Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

m1chart.com

Post reply on HN
Print view View original

41–50 of 132 posts

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#41

Post by choxi »

zz865 wrote: post #25
choxi wrote: post #6

A 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…

> A lot of people say “there’s no such thing as asset inflation” [1] and I find that very confusing. I think most people agree there is a lot of asset inflation. Your link doesn't match your quote either.

You're right, I meant the quote as a paraphrase of what I hear often but it's misleading since that exact phrase is not in the article. I removed the quote.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#42

Post by Ericson2314 »

xiphias2 wrote: post #34
marricks wrote: post #22

Earlier quoted context omitted.

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.

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.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#43

Post by eloff »

Here'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 you could exchange US dollars with the government for a fixed amount of gold) and the massive devaluing of the US dollar, and massive surge in the price of gold that followed.

But I thought the most interesting part is it clearly shows we're not at 2000 bubble levels right now. Which it looks like we are if you just look at the dollar denominated stock market value.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#44

Post by erosenbe0 »

lotsofpulp wrote: post #18
deanmoriarty wrote: post #12

I 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 pre…

Things are difficult to price. Your expenses probably are increasing and I believe you but I know there is bias in my expense calculations. For example, I need a new car. It will be a lot more in sticker price than real cost of previous car. However total cost of ownership if I look all the way out to 2030+ or later will be lower than previous car. This is one of the problems with pricing healthcare. It's out of control expensive but also morbidity and age adjusted disability keeps getting lower.

Edit: The land problem is a thing also difficult to capture since amortized across entire country. Moreover, it's not Singapore in the USA, the land price problem points to various inefficiencies rather some kind of intrinsic supply/real value problem.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#45

Post by bredren »

CyberRabbi wrote: post #16
deanmoriarty wrote: post #12

I 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.

It is this, but there's a twist.

Presume a person with assets sees information like this and in combination with other factors causes them to agree a dramatic market pullback (on the scale of last year's but worse) is likely and soon.

The next logical step would be to enjoy all of the gains so far and sell out from the risk of the drop, and even after a nominal loss of value rebuy.

What I've seen is rather than deal with what that might require, people will present the above argument. They may refer you to 1973's "A Random Walk down Wall Street," or bring up capital gains taxes.

But what they will not do is confront the cognitive dissonance they're feeling between their own sense that something is wrong with the market and that they are in a position to take great advantage of a drop but will not.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#46

Post by ItsMonkk »

deanmoriarty wrote: post #12

I 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,…

Sustainability.

The M2 is growing because interest rates are dropping. But interest rates are at 0, so they can't drop anymore. So there is reason to believe that we can not sustain our current trajectory any longer.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#47

Post by nabla9 »

cft wrote: post #38
nabla9 wrote: post #10

This 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…

CPI is determined by M1V , i.e. velocity of M1. Since M1 is already out there, we just have to wait for the V. For now it's parked in the inflated stocks. Most importantly, without high M1, high M1V is not possible.

That's kind of thinking takes quantity theory of money too seriously (axiomatically). Instead of looking if that has been true, you just assume that it must be true.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#48

Post by Ericson2314 »

core-questions wrote: post #20
Wolfenstein98k wrote: post #4

Oversimplified, 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?

I recommend https://www.ineteconomics.org/perspectives/blog/mainstream-m... for while MMT is nearly as divergent from the mainstream than is hyped. This comparison makes both clearer.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#49

Post by ItsMonkk »

swixi wrote: post #32
nabla9 wrote: post #10

This 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…

> 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 A couple questions because I don't understand this very well. Do we have an idea how much is actually sitting in a bank account vs being put into the market? And, if people put money into stocks and park it there, wouldn't…

You can't just put it into the market. There are two sides to every transaction. You give money, they give stock, they get money, you get stock.

When more money enters the economy than stuff is created, the price that the person willing to sell/price you are willing to buy that stock for goes up.

Re: Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply

#50

Post by nabla9 »

eloff wrote: post #37
nabla9 wrote: post #10

This 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…

I find the "Internet economics" argument more compelling than your argument that "Money supply does not determine the prices". It's intuitive. You increase the amount of money chasing assets, asset prices go up. It's not affecting the price of milk or electronics. But look at land, housing, tuition, medical, stocks, bonds, and gold.

I know. That's the tragedy if internet economics. It's incredibly natural and intuitive and wrong.
Post reply on HN