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If you look at a graph of either our money supply or spending it is pretty clear that we are in uncharted territory in terms of money supply expansion. They are

by anm89 6y ago

If you look at a graph of either our money supply or spending it is pretty clear that we are in uncharted territory in terms of money supply expansion. They are basically hockey sticking. So don't make it out to be some kind of fringe hypothesis to expect inflation. It's the base case at this point. For the record I'm specifically not arguing we will have hyperinflation. I don't think we will. We don't even need to get within 1/10th of hyperinflation to inflate away our current stock market bubble or even the crypto bubble.

arcticbull 6y ago
> So don't make it out to be some kind of fringe hypothesis to expect inflation. It's the base case at this point. I don't think it's a fringe hypothesis, I just don't think it's a foregone conclusion by any stretch. I don't think the folks espousing the idea have any basis either. > They are basically hockey sticking. You're only looking at half the equation - inflation is a function of supply and velocity. The fed has tools to adjust the supply to match velocity and it has successfully done so for 50 years. The high asset prices (and crypto prices) are IMO more a function of supply. That doesn't mean inflation. Inflation is measured against the CPI basket -- not against he S&P. Simply having more supply doesn't imply inflation, or even 1/10th of hyperinflation. It just indicates the supply is high. When combined with measured inflation, it also implies the velocity is low. Were velocity to increase, the Fed can contract the supply by increasing the reserve limit, selling back bonds to unwind its balance sheet and raising interest rates. Speaking of high asset prices, you might find this twitter thread suggesting that the Dutch tulip bubble was actually caused by an oversupply of currency [1]. [1] https://twitter.com/emollick/status/1382159296172015616?s=20 https://twitter.com/emollick/status/1382159296172015616?s=20
- anm89 6y ago
  I'm aware of velocity. The government didn't hand out trillions in transfer payments during the last 10 years of money growth so I think the velocity side is covered as well. The popular wisdom regarding the tulip affair is widely acknowledged to be BS and it is played out regardless, So I'd recommend to pick a more interesting anecdote if you want to make a point regarding economics. On the other hand I have absolutely no doubt that asset bubbles can be inflated by printing money and you are misunderstanding my point if you think I'm insinuating otherwise.

by anm89 6y ago

arcticbull 6y ago

> So don't make it out to be some kind of fringe hypothesis to expect inflation. It's the base case at this point. I don't think it's a fringe hypothesis, I just don't think it's a foregone conclusion by any stretch. I don't think the folks espousing the idea have any basis either. > They are basically hockey sticking. You're only looking at half the equation - inflation is a function of supply and velocity. The fed has tools to adjust the supply to match velocity and it has successfully done so for 50 years. The high asset prices (and crypto prices) are IMO more a function of supply. That doesn't mean inflation. Inflation is measured against the CPI basket -- not against he S&P. Simply having more supply doesn't imply inflation, or even 1/10th of hyperinflation. It just indicates the supply is high. When combined with measured inflation, it also implies the velocity is low. Were velocity to increase, the Fed can contract the supply by increasing the reserve limit, selling back bonds to unwind its balance sheet and raising interest rates. Speaking of high asset prices, you might find this twitter thread suggesting that the Dutch tulip bubble was actually caused by an oversupply of currency [1]. [1] https://twitter.com/emollick/status/1382159296172015616?s=20 https://twitter.com/emollick/status/1382159296172015616?s=20

anm89 6y ago
I'm aware of velocity. The government didn't hand out trillions in transfer payments during the last 10 years of money growth so I think the velocity side is covered as well. The popular wisdom regarding the tulip affair is widely acknowledged to be BS and it is played out regardless, So I'd recommend to pick a more interesting anecdote if you want to make a point regarding economics. On the other hand I have absolutely no doubt that asset bubbles can be inflated by printing money and you are misunderstanding my point if you think I'm insinuating otherwise.