4 ms·

Economically speaking, increasing base money supply (giving money directly to people) does in fact increase inflation, where increasing m2 (giving money directl

Economically speaking, increasing base money supply (giving money directly to people) does in fact increase inflation, where increasing m2 (giving money directly to banks) seems to not have the same effect, based on decades of similar policies in Japan. Some prices will still (real estate) increase but staples do not. Or so I read in various places... Not sure if I personally subscribe to the above, but as long as we don’t experience collapse of currency/dollar and ensuing hyperinflation, we should be ok.

goatinaboat 6y ago
Economically speaking, increasing base money supply (giving money directly to people) does in fact increase inflation Well, sure, if you give a bunch of people some money and they all decide to spend it on re-doing their homes at the same time then the prices charged by local tradesmen will probably go up, then correct themselves again when the peak demand passes. I'd argue that's not a bad thing in the sense that real work is being done, and the money is circulating in real goods and services - because if value is actually being created then there is something backing the new money.
nojs 6y ago
The only difference is that we call the former “inflation” and the latter “my stocks are doing well”. It’s all inflation in the end.
- imtringued 6y ago
  Well, the CPI is exclusively about consumer prices. It's not about savings vehicles like stocks. But you are right. Wealth inequality is the cost of this form of monetary policy.
throw0101a 6y ago
Inflation is dependent on money supply and money velocity. And velocity has been going down for a decade or two (in the US) and recently dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V See also: * https://en.wikipedia.org/wiki/Money_supply#Link_with_inflation https://en.wikipedia.org/wiki/Money_supply#Link_with_inflati...
- christophilus 6y ago
  Right. I think the op was suggesting that velocity would spike if the money made it to Main Street.

goatinaboat 6y ago

Economically speaking, increasing base money supply (giving money directly to people) does in fact increase inflation Well, sure, if you give a bunch of people some money and they all decide to spend it on re-doing their homes at the same time then the prices charged by local tradesmen will probably go up, then correct themselves again when the peak demand passes. I'd argue that's not a bad thing in the sense that real work is being done, and the money is circulating in real goods and services - because if value is actually being created then there is something backing the new money.

nojs 6y ago

The only difference is that we call the former “inflation” and the latter “my stocks are doing well”. It’s all inflation in the end.

imtringued 6y ago
Well, the CPI is exclusively about consumer prices. It's not about savings vehicles like stocks. But you are right. Wealth inequality is the cost of this form of monetary policy.

throw0101a 6y ago

Inflation is dependent on money supply and money velocity. And velocity has been going down for a decade or two (in the US) and recently dropped off a cliff: * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V See also: * https://en.wikipedia.org/wiki/Money_supply#Link_with_inflation https://en.wikipedia.org/wiki/Money_supply#Link_with_inflati...

christophilus 6y ago
Right. I think the op was suggesting that velocity would spike if the money made it to Main Street.