5 ms·

I was predicting hyperinflation from 2008 and for years after, but the evidence just isn't there. Maybe things will eventually pop. The actual happenings of th

by n8cpdx 5y ago

I was predicting hyperinflation from 2008 and for years after, but the evidence just isn't there. Maybe things will eventually pop. The actual happenings of the economy (people buying and selling) are insulated from financial markets enough that a huge rally can happen without affecting lived reality for people. Maybe a pop in the financial sector can happen without actually affecting the economy? I don't see why the fed can't just make that money go away if it really needs to.

vkou 5y ago
I would like to point out that in order to put the economy into hyperinflation (50% month to month inflation), it would require the Fed to print and parachute somewhere between 50 and 200 trillion dollars in one year. It's not very likely to happen.
- nO0b 5y ago
  [citation needed]
  - vkou 5y ago
    There's 6 trillion M0 USD in circulation, and 20 trillion in M2. Hyperinflation is defined as ~50% monthly inflation. This means that the value of money drops ~100 fold in a year. You tell me - how much money will the fed have to print, in order to hit that target, and where would it need to parachute it?
    - deleted 5y ago
      [deleted]
jollybean 5y ago
"but the evidence just isn't there." 1) The average home price in Canada increased in value more than the average workers income. Just digest that for a second: buying a home and doing nothing, is 'more productive' than literally working. That's a devastating situation to be in. 2) Equities are valued quite highly. 3) Esp. after COVID we are now starting to see very real inflation, we're not sure how much of it is from COVID etc. 4) There's a labour shortage, partly due to workers getting support from gov. (at least in Canada) - but a huge signal of inflation. I believe we are seeing considerable inflation of every kind except the narrow version that the economists traditionally like to use. Things don't have to 'pop' they can just realign slow or fast, but I believe they are realigning in ways that are going to be difficult to recover from without significant change. If you think 'raising taxes on the rich' is a controversial idea, how about 'putting a damper on home increases'. It's the most politically toxic thing imaginable, because it's not like those 'narrow issues' like 'gun control' that hit a narrow group with an ideology - it hits the entire middle and upper class in the pocket book. Home affordability is a fairly existential issue, and right now in Canada there's an election and not much talking about it because it's a 'no win' for most of the parties, even if they do have some policy things in the background. So we're already in a 'Funny Money' situation thanks to Toxic Assets from 2008 on the Fed Balance sheet, QE after that, and then 'Wartime Level Debt Spending' as a result of COVID. It's an odd time.
- n8cpdx 5y ago
  Completely agree with everything you've said. I think I've divorced housing prices from the concept of inflation because I spend so much time thinking about the underlying causes (zoning, NIMBY's, environmental reviews, etc). But the crazy price increases are enabled by the financial sector and all the money lying around. It seems the more financialized the sector (housing, higher Ed) the worse the inflation is. I don't know that my thinking on the boundary between finance-driven inflation and fundamentals-driven inflation is as clear as it should be.
carnitine 5y ago
You don’t understand hyperinflation if you think you can print your way into it. Hyperinflation has only ever occurred due to real problems in the country, a total breakdown of normal operation.
pphysch 5y ago
Believe it or not, Beijing propped up the global financial system in the immediate wake of 2008 by pledging to spend trillions on infrastructure, including $568B in the short term [1]. Beijing also accelerated purchases of US treasuries during this crisis, with their holdings reaching a peak (over $1T total) in 2013. These surges of spending from China aligned with the burst of asset purchases (~$1T) by the US Fed. Needless to say, this is not going to happen again. China is no longer interested in propping up the USD. Instead, it is rapidly insulating its economy from toxic USD financialization, from its "dual circulation" domestic policy to its successful launching of the largest "USD-free" trade agreement ever in Nov 2020 [2]. 2008 was already a crisis that could not be managed without global cooperation. By the numbers, 2020-2021 is far worse. The $3T surge of Fed asset purchases in 2020 has been extended by ~$1.5T in regular QE policy, with no end in sight. And there is no mega economy across the ocean that is going to sacrifice itself for the USD. There's a reason George Soros, champion of neoliberalism, is having an op-ed driven public meltdown this week. Best case scenario, the global elite are conspiring to let the global USD have a nice gentle death and we won't even notice. Otherwise, we are looking at a massive crash and inflation. Do you really think this monstrosity (https://fred.stlouisfed.org/graph/?g=GFV3 https://fred.stlouisfed.org/graph/?g=GFV3) can continue forever? [1] - https://www.nytimes.com/2008/11/10/world/asia/10iht-10china.17673270.html https://www.nytimes.com/2008/11/10/world/asia/10iht-10china.... [2] - https://en.wikipedia.org/wiki/Regional_Comprehensive_Economic_Partnership https://en.wikipedia.org/wiki/Regional_Comprehensive_Economi... [3] - https://fred.stlouisfed.org/graph/?g=GFV3 https://fred.stlouisfed.org/graph/?g=GFV3

by n8cpdx 5y ago

vkou 5y ago

I would like to point out that in order to put the economy into hyperinflation (50% month to month inflation), it would require the Fed to print and parachute somewhere between 50 and 200 trillion dollars in one year. It's not very likely to happen.

nO0b 5y ago
[citation needed]
- vkou 5y ago
  There's 6 trillion M0 USD in circulation, and 20 trillion in M2. Hyperinflation is defined as ~50% monthly inflation. This means that the value of money drops ~100 fold in a year. You tell me - how much money will the fed have to print, in order to hit that target, and where would it need to parachute it?
  - deleted 5y ago
    [deleted]

jollybean 5y ago

"but the evidence just isn't there." 1) The average home price in Canada increased in value more than the average workers income. Just digest that for a second: buying a home and doing nothing, is 'more productive' than literally working. That's a devastating situation to be in. 2) Equities are valued quite highly. 3) Esp. after COVID we are now starting to see very real inflation, we're not sure how much of it is from COVID etc. 4) There's a labour shortage, partly due to workers getting support from gov. (at least in Canada) - but a huge signal of inflation. I believe we are seeing considerable inflation of every kind except the narrow version that the economists traditionally like to use. Things don't have to 'pop' they can just realign slow or fast, but I believe they are realigning in ways that are going to be difficult to recover from without significant change. If you think 'raising taxes on the rich' is a controversial idea, how about 'putting a damper on home increases'. It's the most politically toxic thing imaginable, because it's not like those 'narrow issues' like 'gun control' that hit a narrow group with an ideology - it hits the entire middle and upper class in the pocket book. Home affordability is a fairly existential issue, and right now in Canada there's an election and not much talking about it because it's a 'no win' for most of the parties, even if they do have some policy things in the background. So we're already in a 'Funny Money' situation thanks to Toxic Assets from 2008 on the Fed Balance sheet, QE after that, and then 'Wartime Level Debt Spending' as a result of COVID. It's an odd time.

n8cpdx 5y ago
Completely agree with everything you've said. I think I've divorced housing prices from the concept of inflation because I spend so much time thinking about the underlying causes (zoning, NIMBY's, environmental reviews, etc). But the crazy price increases are enabled by the financial sector and all the money lying around. It seems the more financialized the sector (housing, higher Ed) the worse the inflation is. I don't know that my thinking on the boundary between finance-driven inflation and fundamentals-driven inflation is as clear as it should be.

carnitine 5y ago

You don’t understand hyperinflation if you think you can print your way into it. Hyperinflation has only ever occurred due to real problems in the country, a total breakdown of normal operation.

pphysch 5y ago

Believe it or not, Beijing propped up the global financial system in the immediate wake of 2008 by pledging to spend trillions on infrastructure, including $568B in the short term [1]. Beijing also accelerated purchases of US treasuries during this crisis, with their holdings reaching a peak (over $1T total) in 2013. These surges of spending from China aligned with the burst of asset purchases (~$1T) by the US Fed. Needless to say, this is not going to happen again. China is no longer interested in propping up the USD. Instead, it is rapidly insulating its economy from toxic USD financialization, from its "dual circulation" domestic policy to its successful launching of the largest "USD-free" trade agreement ever in Nov 2020 [2]. 2008 was already a crisis that could not be managed without global cooperation. By the numbers, 2020-2021 is far worse. The $3T surge of Fed asset purchases in 2020 has been extended by ~$1.5T in regular QE policy, with no end in sight. And there is no mega economy across the ocean that is going to sacrifice itself for the USD. There's a reason George Soros, champion of neoliberalism, is having an op-ed driven public meltdown this week. Best case scenario, the global elite are conspiring to let the global USD have a nice gentle death and we won't even notice. Otherwise, we are looking at a massive crash and inflation. Do you really think this monstrosity (https://fred.stlouisfed.org/graph/?g=GFV3 https://fred.stlouisfed.org/graph/?g=GFV3) can continue forever? [1] - https://www.nytimes.com/2008/11/10/world/asia/10iht-10china.17673270.html https://www.nytimes.com/2008/11/10/world/asia/10iht-10china.... [2] - https://en.wikipedia.org/wiki/Regional_Comprehensive_Economic_Partnership https://en.wikipedia.org/wiki/Regional_Comprehensive_Economi... [3] - https://fred.stlouisfed.org/graph/?g=GFV3 https://fred.stlouisfed.org/graph/?g=GFV3