4 ms·

You say "There is no magic or mystery here. This is not complicated. It is not new, unknown and to be determined." Clearly wrong. Specifically consider the vel

You say "There is no magic or mystery here. This is not complicated. It is not new, unknown and to be determined." Clearly wrong. Specifically consider the velocity of money. If it falls as the supply increases there will be no inflation. It is falling <https://fred.stlouisfed.org/graph/?g=AzYM https://fred.stlouisfed.org/graph/?g=AzYM> (from another comment). Why? Will it continue to fall or will it rise? You don't know and can't figure out. Also, how much liquidity is required to maximize economic growth -- the "size of the cake"? In recessions (liquidity crunches) growth falls. Would it rise further if we increase liquidity beyond "the usual"? Would it rise enough to wash out the inflationary effect? You don't know and can't figure out. Your positions and other similar ones depend on the situation being subject to simple reasoning but this is wrong. The interactions are complex and the obvious variables do not provide a clean way of decomposing the system.

jsmcgd 6y ago
"If it falls as the supply increases there will be no inflation." Agreed. This is tautological. The fall of velocity is price deflation. Increase in velocity is price inflation. It doesn't matter if the currency supply is increasing or decreasing. However the well established hyperinflation trend is the money supply is increased as the velocity is falling until the point where confidence in the currency collapses. Then the velocity spikes and the value of the currency goes to zero. So we know exactly where we are. We are currently in the deflationary period that precedes all hyperinflation. And we know it will be hyperinflationary because of the amount of money being printed and the lack of economic growth. If the money supply had increased 5% in the past year then I wouldn't say we're about to have hyperinflation. But the M0 money supply increased from 3T to 5T in about a year. No system, no matter what it is can sustain that level of growth. All exponential growth is short lived.

jsmcgd 6y ago

"If it falls as the supply increases there will be no inflation." Agreed. This is tautological. The fall of velocity is price deflation. Increase in velocity is price inflation. It doesn't matter if the currency supply is increasing or decreasing. However the well established hyperinflation trend is the money supply is increased as the velocity is falling until the point where confidence in the currency collapses. Then the velocity spikes and the value of the currency goes to zero. So we know exactly where we are. We are currently in the deflationary period that precedes all hyperinflation. And we know it will be hyperinflationary because of the amount of money being printed and the lack of economic growth. If the money supply had increased 5% in the past year then I wouldn't say we're about to have hyperinflation. But the M0 money supply increased from 3T to 5T in about a year. No system, no matter what it is can sustain that level of growth. All exponential growth is short lived.