4 ms·

Could you explain how your link backs up your claim?

by spuz 6y ago

irjustin 6y ago
Not the poster, but the M1 denotes how much money gets printed. Because of COVID, for better or worse, US has been printing money like crazy to hand out and prop up different areas of the country. Whether you agree/disagree with this, that's for another thread. Point is, we're printing money. If you're familiar with inflation, stop here. Obviously the country and the world are not producing nor consuming at the same level. Thusly at an extremely extremely simplistic level, we're not creating more "intrinsic" value, but adding more printed money to represent that "intrinsic" value. Each dollar now has less "intrinsic" value. (this is over simplified to the n-th degree). This is the basis for inflation. Any unstable country would have seen hyper inflation given these numbers. So, the parent comment is alluding to this... eventually production has to catch up or inflation will.
- marcosdumay 6y ago
  > This is the basis for inflation. Hum... Sure, it's the basis of some kind of inflation. But you'll get no useful kind that only depends on the amount of paper money in existence. There is much more to inflation than the amount of paper money on the economy, and even than the amount of money the government creates.
  - alisonkisk 6y ago
    Do you mean literal "paper" (which is irrelevant) or M1, which is largely electronic?
    - marcosdumay 6y ago
      The comment applies to both paper and M1. It also applies to M3, although M3 is already way too broad for any useful inflation number, it is also too restrictive in different ways. Inflation is a complicated concept.
- ItsMonkk 6y ago
  Neutral money is the spherical cow of economics, and it isn't correct. You need to take into effect the Cantillion effect. The only way we would getting meaningful CPI inflation is if the new money was going to people who would increase their demand of CPI items if they got it. This year the FED has bought bonds, and so that is who that money was given to people with those bonds. Those people can then spend that money, but as we've seen with the stock market, that money was just pumped into the stock market. So all we will see is that the velocity of money will drop further, the prices of items tracked by the CPI won't move, and wealth inequality just got a little worse.

Could you explain how your link backs up your claim?

by spuz 6y ago

Could you explain how your link backs up your claim?

Not the poster, but the M1 denotes how much money gets printed. Because of COVID, for better or worse, US has been printing money like crazy to hand out and prop up different areas of the country. Whether you agree/disagree with this, that's for another thread. Point is, we're printing money. If you're familiar with inflation, stop here. Obviously the country and the world are not producing nor consuming at the same level. Thusly at an extremely extremely simplistic level, we're not creating more "intrinsic" value, but adding more printed money to represent that "intrinsic" value. Each dollar now has less "intrinsic" value. (this is over simplified to the n-th degree). This is the basis for inflation. Any unstable country would have seen hyper inflation given these numbers. So, the parent comment is alluding to this... eventually production has to catch up or inflation will.

marcosdumay 6y ago
> This is the basis for inflation. Hum... Sure, it's the basis of some kind of inflation. But you'll get no useful kind that only depends on the amount of paper money in existence. There is much more to inflation than the amount of paper money on the economy, and even than the amount of money the government creates.
- alisonkisk 6y ago
  Do you mean literal "paper" (which is irrelevant) or M1, which is largely electronic?
  - marcosdumay 6y ago
    The comment applies to both paper and M1. It also applies to M3, although M3 is already way too broad for any useful inflation number, it is also too restrictive in different ways. Inflation is a complicated concept.
ItsMonkk 6y ago
Neutral money is the spherical cow of economics, and it isn't correct. You need to take into effect the Cantillion effect. The only way we would getting meaningful CPI inflation is if the new money was going to people who would increase their demand of CPI items if they got it. This year the FED has bought bonds, and so that is who that money was given to people with those bonds. Those people can then spend that money, but as we've seen with the stock market, that money was just pumped into the stock market. So all we will see is that the velocity of money will drop further, the prices of items tracked by the CPI won't move, and wealth inequality just got a little worse.