3 ms·

No, that graph only shows a discontinuity because the definition of M1 money supply was changed on that date. They explained it fully here: https://fredblog.st

No, that graph only shows a discontinuity because the definition of M1 money supply was changed on that date. They explained it fully here: https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec... Sharing the graph without the context is misleading.

deleted 5y ago
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nairboon 5y ago
But the money was still printed as you see in the M2 supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- atq2119 5y ago
  I seriously doubt that the money was printed. It's all electronic nowadays. There's so much confusion and cargo-culting around money, it would serve as well to use accurate language. The money was created, but not printed. This is significant because "printing" evokes a picture of the money being distributed to people who then spend it, which is not quite the case here.
  - Acrobatic_Road 5y ago
    It makes no difference whether the money was printed or "created".
    - imtringued 5y ago
      It makes a huge difference because creating money follows regulations, "printing money" means you are ignoring those regulations.
    - SantalBlush 5y ago
      Actually, it makes an enormous difference. The supply of money that is created by banks can be increased and decreased through Fed operations. That means when inflation becomes a threat, the Fed can reduce the money supply, thereby reducing the money in circulation and reducing inflation risks. Seriously, this is one of the Fed's primary tasks, to control inflation through monetary policy. It's sad how many people on HN fail to understand this.
- rsj_hn 5y ago
  Table stakes for discussing monetary policy is knowing the defintion of things like M2 and understanding it has nothing to do with "printing" assets as M2 primarily measures deposit accounts which are created by bank lending and destroyed by either the repayment of loans or households shifting their portfolio away from demand accounts and towards longer term financial sector liabilities such as commercial paper or mortgage bonds. The shape of this curve does not reflect policy choices by the government but rather is controlled by household portfolio balance choices.
JohnJamesRambo 5y ago
The effect is real, it doesn’t seem to be a graphing error or change in definition. https://seekingalpha.com/article/4396194-why-m1-money-supply-cash-is-skyrocketing-like-no-time-in-history https://seekingalpha.com/article/4396194-why-m1-money-supply... From your own link we can see- “In late February and early March of 2020, the Fed cut its policy interest rate dramatically to help ease credit conditions during the COVID-19 crisis. The resulting acceleration in the supply of M1 can be understood largely as banks accommodating an increase in people's demand for money.” This is “real” money that banks needed access to for their customers in unprecedented amounts. The problem is that it was created out of nothing.

deleted 5y ago

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nairboon 5y ago

But the money was still printed as you see in the M2 supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

atq2119 5y ago
I seriously doubt that the money was printed. It's all electronic nowadays. There's so much confusion and cargo-culting around money, it would serve as well to use accurate language. The money was created, but not printed. This is significant because "printing" evokes a picture of the money being distributed to people who then spend it, which is not quite the case here.
- Acrobatic_Road 5y ago
  It makes no difference whether the money was printed or "created".
  - imtringued 5y ago
    It makes a huge difference because creating money follows regulations, "printing money" means you are ignoring those regulations.
  - SantalBlush 5y ago
    Actually, it makes an enormous difference. The supply of money that is created by banks can be increased and decreased through Fed operations. That means when inflation becomes a threat, the Fed can reduce the money supply, thereby reducing the money in circulation and reducing inflation risks. Seriously, this is one of the Fed's primary tasks, to control inflation through monetary policy. It's sad how many people on HN fail to understand this.
rsj_hn 5y ago
Table stakes for discussing monetary policy is knowing the defintion of things like M2 and understanding it has nothing to do with "printing" assets as M2 primarily measures deposit accounts which are created by bank lending and destroyed by either the repayment of loans or households shifting their portfolio away from demand accounts and towards longer term financial sector liabilities such as commercial paper or mortgage bonds. The shape of this curve does not reflect policy choices by the government but rather is controlled by household portfolio balance choices.

JohnJamesRambo 5y ago

The effect is real, it doesn’t seem to be a graphing error or change in definition. https://seekingalpha.com/article/4396194-why-m1-money-supply-cash-is-skyrocketing-like-no-time-in-history https://seekingalpha.com/article/4396194-why-m1-money-supply... From your own link we can see- “In late February and early March of 2020, the Fed cut its policy interest rate dramatically to help ease credit conditions during the COVID-19 crisis. The resulting acceleration in the supply of M1 can be understood largely as banks accommodating an increase in people's demand for money.” This is “real” money that banks needed access to for their customers in unprecedented amounts. The problem is that it was created out of nothing.