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The broad money supply has shot up by almost 33% in roughly one year: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL. Even thou
by rebelos 5y ago
The broad money supply has shot up by almost 33% in roughly one year: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL. Even though some prices have already gone up, we haven't felt the full effect of this yet because we're still emerging out of the pandemic and money velocity hasn't reverted to trend: https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V. Roughly speaking, price level = money velocity * broad money supply.
- dragonwriter 5y agoMoney supply isn’t a thing which varies randomly, impacting the economy but not impacted by it. The money supply hasn’t shot up as some random event which will remain static if money velocity reverts to trend, it shot up specifically as a policy response to low velocity, and increasing velocity is one of the signals which will cause 8t to be reeled back in.
- rebelos 5y agoThat's a pretty bold assertion when the M2 chart itself demonstrates that broad money supply has never contracted in any substantial way. Federal and corporate debt to GDP are also at historic highs, which is precisely the environment in which the Fed prefers to let inflation run hot.