5 ms·

Over the last 10 years, the FED has more then doubled the amount of money they have out in the market. Other central banks have done the same. Despite popular

Over the last 10 years, the FED has more then doubled the amount of money they have out in the market. Other central banks have done the same. Despite popular belief, the value of money decreased by about 50% during this time. It is not easy to say if this is a coincidence. But it looks a lot like there is causality at play. The reason why inflation "officially" is lower then what one would expect given the amount of money printed lies in the way it is calculated. The calculation includes mostly goods and services bought by people who live from hand to mouth. Not the goods and services bought by people with savings and high income. Rent and real estate in desireable areas, gold, bitcoin, equities - all of these now require significantly more money to buy then they did in 2010. People who saved money lost about 50% of their buying power to inflation.

deleted 6y ago
[deleted]
cm2187 6y ago
and college education.
- abyssin 6y ago
  Is this true everywhere in the world?
Retric 6y ago
Inflation only reduces the value of money not other goods. So, if your savings is in wine, land, gold, or whatever then low levels are not that important. Put another way the difference between 1% and 2% inflation is roughly cutting the value of money in half over 70 or 35 years. But, it’s hard to really notice then difference between them on a month by month basis.
iso1631 6y ago
Gold value (https://www.gold.org/goldhub/data/gold-prices https://www.gold.org/goldhub/data/gold-prices) Apr 2000: $274/oz Apr 2005: $425/oz (+55%) Apr 2010: $1132/oz (+166% in 5 years, +313% in 10 years) Apr 2015: $1175/oz (+3% in 5 years, +176% in 10 years) Apr 2020: $1647/oz (+40% in 5 years, +45% in 10 years) So we can see that Gold was massively inflating until 2010, when you say the fed started printing money, since then it's stabilised, even with the current panic House prices in the US (https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/) Apr 2000: $134k Apr 2005: $199k Apr 2010: $183k Apr 2015: $210k Apr 2019: $269k So 2010-2019 is a 46% increase, or 4.5% per year, so about 50% for 10 years. 2000 to 2010 is 36%, but the charts indicate we're nearing the top of another house price bubble (1998-2007 was an 80% increase over 9 years, or 7.5% increase per year) So I'm not sure your assertions that the increase of these values are due to quantitive easing over the last 10 years holds.
- mrep 6y ago
  Also, annualized S&P 500 Return with Dividends Reinvested from april 2010 to april 2020 are 9.694% [0] which is entirely in line with historical returns [1]. [0]: https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ [1]: https://en.wikipedia.org/wiki/S%26P_500_Index#Performance https://en.wikipedia.org/wiki/S%26P_500_Index#Performance
- bsanr2 6y ago
  Look again. The 2015-2020 increases dwarf the 2010-2015 increases. What changed?
  - iso1631 6y ago
    Same things that changed in 2000-2005 and 2005-2010.
    - bsanr2 6y ago
      Please specify.
      - iso1631 6y ago
        Many many factors not relating to quantative easing
        bsanr2 6y ago
        That's incredibly nonspecific.
- TooCreative 6y ago
  2010, when you say the fed started printing money I did not say the FED started printing money in 2010. I said nothing about the time before 2010 or about the future. Your argument would have been much more precise and useful if you focussed on the same timeframe as I did: 2010-2020. Mixing it with the time before and what you read in the charts for the future muddled it to a degree that I find it hard to reply.
QuesnayJr 6y ago
Inflation indices do include rent and real estate. Housing costs is the single largest component in CPI. Equities have had a gigantic bull market since an incredible low after the financial crisis. Of course it costs significantly more to buy at the top of the market than at the bottom.
- TooCreative 6y ago
  Rent and real estate are artificially low because of rent control. In a free market, the value decrease of money would be more visible compared to these assets. Calling the prise increase in equities a "bull market" does not change the fact that the prise increased.
  - QuesnayJr 6y ago
    CPI includes owner-occupied housing as well, not just rent. If you are going to define bull markets as inflation, then you are ruling out the possibility that the economy can ever just do well. We had a horrible crash a decade ago. In the last couple of years, the economy has done well with record low unemployment. Of course equity prices went up.

deleted 6y ago

[deleted]

cm2187 6y ago

and college education.

abyssin 6y ago
Is this true everywhere in the world?

Retric 6y ago

Inflation only reduces the value of money not other goods. So, if your savings is in wine, land, gold, or whatever then low levels are not that important. Put another way the difference between 1% and 2% inflation is roughly cutting the value of money in half over 70 or 35 years. But, it’s hard to really notice then difference between them on a month by month basis.

iso1631 6y ago

Gold value (https://www.gold.org/goldhub/data/gold-prices https://www.gold.org/goldhub/data/gold-prices) Apr 2000: $274/oz Apr 2005: $425/oz (+55%) Apr 2010: $1132/oz (+166% in 5 years, +313% in 10 years) Apr 2015: $1175/oz (+3% in 5 years, +176% in 10 years) Apr 2020: $1647/oz (+40% in 5 years, +45% in 10 years) So we can see that Gold was massively inflating until 2010, when you say the fed started printing money, since then it's stabilised, even with the current panic House prices in the US (https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/) Apr 2000: $134k Apr 2005: $199k Apr 2010: $183k Apr 2015: $210k Apr 2019: $269k So 2010-2019 is a 46% increase, or 4.5% per year, so about 50% for 10 years. 2000 to 2010 is 36%, but the charts indicate we're nearing the top of another house price bubble (1998-2007 was an 80% increase over 9 years, or 7.5% increase per year) So I'm not sure your assertions that the increase of these values are due to quantitive easing over the last 10 years holds.

mrep 6y ago
Also, annualized S&P 500 Return with Dividends Reinvested from april 2010 to april 2020 are 9.694% [0] which is entirely in line with historical returns [1]. [0]: https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ [1]: https://en.wikipedia.org/wiki/S%26P_500_Index#Performance https://en.wikipedia.org/wiki/S%26P_500_Index#Performance
bsanr2 6y ago
Look again. The 2015-2020 increases dwarf the 2010-2015 increases. What changed?
- iso1631 6y ago
  Same things that changed in 2000-2005 and 2005-2010.
  - bsanr2 6y ago
    Please specify.
    - iso1631 6y ago
      Many many factors not relating to quantative easing
      - bsanr2 6y ago
        That's incredibly nonspecific.
TooCreative 6y ago
2010, when you say the fed started printing money I did not say the FED started printing money in 2010. I said nothing about the time before 2010 or about the future. Your argument would have been much more precise and useful if you focussed on the same timeframe as I did: 2010-2020. Mixing it with the time before and what you read in the charts for the future muddled it to a degree that I find it hard to reply.

QuesnayJr 6y ago

Inflation indices do include rent and real estate. Housing costs is the single largest component in CPI. Equities have had a gigantic bull market since an incredible low after the financial crisis. Of course it costs significantly more to buy at the top of the market than at the bottom.

TooCreative 6y ago
Rent and real estate are artificially low because of rent control. In a free market, the value decrease of money would be more visible compared to these assets. Calling the prise increase in equities a "bull market" does not change the fact that the prise increased.
- QuesnayJr 6y ago
  CPI includes owner-occupied housing as well, not just rent. If you are going to define bull markets as inflation, then you are ruling out the possibility that the economy can ever just do well. We had a horrible crash a decade ago. In the last couple of years, the economy has done well with record low unemployment. Of course equity prices went up.