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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.

#301

Post by scsilver »

darawk wrote: post #68
scsilver wrote: post #28

Earlier quoted context omitted.

The people who continue to jumble up inflation by its consumer defenition with the huge expanding of the amount of us dollars are only shooting their own wealth and anyone who listens to them's wealth in the foot. All you have to look at is stocks and home real estate to see that assets are ballooning no matter how cheap a dozen of eggs stays.

Asset prices are being inflated by the low risk-free rate. That's why you see asset prices rising while CPI remains flat.

Agreed

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

#302

Post by scsilver »

leg100 wrote: post #190
scsilver wrote: post #97

Earlier quoted context omitted.

I'm not gonna bet against the fed. Im not going to bet against politicians protecting retirement accounts and personal homes. I've got 30 more years until I get out of the market, might as well hedge against the dollar, only take out a bit to get a down payment on a home in a nice area, and try to catch the capitalist wave. If you stayed in through 2008 till now, you'd be doing perfectly fine. If you had to take out…

> I'm not gonna bet against the fed. Im not going to bet against politicians protecting retirement accounts and personal homes. I'll take a punt. At some point inflation will take root, and when it does the fed will be in a bind. Hell, the fed has already been digging away at pensions with their 40 year long put. Pensions funds struggle now to find a positive yield that meets their liabilities. And homes will at some…

From my viewpoint in history, the homes will be the last thing to get attacked, politicians can't stomach another 08 and we know how to print our way out. If the dollar manages to fend off devaluation due to entended printing(crosses fingers and hopes the world trusts us more than any other currency to pay back our debt) the US may get out of this, ahead of other economies. The people really holding bag havent even entered the workforce, many havent even been born yet.

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

#303

Post by marketingPro »

leetcrew wrote: post #207
marketingPro wrote: post #186

Earlier quoted context omitted.

Do not use CPI as it doesn't take into account technology improvement and outsourcing. I'd take the big mac index over CPI.

isn't the price of a big mac also subject to technology improvement and outsourcing? it takes quite a logistics chain to get all those ingredients where they need to go.

It's not a commodity though.

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

#304

Post by anm89 »

anm89 wrote: post #297
bryan0 wrote: post #296

Earlier quoted context omitted.

Thanks for posting this. After watching I searched for some diagrams on this process and came cross another one of George Gammon's videos ( https://www.youtube.com/watch?v=oLhO7tIAtoY ). He comes off super sketchy trying to me, almost like a get rich quick salesman, but the actual information in the video seemed legit. Anyway, based on the discussions and videos, it seems like QE by itself is relatively neutral with…

Yeah it took me a while to come around to Gammon, he uses a really clickbaity/scammy visual language and marketing copy to get subscribers but if you make it past that to the content, the content is mostly very high quality. The specific video you posted is one of his best. And right, the classic equation from macro 101 that sums this up is: P = ( M x V ) / Y Where price level = money supply x velocity of money / gdp…

correction, velocity would equal 1 here.

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

#305

Post by BoiledCabbage »

nkurz wrote: post #248
lordnacho wrote: post #214

I don't often write meta-comments, but it's interesting to see the two large threads here. One of them is about whether the Fed is printing money. The other one is about what inflation is, or how it ought to be measured. I find it fascinating that there's so much confusion about all these economic terms. I don't have a simple answer to either, but it's thought provoking that there isn't an established theory that eve…

> it's interesting to see the two large threads here. One of them is about whether the Fed is printing money. The other one is about what inflation is, or how it ought to be measured. Observant, but you are most likely seeing the result of 'dang' changing the URL from the article about printing money to the one about how to measure inflation! https://news.ycombinator.com/item?id=24770185 Was: "22% of all US Dollars w…

I think you completely missed the point.

OP's post isn't about that fact that two different topics are being discussed. OPs point is that for neither of this two topics that are critical to economic theory, people don't even seem to know or agreed on the definition of either. How in the world can people discuss (let alone judge or shape) policy if we can't even agree on what basic concepts even mean.

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

#306

Post by valuearb »

It’s not inflation exactly, because of the influence of lower interest rates, but in my neighborhood houses sold for around $250/square foot last couple years. My neighbor just sold her house for $365/square foot.

There is a measure of the balance of supply vs demand where 100 is an equal number of buyers and sellers. More sellers 100. My realtor just told me it typically bounces between 80 and 120, but right now it’s 350. She’s never seen it remotely as high.

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

#307

Post by blackflame7000 »

nitrogen wrote: post #295
blackflame7000 wrote: post #175

Earlier quoted context omitted.

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…

I think you do have some interesting things to say and could convey them better without the negativity of the last paragraph. I'm coming from the perspective of someone whose extended-extended family ranges from dirt poor laborers to set-for-life landlords. I'm also drawing on my own experiences. I'm a software engineer, currently on hiatus to work on a YouTube series. I lost a good chunk of change from non-housing a…

No. There are too many people on this website, and silicon valley that think their feelings are more important than truth. They use those feelings to manipulate people into buying shit they don't need and they know exactly what they are doing. I don't give a shit about your feelings and neither does anyone else really except maybe your mother. The rest of us just virtual signal to show we do but never actually accomplish anything often times doing the opposite and creating more division via botched execution. (Oh hey Colin Kaepernick)

Your feelings are irrelevant because they are subjective. Seriously, you and everyone else who feels triggered to downvote me, grow the fuck up. The points are imaginary and I frankly think it's funny to get -4 scores because it shows just how easy it is to set you mental midges off because of your feelings of in adequacy that program you to blame anyone but thine own ego.

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

#308

Post by SonOfThePlower »

neffy wrote: post #211
SonOfThePlower wrote: post #172

Earlier quoted context omitted.

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

I'm sure their canteen buys lettuce, and as it happens they've been getting quite adventurous with what else they're prepared to buy recently.

Well, lettuce has not been inflated by FED (yet), why would stocks have been?

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

#309

Post by darawk »

RobertoG wrote: post #266
darawk wrote: post #255

Earlier quoted context omitted.

Of course the existence of reserves doesn't force a bank to lend. It increases their capacity to lend, which, assuming there is sufficient demand for credit, increases the money supply.

So you agree that creating reserves is not necessarily inflationary. Also, a bank is not limited by reserves to lend. In fact, in practice, banks first lend and then search for the reserves in the inter-bank market. Those demand-offer dynamics between banks determine the interest rate. If the Central Bank doesn't want to loss control of the interest rate, it has to increase reserves in the system when there is demand…

> So you agree that creating reserves is not necessarily inflationary.

Not necessarily, no. But in practice they create inflationary pressure.

> Also, a bank is not limited by reserves to lend. In fact, in practice, banks first lend and then search for the reserves in the inter-bank market. Those demand-offer dynamics between banks determine the interest rate. If the Central Bank doesn't want to loss control of the interest rate, it has to increase reserves in the system when there is demand.

This is exactly what my original post said. Of course they search for reserves in the inter-bank lending market. But the more reserves there are in that market, the cheaper they are to borrow, which reduces the rate that banks have to charge to earn their spread, which increases demand for credit, which increases the money supply.

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

#310

Post by darawk »

RobertoG wrote: post #268
darawk wrote: post #254

Earlier quoted context omitted.

Sure, there are limits. But fundamentally, holding all else constant, increasing bank reserves decreases the cost of lending, which increases the quantity of lending, which increases the money supply.

Not when the interest rate is 0% From then on, any increase in reserves doesn't make borrowing more attractive.

When it is actually 0%, yes. But it is currently not 0%.
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