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Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
101–110 of 132 posts
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#102Earlier quoted context omitted.
My friends mostly care about house / rental prices, not bread or stocks. Rent compared to their salaries is the main thing that they look at when they get a job offer.
The fact that housing is more like stocks than bread is what's fucked up.
Everyone rich or poor can only eat so much bread, but you can always buy more stock or real estate. Supply is harder to increase as well.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#103Earlier quoted context omitted.
> But interest rates are at 0, so they can't drop anymore Interest rates are not at zero [0], and interest rates, and their targets, can go negative. [1] [0] target range is currently 0-0.25%, actual is 0.08%: https://apps.newyorkfed.org/markets/autorates/fed%20funds [1] https://www.investopedia.com/terms/n/negative-interest-rate-...
The fed funds rate are not interest rates writ large however. This is the interest rates banks pay to borrow reserves over a short term. The markets for longer dated securities (i.e. 10Y and 30Y) more accurately reflect interest. The 10 year is currently at 1% and the 30 year at 2%.
> The fed funds rate are not interest rates writ large however
They are interest rates and since they are essentially risk free, they ought to be roughly the floor of interest rates that aren't being subsidized by some other consideration.
> The 10 year is currently at 1% and the 30 year at 2%.
I would argue that 1% and 2% are even more clearly greater than 0% than is 0.08% (the recent effective federal funds rate), so that just reinforces the point, to the extent one agrees that they are the relevant interest rates, that interest rates are not currently at 0.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#104Earlier quoted context omitted.
Its not your job to convince me, but you've been unsuccessful at it. I care what the truth is, not for any particular side, so I should be easier to convince than many. Why would increasing monetary supply not cause inflation? I'm aware there is a group in macroeconomics that believes that, but I think they're crazy. Do you have anything to support your position?
It's not just the money supply, but the "velocity of money" [1] that matters. If the Fed prints 1 trillion dollars and gives it to me, but I keep it in my basement and never spend it, why would inflation be expected? The velocity of that money is zero, hence its impact on prices is zero. Inflation rises relative to the money supply multiplied by the velocity of money. [1] https://en.wikipedia.org/wiki/Velocity_of_mon…
But now you have 1 trillion dollars so my money is deflated at your whim to use it
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#105Earlier quoted context omitted.
It's definitely true that lower-income people spend a higher percentage of their income on groceries. But it's also true that the % of income spent on groceries on average has been dropping over time. Groceries may have made more sense as a metric when the CPI was invented than they do now. "Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from…
How does the growth and concentration of wealth in the hands of billionaires affect that data? An average doesn’t seem like a reliable stat in this context.
I don't think relatively few billionaries would effect this kind of average much mathematically.
But I'm not really sure how they calculate this number in the first place, the USDA page's only citation is "for more information contact", which is kind of lame. It seems likely that it's based on a survey sample though.
It makes sense to me though; we have whole categories of expense that our grandparents just didn't have, they had a lot less stuff than we have. But they needed about the same number of calories. (On the other hand, I bet average % of income spent on rent has gone up...)
Apparently Americans also spend less % of income on food than most other countries, which is kind of odd.
https://www.npr.org/sections/thesalt/2015/03/02/389578089/yo...
For this discussion, the reason it matters that less % of income is spent on groceries -- is that it makes a CPI based on groceries not as good a metric of relative buying power overall.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#106So basically, if the Fed wasn’t printing money the rich’s wealth would have far greater intrinsic value, and they could be content with hoarding cash or making less risky investments, because there is little to no inflation to fight against. But because of all the money printing, they have to run in place just to stand still, so they funnel their money into assets like stocks, which the general public also invests in…
Now do housing
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#107Earlier quoted context omitted.
Its not your job to convince me, but you've been unsuccessful at it. I care what the truth is, not for any particular side, so I should be easier to convince than many. Why would increasing monetary supply not cause inflation? I'm aware there is a group in macroeconomics that believes that, but I think they're crazy. Do you have anything to support your position?
It's not just the money supply, but the "velocity of money" [1] that matters. If the Fed prints 1 trillion dollars and gives it to me, but I keep it in my basement and never spend it, why would inflation be expected? The velocity of that money is zero, hence its impact on prices is zero. Inflation rises relative to the money supply multiplied by the velocity of money. [1] https://en.wikipedia.org/wiki/Velocity_of_mon…
And if that money is used to purchase financial instruments, say bonds, from investment banks and hedge funds, those funds then have money to put into other bonds or stocks, both of which have risen spectacularly in price.
The velocity of money may still be low in this case, but asset inflation happened.
It may be that the money hasn't trickled out into the real world in large enough quantities to cause inflation yet.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#108Here's the S&P 500 in "real money" that is, gold, over the past century: https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart I was looking at that earlier today to try to get a feel for if the stock market is really at record highs, or if it's just the Dollar and other major currencies that are just at record lows. Note, that massive crash on the chart after 1971 is the US abandoning the gold standard (where y…
But this isn't accurate either. Gold is highly correlated with interest rates. Why would I want to hold a rock that yields nothing if there are bonds that yield a real return? As of now we haven't hit a regime of negative real yields on long dated treasuries in the US. After being at ZIRP for decades with new inflation fears, I'd bet gold will continue to be punished as yields rise, so you may never see that same sig…
Stocks are highly correlated with interest rates too. For the same reason.
I think it's a pretty reasonable look at the value of stocks in something tangible.
Maybe you could compare the stock market to the price of a gallon of milk or something, but gold is a fairly natural choice.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#109This is very confused "Internet economics" take on the issue. Money in band account that is not used is just a number. As Fed puts more money into the economy, the velocity of money decreases as the money is used less. https://fred.stlouisfed.org/series/M2V Federal Reserve can increase and decrease effective money supply as it pleases. Money supply does not determine the prices as we have learned over last two decade…
Instead of M1, would this make more sense as a currency adjusted chart, with USD against a basket of non-USD currencies (or gold)?
You may be eluding to it but for others that don’t know, There is an index chart that measures the USD against a basket of non USD currency called DXY.
Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply
#110A 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…
The general public cares a lot more about the price of bread than the price of Google's stock, so I'd say economists are reasonable on this one. If and when that money injection moves around to affect the price of bread will be quite important though.
Given the nature of retirement funding in the US. A large portion of the general public cares about google and other stocks - they would not be able to afford their lifestyles without continued increases.