3 ms·

Not surprising. The money supply has increased sharply: https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2

• baryphonic 6y ago
  And yet velocity of M2 has decreased sharply.[1] Therefore, hyperinflation seems unlikely unless the real economy unexpectedly recovers rapidly. However, since money is not neutral in the short run[2], we could actually get additional output from the increased money supply. That said, I'm personally skeptical of that claim in this crisis. Additional M2 can have zero effect on output when the law itself has forbidden workers from showing up and producing goods, and in some cases has discouraged them from trying to do so. [1] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V [2] https://en.wikipedia.org/wiki/Monetary-disequilibrium_theory https://en.wikipedia.org/wiki/Monetary-disequilibrium_theory
  • kyboren 6y ago
    Indeed, velocity has decreased sharply. I also do not think hyperinflation is likely, even if the economy recovers quickly. But I do expect to see asset price inflation.
  • canada_dry 6y ago
    >> money supply has increased sharply > velocity of M2 has decreased sharply I don't think M2 takes into account money going into derivatives, does it?? I'd propose that most of the stimulus is going directly into propping up the US financial market. My take is that bubble might burst when markets realize that the situation is still getting worse i.e. earnings and GDP continue to decline winter 2020/spring 2021.