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There are multiple cases where an increase in money supply doesn't lead to inflation; the United States in recent years comes to mind: "A good example is in a

There are multiple cases where an increase in money supply doesn't lead to inflation; the United States in recent years comes to mind: "A good example is in a recession, the stock of money may rise 5%, however, people will be making fewer transactions and therefore the velocity of circulation will fall. This explains why quantitative easing (increasing the money supply) did not cause inflation between 2009 and 2016." [0] The article I link below contains 3 more examples: [0] https://www.economicshelp.org/blog/111/inflation/money-supply-inflation/ https://www.economicshelp.org/blog/111/inflation/money-suppl...

marcusverus 7y ago
You are arguing that this is sometimes true. The author was clearly arguing that it is generally true: "We now live in a different economic universe than we did before the crash. Falling unemployment no longer drives up wages. Printing money no longer causes inflation." He is stating that we are in a different universe, with the clear implication being that the following items, which he does not qualify, are the new reality.
- deleted 7y ago
  [deleted]
- rayiner 7y ago
  I cannot stress enough that the author, David Graeber, is a professor of anthropology.
- corporate_shi11 7y ago
  He is referring to QE not causing inflation. The truth is that it did cause inflation, but in asset prices not consumer goods.
  - bildung 7y ago
    But gains in asset prices are not inflation. Inflation is per definition the rise of prices in consumer goods.
    - corporate_shi11 7y ago
      The CPI inflation metric certainly does exist, but the idea of inflation can apply to any basket of goods.
      - bildung 7y ago
        But is have to be consumables that are put into the basket. Inflation/deflation doesn't make sense otherwise. If an asset gains in nominal value, that means nominated in that asset, the consumables fell in price, i.e. we observe deflation. If the valuations of housing and stocks rise, this isn't inflation: If I owned them then I can sell these and buy more consumables than before, not less.
- bjourne 7y ago
  That the author is right follows from simple logic. Assume A implies B. Observe A but not B. Conclude that A implies B is false. Replace A with "printing money" and B with "increased inflation."
roenxi 7y ago
To add some precision: doesn't lead to consumer price inflation. Increasing the money supply has caused massive inflation; the price of gold isn't where it is because the colour yellow is in fashion. Asset prices are out of control.
- perl4ever 7y ago
  I don't think gold is a good example of whatever you are saying is happening. Gold hit a peak about eight years ago, and before that, while it was going up in kind of an apparent smooth exponential curve, there wasn't any significant blip from the financial crisis, 9/11, or anything else. Is there even a generally accepted explanation for this behavior? If post-crisis spending is blamed, how did the market for gold "know" for years in advance?
  - perl4ever 7y ago
    I did some looking around, and ran across a page which claims gold was particularly low around 2000 because of central bank sales and rose steadily for almost a decade because energy prices were going up. Also, I remember how cheap gas was around 2000 as well.
- littlestymaar 7y ago
  The price of gold (or silver)isn't out of control at all. There has been a peak (because people viewed it as a reliable asset) and then the situation stabilized (for gold) and almost returned to its level before 2008 (for silver) whereas the money from the QE is still here! https://framapic.org/pSCHdCxNc2w4/wRKHzipzlWHp.png https://framapic.org/pSCHdCxNc2w4/wRKHzipzlWHp.png
  - roenxi 7y ago
    Picking on 2005 as a start year, because that was a little before QE, to 2019 silver has risen at a 5% p.a. rate and gold at at 8% rate. The official inflation rate over that time is 2% (from https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/). I put it to you that the value of gold is not really rising at a real rate of 6% per annum. That is better than the US economy! It is much more likely that QE caused asset price inflation. Silver probably doesn't get treated so much as an asset because storing it is so much harder than gold.

marcusverus 7y ago

You are arguing that this is sometimes true. The author was clearly arguing that it is generally true: "We now live in a different economic universe than we did before the crash. Falling unemployment no longer drives up wages. Printing money no longer causes inflation." He is stating that we are in a different universe, with the clear implication being that the following items, which he does not qualify, are the new reality.

deleted 7y ago
[deleted]
rayiner 7y ago
I cannot stress enough that the author, David Graeber, is a professor of anthropology.
corporate_shi11 7y ago
He is referring to QE not causing inflation. The truth is that it did cause inflation, but in asset prices not consumer goods.
- bildung 7y ago
  But gains in asset prices are not inflation. Inflation is per definition the rise of prices in consumer goods.
  - corporate_shi11 7y ago
    The CPI inflation metric certainly does exist, but the idea of inflation can apply to any basket of goods.
    - bildung 7y ago
      But is have to be consumables that are put into the basket. Inflation/deflation doesn't make sense otherwise. If an asset gains in nominal value, that means nominated in that asset, the consumables fell in price, i.e. we observe deflation. If the valuations of housing and stocks rise, this isn't inflation: If I owned them then I can sell these and buy more consumables than before, not less.
bjourne 7y ago
That the author is right follows from simple logic. Assume A implies B. Observe A but not B. Conclude that A implies B is false. Replace A with "printing money" and B with "increased inflation."

roenxi 7y ago

To add some precision: doesn't lead to consumer price inflation. Increasing the money supply has caused massive inflation; the price of gold isn't where it is because the colour yellow is in fashion. Asset prices are out of control.

perl4ever 7y ago
I don't think gold is a good example of whatever you are saying is happening. Gold hit a peak about eight years ago, and before that, while it was going up in kind of an apparent smooth exponential curve, there wasn't any significant blip from the financial crisis, 9/11, or anything else. Is there even a generally accepted explanation for this behavior? If post-crisis spending is blamed, how did the market for gold "know" for years in advance?
- perl4ever 7y ago
  I did some looking around, and ran across a page which claims gold was particularly low around 2000 because of central bank sales and rose steadily for almost a decade because energy prices were going up. Also, I remember how cheap gas was around 2000 as well.
littlestymaar 7y ago
The price of gold (or silver)isn't out of control at all. There has been a peak (because people viewed it as a reliable asset) and then the situation stabilized (for gold) and almost returned to its level before 2008 (for silver) whereas the money from the QE is still here! https://framapic.org/pSCHdCxNc2w4/wRKHzipzlWHp.png https://framapic.org/pSCHdCxNc2w4/wRKHzipzlWHp.png
- roenxi 7y ago
  Picking on 2005 as a start year, because that was a little before QE, to 2019 silver has risen at a 5% p.a. rate and gold at at 8% rate. The official inflation rate over that time is 2% (from https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/). I put it to you that the value of gold is not really rising at a real rate of 6% per annum. That is better than the US economy! It is much more likely that QE caused asset price inflation. Silver probably doesn't get treated so much as an asset because storing it is so much harder than gold.