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Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
11–20 of 132 posts
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#12I don’t understand this.
My current portfolio is, say, 30 times my yearly living expenses. All I care about is that it will continue to grow in a way that stays at/above this ratio, so I will be able to retire early.
The pace at which my yearly expenses inflate is much more correlated to CPI than money supply. My expenses haven’t changed much between 2019, 2020 and 2021 (projected), despite the large money printing, and my consumption pattern has been the same.
So, why should I care? Genuine question.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#1310/10
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#14A 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.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#15A 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…
Of course there’s asset inflation. Inflation is not uniformly distributed across all industries and markets, and sometimes it takes a very long time for imbalances to dissipate.
It’s similar to how certain industries can crash while others can boom at the same time. A non-uniform economy is such a basic and intuitive concept, it’s hard to believe it needs to be argued to the average layman.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#16I don’t understand this. My current portfolio is, say, 30 times my yearly living expenses. All I care about is that it will continue to grow in a way that stays at/above this ratio, so I will be able to retire early. The pace at which my yearly expenses inflate is much more correlated to CPI than money supply. My expenses haven’t changed much between 2019, 2020 and 2021 (projected), despite the large money printing,…
The point isn’t that people with assets should care. The point is that people who hold dollars should care because eventually they’ll need to convert those dollars into assets.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#17I don’t understand this. My current portfolio is, say, 30 times my yearly living expenses. All I care about is that it will continue to grow in a way that stays at/above this ratio, so I will be able to retire early. The pace at which my yearly expenses inflate is much more correlated to CPI than money supply. My expenses haven’t changed much between 2019, 2020 and 2021 (projected), despite the large money printing,…
The point isn’t that people with assets should care. The point is that people who hold dollars should care because eventually they’ll need to convert those dollars into assets.
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Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#18I don’t understand this. My current portfolio is, say, 30 times my yearly living expenses. All I care about is that it will continue to grow in a way that stays at/above this ratio, so I will be able to retire early. The pace at which my yearly expenses inflate is much more correlated to CPI than money supply. My expenses haven’t changed much between 2019, 2020 and 2021 (projected), despite the large money printing,…
> The pace at which my yearly expenses inflate is much more correlated to CPI than money supply. My expenses haven’t changed much between 2019, 2020 and 2021 (projected), despite the large money printing, and my consumption pattern has been the same.
What were the changes in your health insurance premiums(employer+employee)/deductible/oop max?
As an example, my parents’ deductible went from $3,450 to $6k, monthly premium from $1,137 to $1,232 between 2020 and 2021.
My expenses consistently go up quite a bit, far more than any government number. Both for my businesses and at home. My taxes also reliably go up more than CPI figures. Land has especially gone up.
Also, if you were planning on purchasing a home in any popular area of the past 10+ years, the lack of price increase in food or tech would have been meaningless in the face of land price increases.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#19Why 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.
You have to adjust nominal returns with something, and exactly what you use is a matter of style and taste. Exactly what adjuster to use is always arbitrary. Money supply is a lot simpler than inflation, because something like M2 is a pretty simple sum while inflation is a weighting that is a bit hard to follow the implications of (the handbook for how to calculate inflation is a bit of a doorstop, from memory). Plus…
Friedman was right when he said "inflation is always and everywhere a monetary phenomenon."
Assume doodads are $1 today. If tomorrow money supply is doubled, they will be $2.
A reasonable definition of the intrinsic value of a stock market index is the discounted net present value of all the profit streams of all the firms included in it. If it is 100 today, and the money supply doubles, it will be 200.
What good are the returns to your investments? At some points, those returns are to be spent on real stuff. If your returns went up by 100% but the prices of the stuff you spend money on went up by 200%, the returns are not that good, to put it mildly.
Over 2020 and continuing in to 2021, governments around the world have chosen to burn GDP, and lower the future growth trajectories of their economies. Ceteris paribus, that would mean the intrinsic value mentioned above will be much lower. Given the expansion in the money supply, asset prices will be inflated (i.e. keep going up despite physical reality). As governments fear asset price crashes, inflationary policies will be their refuge.
See stagflation in the 70s and the so-called inflation-unemployment tradeoff.
> The theory which has been guiding monetary and financial policy during the last thirty years, and which I contend is largely the product of such a mistaken conception of the proper scientific procedure, consists in the assertion that there exists a simple positive correlation between total employment and the size of the aggregate demand for goods and services; it leads to the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level. Among the various theories advanced to account for extensive unemployment, this is probably the only one in support of which strong quantitative evidence can be adduced. I nevertheless regard it as fundamentally false, and to act upon it, as we now experience, as very harmful.[1]
[1]: https://www.nobelprize.org/prizes/economic-sciences/1974/hay...
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#20Oversimplified, 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?