does it still look bad if you use a log scale?
Money Creation: 70% in the Last 12mo (Fed, M1, $)
11–20 of 53 posts
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#12Kings used to coin money, hand it out to the army and then collect taxes from the entire population that was paid in the same coin. The Fed creates dollars, hands it out to bankers and then the US gov't collects taxes from the entire population in the same dollars. Same strategy, different masters.
There is difference. King wanted the value of money stay stable or increase. Fed wants to reach 2% average inflation target but it keeps failing.
Can someone ELI5 why we want inflation?
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#13Hey HN Friends, I'm posting this because I was shocked when I saw this graph. I hadn't previously appreciated just how much of an unprecedented explosion in the money supply there'd been this year. In particular, it seems to quantify a lot of potential for long run inflation and a very expansionary monetary policy move required to prop up the economy during the pandemic. But I'm not an expert here; I'm hoping we can…
Keep in mind that “inflation” as defined by the fed doesn’t count food, energy and asset prices. Who can live a day without eating food, using energy for driving or powering appliances and finally paying for a place to live.
Basically I paid $76 at KFC the other day to feed 6 people. Inflation is here already but it doesn’t show up in the fed numbers.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#14Earlier quoted context omitted.
There is difference. King wanted the value of money stay stable or increase. Fed wants to reach 2% average inflation target but it keeps failing.
Can someone ELI5 why we want inflation?
Saving is bad because it slows down the economy. We need people spending their dollars. So a little inflations is like grease keeps the economic gears moving.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#15Hey HN Friends, I'm posting this because I was shocked when I saw this graph. I hadn't previously appreciated just how much of an unprecedented explosion in the money supply there'd been this year. In particular, it seems to quantify a lot of potential for long run inflation and a very expansionary monetary policy move required to prop up the economy during the pandemic. But I'm not an expert here; I'm hoping we can…
Keep in mind that “inflation” as defined by the fed doesn’t count food, energy and asset prices. Who can live a day without eating food, using energy for driving or powering appliances and finally paying for a place to live. Basically I paid $76 at KFC the other day to feed 6 people. Inflation is here already but it doesn’t show up in the fed numbers.
Keep in mind that “inflation” as defined by the fed doesn’t count food, energy and asset prices.
Yes, inflation does count all those things. At least if you regard housing as an asset (inflation of implied rent).
I mean the definition is public. Not like anyone is hiding anything.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#16Hey HN Friends, I'm posting this because I was shocked when I saw this graph. I hadn't previously appreciated just how much of an unprecedented explosion in the money supply there'd been this year. In particular, it seems to quantify a lot of potential for long run inflation and a very expansionary monetary policy move required to prop up the economy during the pandemic. But I'm not an expert here; I'm hoping we can…
Keep in mind that “inflation” as defined by the fed doesn’t count food, energy and asset prices. Who can live a day without eating food, using energy for driving or powering appliances and finally paying for a place to live. Basically I paid $76 at KFC the other day to feed 6 people. Inflation is here already but it doesn’t show up in the fed numbers.
> Keep in mind that “inflation” as defined by the fed
There is no such thing; the Fed doesn't define or measure inflation.
> doesn’t count food, energy and asset prices.
The primary inflation measures from the BLS (the various forms of the CPI) do include the first two things; they don't include asset prices.
> Who can live a day without eating food, using energy for driving or powering appliances and finally paying for a place to live.
The cost of having a place to live (rent, including imputed rent) is, like food and energy, included in CPI.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#17Hey HN Friends, I'm posting this because I was shocked when I saw this graph. I hadn't previously appreciated just how much of an unprecedented explosion in the money supply there'd been this year. In particular, it seems to quantify a lot of potential for long run inflation and a very expansionary monetary policy move required to prop up the economy during the pandemic. But I'm not an expert here; I'm hoping we can…
One of the angles that I haven't seen discussed yet is that an increase in the money supply is a reasonable response to a significant decrease in the velocity of money. With stores closed, services shuttered and experiences unavailable, people are holding onto money longer, and it's changing hands less. If money is changing hands less (lower velocity) you need more money in the system to enable the same amount of com…
"the fed could reduce the money supply"
What is your proposed mechanism for this?
On the other hand, inflation is great for shafting the labor class, so at least we're going to put most of the pain on the people who are least capable of retaliating against the government; and they'll blame the rich anyways.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#18Earlier quoted context omitted.
There is difference. King wanted the value of money stay stable or increase. Fed wants to reach 2% average inflation target but it keeps failing.
Can someone ELI5 why we want inflation?
It lets you raise revenue by slowly devaluing the wages of the lower class. It's so difficult to notice that they blame the rich instead of the government. It's a perfect strategy.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#19Hey HN Friends, I'm posting this because I was shocked when I saw this graph. I hadn't previously appreciated just how much of an unprecedented explosion in the money supply there'd been this year. In particular, it seems to quantify a lot of potential for long run inflation and a very expansionary monetary policy move required to prop up the economy during the pandemic. But I'm not an expert here; I'm hoping we can…
One of the angles that I haven't seen discussed yet is that an increase in the money supply is a reasonable response to a significant decrease in the velocity of money. With stores closed, services shuttered and experiences unavailable, people are holding onto money longer, and it's changing hands less. If money is changing hands less (lower velocity) you need more money in the system to enable the same amount of com…
Also how will it extract the money already created from circulation? I find that extremely implausible.
Re: Money Creation: 70% in the Last 12mo (Fed, M1, $)
#20Earlier quoted context omitted.
Can someone ELI5 why we want inflation?
Saving is bad because it slows down the economy. We need people spending their dollars. So a little inflations is like grease keeps the economic gears moving.
Saving is not bad because "it slows the economy". Savings is bad in the views of governments and central banks because it removes their power over money. There is no meaningful practical diference between the fed printing money, and people using their savings in the event of a crisis, but only in the first case does the fed and government have control over it.