

Hinges on what you believe would have happened to stock that scalpers bought, had they not done so. It may have left enough on the shelf for the would-be customers of scalpers to meet their needs. On the other hand, that leftover stock may have been obtained by panic buyers. On a hunch I'd say a scalper would purchase more off the shelf than a panic buyer, because with the goal they have in mind they a) want a large…

that's why I used the toilet paper example. I don't think scalpers have enough storage space to clear an entire region's stockpile of tp. I did read a story of a guy who did exactly that with hand sanitizer, literally bought the entire supply from every store within 100 miles. that does change the analysis.

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

#290

Post by dnautics »

RobertoG wrote: post #168
dnautics wrote: post #154

Earlier quoted context omitted.

do you always trust the government's definitions of things? Suppose the government defined "eastern time zone" to be a geographical area. And you live in western indiana, and commute to work in chicago. Suppose the government defined "torture" to not include "waterboarding".

That's not my point. My point is that if we don't agree in a definition of inflation, how can we have a rational discussion? And there is a clear textbook definition of inflation.

Right but that definition has drifted. That's not necessarily a problem in and of itself but in the process of drifting in this case it has obscured the original definition, which now is orphaned without a label. The problem therein is that it's left the discourse; since the subject of the old definition is more likely to precede and be a cause of the subject of the new definition, it seriously muddies the discourse and arguably the modes of thinking about the solution.
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