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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.

#171

Post by wcoenen »

jganetsk wrote: post #129
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. I think what the poster is saying is that running a government deficit is printing money. Fiscal policy is money printing, not monetary policy. This is very much not what is colloquially known as money printing, rather it's the basis of modern money theory. Monetary policy is just swapping one kind of USD denominated assets for another. It doesn't really change the size of private bank balance sheets, hence it is…

> I think what the poster is saying is that running a government deficit is printing money.

The government borrows the money from bond buyers, so that's also not printing money. (The Fed does buy these bonds, but not directly from the government because the government can't do anything with bank reserves. The Fed can only "print" bank reserves therefore it can only buy assets from banks.)

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

#172

Post by SonOfThePlower »

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.

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

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

#173

Post by svachalek »

matthewbauer wrote: post #98
pauldickwin wrote: post #64

Earlier quoted context omitted.

I am just wondering if the PE ratio became extraordinarily high because high growth tech companies now are a major part of all of the large indices. Did you ever think about that?

That's definitely the cause of it, but it doesn't make sense to me. Once you're on S&P 500, how much growth can you realistically do? I don't see why investors don't make Google & Apple pay dividends.

Apple does pay dividends, has for years. Is also buying back a lot of stock which is another form of investor return. Google does buybacks too but on a less systematic basis afaik.

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

#174

Post by programmertote »

jakub_g wrote: post #166
diob wrote: post #60

Earlier quoted context omitted.

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…

Can you expand the example with consumer electronics - because it's not clear: who's gouging whom? You mean Big Tech selling expensive smartphones to people who can't buy a house so will buy an iPhone instead?

As someone who tried buying Nintendo Switch, I can confirm that there were scalpers who bought up every Switch stock available during the COVID lock down and resold it for ~1.5x to 2x more than the MSRP price. This seems to have happened with the latest Nvidia graphic cards as well.

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

#175

Post by blackflame7000 »

nitrogen wrote: post #170
blackflame7000 wrote: post #143

Earlier quoted context omitted.

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…

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 imaginary number go down does change the fact that YOU AND ONLY YOU have the most power to change your life not some "system". If you can't afford to buy a house, get a better job. Sorry that's harsh. Who said life was easy?

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

#176

Post by pedro_hab »

RobertoG wrote: post #127
pedro_hab wrote: post #106

Earlier quoted context omitted.

This is the new definition, in old dictionaries inflation was defined as increase in money supply. Using products to measure inflation, is a terrible mistake in my estimation, because cost has been falling, so stable prices don't mean no inflation. It just means the governments got wise to just take what they can get without being noticed.

You can't define inflation as you want. Inflation is an government official indicator with a very clear meaning.

I didn't define as I want to, I pointed to the fact that the meaning in old dictionaries used to be increase in money supply.

My point doesn't depend on this tho, measuring inflation by rising prices isn't ideal, because you will be measuring multiple things at once, and only the people lose in that case.

Prices can rise and fall for multiple reasons, and knowing why helps to fix it.

If the price goes up because of a shortage, the increase in price helps stimulate more production.

Governments get the advantage of being able to inflate the money supply to the point were it prevents prices from falling, ensuring easier reelection at the price of the people paying more for things and effectively taxing savers.

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

#177

Post by jakub_g »

matthewbauer wrote: post #98
pauldickwin wrote: post #64

Earlier quoted context omitted.

I am just wondering if the PE ratio became extraordinarily high because high growth tech companies now are a major part of all of the large indices. Did you ever think about that?

That's definitely the cause of it, but it doesn't make sense to me. Once you're on S&P 500, how much growth can you realistically do? I don't see why investors don't make Google & Apple pay dividends.

Apple does pay dividends. Google and Amazon do not.

https://www.nasdaq.com/market-activity/stocks/aapl/dividend-...

Regarding dividends, in theory when company spends $1 per share on a dividend, its stock price should go down by $1 to compensate for this. So receiving a dividend is kind of like forced selling a small portion of your stock (except that you don't pay the transaction fee).

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

#178

Post by jakub_g »

programmertote wrote: post #174
jakub_g wrote: post #166

Earlier quoted context omitted.

Can you expand the example with consumer electronics - because it's not clear: who's gouging whom? You mean Big Tech selling expensive smartphones to people who can't buy a house so will buy an iPhone instead?

As someone who tried buying Nintendo Switch, I can confirm that there were scalpers who bought up every Switch stock available during the COVID lock down and resold it for ~1.5x to 2x more than the MSRP price. This seems to have happened with the latest Nvidia graphic cards as well.

Ah I see. Well same stuff with concert/football tickets, Air Jordans etc. If something is valuable but with limited quantity, this is inevitable.

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

#179

Post by IncRnd »

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.

Yes, that is a conditional. We won't remain the world's reserve currency forever.

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

#180

Post by magicsmoke »

rogerkirkness wrote: post #2

When money supply expands faster than trade, you're going to have a bad time (in the future). We shall see how many USD it takes to buy goods from overseas.

USD won't collapse as long as the US has a tech monopoly and is the only source of certain high tech electronics, biotech, and aerospace components. As long as the US is the only source of key technologies, countries will continue to maintain a stockpile of USD so they can buy/pay license fees. If another country develops an alternate ecosystem that's equal in capability (looking at China) then you'll see the collapse of the USD's global value, especially if both sides start a price war.
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