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Zero mention of the recent unprecedented fiat currency printing we've seen, nor the fact that every time since the Tang Dynasty when we have done this, it has l

by jp555 5y ago

Zero mention of the recent unprecedented fiat currency printing we've seen, nor the fact that every time since the Tang Dynasty when we have done this, it has led to very troubling times 12-18 months later. Everyone is gambling even if they dont know Crypto exists.

tim333 5y ago
Ha. I was skeptical about the unprecedented bit but googling seems to indicate you are correct, at least for the US https://mobile.twitter.com/fgmr/status/1355105955982282752 https://mobile.twitter.com/fgmr/status/1355105955982282752
- quickthrowman 5y ago
  You need to look at velocity of money in conjunction with the money supply to get the true picture: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V The tweet you linked leaves out half the story, which is that money velocity is down greatly, thus the increase in money supply hasn’t caused rapid inflation. https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us https://www.stlouisfed.org/on-the-economy/2014/september/wha...
  - tim333 5y ago
    Yeah though what happens when people go out again?
    - imtringued 5y ago
      Hopefully people spend their money and corporations invest their money to meet the demand.
    - mariojv 5y ago
      The Fed sells its assets to decrease the USD supply and raises rates. My best guess is a short period of higher inflation and then a correction, but who knows.
paulpauper 5y ago
then how come the US economy boomed after 2009 in spite of unprecedented stimulus and other programs. Not saying that the programs caused the expansion, but it did not seem to hurt it either. Everyone who said that the printing would cause inflation, a repeat crisis, recession, or other problems, were wrong.
- swiley 5y ago
  It boomed according to certain metrics but fewer people could afford housing and transportation so I'm not sure I agree.
  - realce 5y ago
    It's hard NOT to have the metrics of a "boom" when the Fed just buys up any bad asset on the market and puts it in a black bag.
    - swiley 5y ago
      Not being able to get to work or live inside because of a national financial issue is not a boom.
- AlexandrB 5y ago
  Doesn't something feel wrong about the post 2008 "boom"? Theoretically the economy is doing great but you have constant social upheaval, a generation where many are still living with their parents, and the need for constant central bank stimulus in the form of cheap credit. I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine.
  - calvano915 5y ago
    > I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine. This concept extrapolates widely in our personal and professional lives. The internet and cell phones were probably the biggest real pieces of innovation in my lifetime (mid thirties). Everything else is just fluffed up rehashes of relics or in very early stages of something radically new. I just read an article proposing genomics as the next big thing to really change the course of medicine and humanity, and I'm inclined to agree but do not see what the timeline of the tipping point will be. Everywhere else I look I just see more stagnation, short term thinking/goals, and continuation of status quo...with touches of regression throughout.
ac29 5y ago
The US printed and spent tons of money during World War 2, and the postwar period was one of, if not the largest economic expansions in its modern history.
- hpoe 5y ago
  I see this argument come up a lot, I'd like to point out 2 points. 1) Wealth wasn't created during WW2, almost all of the increased production went to things like bombs and tanks and bullets, these things don't provide a real increase in quality of life this is one of the main points in 1984, people need to be kept busy, but Quality of Life can't increase. 2) The postwar boom was largely a result of everyone except America being unable to really produce because their economy and workforce was shattered. When you suddenly have 66% percent of the world only able to purchase from you, that's a lot of demand that you can then serve.
  - nickthemagicman 5y ago
    This is a great point. Not to mention the world owed the US a bunch of money due to the Lend Lease Act. https://www.loc.gov/item/today-in-history/october-23/#:~:text=The%20Lend%2DLease%20Act%2C%20approved,nation's%20official%20position%20of%20neutrality https://www.loc.gov/item/today-in-history/october-23/#:~:tex....
  - lazerpants 5y ago
    Plus it was an unprecedented investment in labor. An entire generation of young men were either killed or maimed, or they received job training and the offer of a free college degree. Suddenly you have an exceedingly employable workforce. And, on top of that, employing women became acceptable too, all creating a situation in which supply expanded massively.
  - throwaway_4253 5y ago
    Just for clarity, how are you defining "Wealth" here? I tend to think of knowledge and skills as a form of Wealth, but it's reasonable for that to be debated; especially if all you're measuring is relative positions in a commodities market. Either way, I think it's possible to argue that the US did generate Wealth in WW2, in the sense that it developed new technologies and knowledge that were eventually shared worldwide (I'm thinking mass production of materials like plastics, antibiotics, better research on nutrition, etc, statistical engineering techniques which eventually helped build up the Japanese auto industry), and that it trained a large portion of its population via the G.I. Bill and women working in factories, etc. (None of this is to belittle all the damage done by the bombs, etc, and the US did have a massive advantage in non having it's production capacity wrecked like Europe, Russia and Japan. The broken window fallacy is a real thing)
richardwhiuk 5y ago
TFA: > Asked if the money the Fed was injecting into banks in the wake of the global financial crisis was “taxpayer money,” Bernanke shook his head and grinned sheepishly. “To lend to a bank,” he said, “we simply use the computer to mark up the size of the account that they have with the Fed.”

by jp555 5y ago

tim333 5y ago

Ha. I was skeptical about the unprecedented bit but googling seems to indicate you are correct, at least for the US https://mobile.twitter.com/fgmr/status/1355105955982282752 https://mobile.twitter.com/fgmr/status/1355105955982282752

quickthrowman 5y ago
You need to look at velocity of money in conjunction with the money supply to get the true picture: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V The tweet you linked leaves out half the story, which is that money velocity is down greatly, thus the increase in money supply hasn’t caused rapid inflation. https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us https://www.stlouisfed.org/on-the-economy/2014/september/wha...
- tim333 5y ago
  Yeah though what happens when people go out again?
  - imtringued 5y ago
    Hopefully people spend their money and corporations invest their money to meet the demand.
  - mariojv 5y ago
    The Fed sells its assets to decrease the USD supply and raises rates. My best guess is a short period of higher inflation and then a correction, but who knows.

paulpauper 5y ago

then how come the US economy boomed after 2009 in spite of unprecedented stimulus and other programs. Not saying that the programs caused the expansion, but it did not seem to hurt it either. Everyone who said that the printing would cause inflation, a repeat crisis, recession, or other problems, were wrong.

swiley 5y ago
It boomed according to certain metrics but fewer people could afford housing and transportation so I'm not sure I agree.
- realce 5y ago
  It's hard NOT to have the metrics of a "boom" when the Fed just buys up any bad asset on the market and puts it in a black bag.
  - swiley 5y ago
    Not being able to get to work or live inside because of a national financial issue is not a boom.
AlexandrB 5y ago
Doesn't something feel wrong about the post 2008 "boom"? Theoretically the economy is doing great but you have constant social upheaval, a generation where many are still living with their parents, and the need for constant central bank stimulus in the form of cheap credit. I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine.
- calvano915 5y ago
  > I sometimes wonder if we've managed to mask the real state of the economy by pumping the metrics to make it look like it's fine. This concept extrapolates widely in our personal and professional lives. The internet and cell phones were probably the biggest real pieces of innovation in my lifetime (mid thirties). Everything else is just fluffed up rehashes of relics or in very early stages of something radically new. I just read an article proposing genomics as the next big thing to really change the course of medicine and humanity, and I'm inclined to agree but do not see what the timeline of the tipping point will be. Everywhere else I look I just see more stagnation, short term thinking/goals, and continuation of status quo...with touches of regression throughout.

ac29 5y ago

The US printed and spent tons of money during World War 2, and the postwar period was one of, if not the largest economic expansions in its modern history.

hpoe 5y ago
I see this argument come up a lot, I'd like to point out 2 points. 1) Wealth wasn't created during WW2, almost all of the increased production went to things like bombs and tanks and bullets, these things don't provide a real increase in quality of life this is one of the main points in 1984, people need to be kept busy, but Quality of Life can't increase. 2) The postwar boom was largely a result of everyone except America being unable to really produce because their economy and workforce was shattered. When you suddenly have 66% percent of the world only able to purchase from you, that's a lot of demand that you can then serve.
- nickthemagicman 5y ago
  This is a great point. Not to mention the world owed the US a bunch of money due to the Lend Lease Act. https://www.loc.gov/item/today-in-history/october-23/#:~:text=The%20Lend%2DLease%20Act%2C%20approved,nation's%20official%20position%20of%20neutrality https://www.loc.gov/item/today-in-history/october-23/#:~:tex....
- lazerpants 5y ago
  Plus it was an unprecedented investment in labor. An entire generation of young men were either killed or maimed, or they received job training and the offer of a free college degree. Suddenly you have an exceedingly employable workforce. And, on top of that, employing women became acceptable too, all creating a situation in which supply expanded massively.
- throwaway_4253 5y ago
  Just for clarity, how are you defining "Wealth" here? I tend to think of knowledge and skills as a form of Wealth, but it's reasonable for that to be debated; especially if all you're measuring is relative positions in a commodities market. Either way, I think it's possible to argue that the US did generate Wealth in WW2, in the sense that it developed new technologies and knowledge that were eventually shared worldwide (I'm thinking mass production of materials like plastics, antibiotics, better research on nutrition, etc, statistical engineering techniques which eventually helped build up the Japanese auto industry), and that it trained a large portion of its population via the G.I. Bill and women working in factories, etc. (None of this is to belittle all the damage done by the bombs, etc, and the US did have a massive advantage in non having it's production capacity wrecked like Europe, Russia and Japan. The broken window fallacy is a real thing)

richardwhiuk 5y ago

TFA: > Asked if the money the Fed was injecting into banks in the wake of the global financial crisis was “taxpayer money,” Bernanke shook his head and grinned sheepishly. “To lend to a bank,” he said, “we simply use the computer to mark up the size of the account that they have with the Fed.”