3 ms·

Simple reason: money printing by the government. The loss of value of the USD is likely continuing if the aggressive printing goes on.

by kerng 5y ago

quotemstr 5y ago
Often, a simple common-sense understanding of the world produces better results than some complicated official narrative that all the important people profess to believe. It takes a lot of intellectual work to persuade yourself that some theory is right and that your eyes are wrong. Here's a graph of money supply over time [1]: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL See the hockey stick on the right? That's going to cause inflation. I'm sick and tired of hearing about base effects, transient demand spikes, and other garbage. All of this complicated analysis amounts to a mixture of wishful thinking, deliberate public deception, and psychological denial of the obvious. The obvious reality is that there are a now more dollars chasing fewer goods and services, and that's going to increase the general price level. Don't try to bullshit me with some complicated theory that says otherwise. [1] This is the current up-to-date officially-supported M2 money supply series from the fed. It incorporates M1. Don't bullshit me by talking about the recent change in the definition of M1: it's all incorporated into M2 here.
- deleted 5y ago
  [deleted]
- jfengel 5y ago
  It has caused inflation. In assets. The stock market has gone through the roof. So have some other assets, like cryptocurrencies and some real estate. What it hasn't caused is significant inflation in consumer goods. That "hockey stick" has been going on for north of a decade, and the inflation rate for consumer goods has been under target for most of that time. The increased money supply isn't in the hands of consumers. The only money given directly to consumers was given at a time when enormous numbers of them were out of work, reducing demand. More dollars aren't chasing fewer goods and services. They're chasing the same supply of stocks (and houses and Bitcoins). It's long past time for the Fed to stop giving money to the asset markets. It's not "trickling down" in the form of business creation, as they hoped. It's just being used to pump up stock prices. But that also means that this isn't the sky-is-falling inflation monetarists have predicted 97 out of the last 2 times. This really, genuinely is part of all of that "garbage" you're so tired of hearing about but which is actually true. The inflation you seek really is obvious. It's right there, in the stock market. It doesn't require complicated analysis to see it.
  - quotemstr 5y ago
    What happens when people sell these appreciated assets and try to obtain real goods and services with the proceeds? Inflation cannot remain isolated in assets!
    - jfengel 5y ago
      It can, actually, which is the problem. It's the multi-trillion-dollar question. Some of it will go to real goods and services, but little of that is consumer goods. The rich don't eat more canned peas than other people. They buy more expensive cars, but that doesn't compete with consumer-grade cars. They do sometimes try to invest it in housing, and there are indications that that's going on right now. That does potentially raise actual consumer-level inflation, at least temporarily. It's one of those play-stupid-games-win-stupid-prizes, market-remain-irrational-longer-than-you-can-remain-solvent type situations. That's something they're going to need to watch out for. Some of that money will vanish when they try to cash out. In asset markets, the prices are all fictional, and the money can simply disappear. And some will go back into government coffers, which was the plan in the first place. The government works counter-cyclically, spending money when others won't and collecting taxes when people are spending freely. It's supposed to keep the market on an even keel. For most of a decade they've been putting out more and more punch bowl even though the party is going strong. That will be bad in the end. There's a crash coming -- but nobody knows when, and nobody wants to leave the party too early. The Fed will, probably this year, start taking away the punch, and that will be the signal to start selling assets. And the market will crash, by perhaps 50% -- all the while the government is collecting cap gains. And the rest of the money goes... gold? Real estate? Bonds? It's gonna be a mess. And it's likely to cause deflation, since whenever markets crash companies close -- because they were being propped up by fake cash. At which point the whole stupid business cycle starts over again.

Simple reason: money printing by the government. The loss of value of the USD is likely continuing if the aggressive printing goes on.

by kerng 5y ago

Simple reason: money printing by the government. The loss of value of the USD is likely continuing if the aggressive printing goes on.

quotemstr 5y ago

Often, a simple common-sense understanding of the world produces better results than some complicated official narrative that all the important people profess to believe. It takes a lot of intellectual work to persuade yourself that some theory is right and that your eyes are wrong. Here's a graph of money supply over time [1]: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL See the hockey stick on the right? That's going to cause inflation. I'm sick and tired of hearing about base effects, transient demand spikes, and other garbage. All of this complicated analysis amounts to a mixture of wishful thinking, deliberate public deception, and psychological denial of the obvious. The obvious reality is that there are a now more dollars chasing fewer goods and services, and that's going to increase the general price level. Don't try to bullshit me with some complicated theory that says otherwise. [1] This is the current up-to-date officially-supported M2 money supply series from the fed. It incorporates M1. Don't bullshit me by talking about the recent change in the definition of M1: it's all incorporated into M2 here.

deleted 5y ago
[deleted]
jfengel 5y ago
It has caused inflation. In assets. The stock market has gone through the roof. So have some other assets, like cryptocurrencies and some real estate. What it hasn't caused is significant inflation in consumer goods. That "hockey stick" has been going on for north of a decade, and the inflation rate for consumer goods has been under target for most of that time. The increased money supply isn't in the hands of consumers. The only money given directly to consumers was given at a time when enormous numbers of them were out of work, reducing demand. More dollars aren't chasing fewer goods and services. They're chasing the same supply of stocks (and houses and Bitcoins). It's long past time for the Fed to stop giving money to the asset markets. It's not "trickling down" in the form of business creation, as they hoped. It's just being used to pump up stock prices. But that also means that this isn't the sky-is-falling inflation monetarists have predicted 97 out of the last 2 times. This really, genuinely is part of all of that "garbage" you're so tired of hearing about but which is actually true. The inflation you seek really is obvious. It's right there, in the stock market. It doesn't require complicated analysis to see it.
- quotemstr 5y ago
  What happens when people sell these appreciated assets and try to obtain real goods and services with the proceeds? Inflation cannot remain isolated in assets!
  - jfengel 5y ago
    It can, actually, which is the problem. It's the multi-trillion-dollar question. Some of it will go to real goods and services, but little of that is consumer goods. The rich don't eat more canned peas than other people. They buy more expensive cars, but that doesn't compete with consumer-grade cars. They do sometimes try to invest it in housing, and there are indications that that's going on right now. That does potentially raise actual consumer-level inflation, at least temporarily. It's one of those play-stupid-games-win-stupid-prizes, market-remain-irrational-longer-than-you-can-remain-solvent type situations. That's something they're going to need to watch out for. Some of that money will vanish when they try to cash out. In asset markets, the prices are all fictional, and the money can simply disappear. And some will go back into government coffers, which was the plan in the first place. The government works counter-cyclically, spending money when others won't and collecting taxes when people are spending freely. It's supposed to keep the market on an even keel. For most of a decade they've been putting out more and more punch bowl even though the party is going strong. That will be bad in the end. There's a crash coming -- but nobody knows when, and nobody wants to leave the party too early. The Fed will, probably this year, start taking away the punch, and that will be the signal to start selling assets. And the market will crash, by perhaps 50% -- all the while the government is collecting cap gains. And the rest of the money goes... gold? Real estate? Bonds? It's gonna be a mess. And it's likely to cause deflation, since whenever markets crash companies close -- because they were being propped up by fake cash. At which point the whole stupid business cycle starts over again.