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The expansion of the Fed's balance sheet is just extraordinary... given the news coverage in other areas, this seems like a huge piece missing from public disco

The expansion of the Fed's balance sheet is just extraordinary... given the news coverage in other areas, this seems like a huge piece missing from public discourse. https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE While the gigantic increases in monetary base in the 2008 crisis didn't cause inflation, I (as a layperson) don't know that is too relevant. In 2008 there was a huge decrease in monetary velocity, meaning the total money supply didn't jolt up. Today, this seems very different, with a gigantic jolt in the M2 measure of money supply. https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 Quite scary to me to build this crisis before the previous crisis was unwound.

bravo22 6y ago
2008 monetary expansion did cause inflation, in all asset classes.
hakesdev 6y ago
Yes the fed's balance sheet has inflated, but it has inflated at the same time as dollars have stopped flowing out of the United States through trade and tourism. The global economy needs dollars: - 84% of all non-domestic debt globally is US Dollar debt. - Around $100trn of global debts are denominated in US Dollars. This creates a tremendous demand for dollars, and if they aren't flowing through trade and tourism, dollars will need to be purchased on the spot market or missed debt payments will make these foreign cos go BK. US Fed's monetary base inflation is different from the ECB and Japanese Fed in that the world will sop up basically all of the money it prints. In order for the US Fed to have the same impact on inflation, they need to print multiples of what the ECB and Japanese Fed print. I agree in the end the dollar will come, I just think we will have a dollar bull rally before then. See this thread from Raoul Pal: https://threadreaderapp.com/thread/1264224744271945728.html?refreshed=yes https://threadreaderapp.com/thread/1264224744271945728.html?...

bravo22 6y ago

2008 monetary expansion did cause inflation, in all asset classes.

hakesdev 6y ago

Yes the fed's balance sheet has inflated, but it has inflated at the same time as dollars have stopped flowing out of the United States through trade and tourism. The global economy needs dollars: - 84% of all non-domestic debt globally is US Dollar debt. - Around $100trn of global debts are denominated in US Dollars. This creates a tremendous demand for dollars, and if they aren't flowing through trade and tourism, dollars will need to be purchased on the spot market or missed debt payments will make these foreign cos go BK. US Fed's monetary base inflation is different from the ECB and Japanese Fed in that the world will sop up basically all of the money it prints. In order for the US Fed to have the same impact on inflation, they need to print multiples of what the ECB and Japanese Fed print. I agree in the end the dollar will come, I just think we will have a dollar bull rally before then. See this thread from Raoul Pal: https://threadreaderapp.com/thread/1264224744271945728.html?refreshed=yes https://threadreaderapp.com/thread/1264224744271945728.html?...