6 ms·

Inflation bubbles over the horizon Almost a fifth of ALL US dollars were created this year https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created

Inflation bubbles over the horizon Almost a fifth of ALL US dollars were created this year https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/ https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were...

imtringued 5y ago
Can you buy stocks with central bank reserves? I get that QE drives yields down on treasury bonds and this makes them less attractive but are you sure this isn't about regular people selling their bonds and getting stocks instead?
- ratsmack 5y ago
  I personally cashed in >$1m in CD's and bought stocks because of my fear of being left behind because of inflation. Many of my CD's were callable, so I really had no choice.
  - nomoreplease 5y ago
    Why did you have 1M in CDs in the first place?
    - ratsmack 5y ago
      I already had a bunch in stocks, so having a portion of my money in CD's made me feel all warm and fuzzy.
      - arthurcolle 5y ago
        Are there any inflation protected CD's ? I know of TIPS from my time on a trading desk that was a few rows away from the inflation desk, but curious if there are any retail products like a CD with some level of inflation protection
        ac29 5y ago
        I Bonds are the closest thing I can think of.
  - lubujackson 5y ago
    Technically "reserves" only exist to insure against loans the banks make. Money is generally added to the economy by the banks when they trade cash for debt (i.e. make a loan). The whole idea behind giving banks more reserves is so that they can make more loans, which are capped by the government at some % of the bank's reserves. So really the government is tweaking things for banks to get around their own rules... but none of this matters if banks aren't near their cap in loans, which none of them are. So it really is just political theater to make it seem like things are getting done. Once you understand that, the supression of interest rates makes a lot more sense, because it is another way to encourage new loans (and keep existing ones manageable).
- dragonwriter 5y ago
  > Can you buy stocks with central bank reserves? That kind of depends on who you are. If you are a central bank, and particularly one of the central banks that doesn't, by policy, not buy that class of securities, yes, you can (e.g., the Bank of Japan does.) If you are not a central bank, you can't buy anything with central bank reserves, and if you are, say, the Fed, you could, but you've made a policy choice not to.
wobblyasp 5y ago
> Many economists are skeptical. Andrew Hunter, senior US economist at Capital Economics, said the relationship between the money supply and inflation has “in reality” been “pretty weak or arguably non-existent for a few decades now”. > “We had these same concerns back in 2008/9, that it was going to trigger a surge in inflation. Clearly that didn’t happen.”
- refurb 5y ago
  Based on this same logic I could see someone saying, in 2005, “despite loosening lending requirements back in the late 1990’s, we had these same concerns of instability in mortgages that would result in a housing collapse. Clearly that didn’t happen.”
  - filoleg 5y ago
    The difference is that between late 90s and 2008, there has been a single decade at most. However, at this point, we are talking about a few decades with many predicted catalysts actually happening, but not the inflation surge itself.
    - refurb 5y ago
      The money supply was rapidly expanded in 2008. That’s 13 years ago and we’ve seen massive asset inflation since. There is ample reason to think it might still blow up in our faces.
    - klipt 5y ago
      Certain costs have drastically inflated during that time. Healthcare. Education. Housing.
      - rualca 5y ago
        Do housing prices actually reflect inflation at this point in time? The underlying hypothesis is that institutional investors are dumping their cash into real estate as an alternative to low-rise investments that recently started to pay negative interest rates. In fact, we are starting to see places around the world whose local government started blocking real estate purchases from institutional investors as they were pricing families out of the market.
deleted 5y ago
[deleted]

imtringued 5y ago

Can you buy stocks with central bank reserves? I get that QE drives yields down on treasury bonds and this makes them less attractive but are you sure this isn't about regular people selling their bonds and getting stocks instead?

ratsmack 5y ago
I personally cashed in >$1m in CD's and bought stocks because of my fear of being left behind because of inflation. Many of my CD's were callable, so I really had no choice.
- nomoreplease 5y ago
  Why did you have 1M in CDs in the first place?
  - ratsmack 5y ago
    I already had a bunch in stocks, so having a portion of my money in CD's made me feel all warm and fuzzy.
    - arthurcolle 5y ago
      Are there any inflation protected CD's ? I know of TIPS from my time on a trading desk that was a few rows away from the inflation desk, but curious if there are any retail products like a CD with some level of inflation protection
      - ac29 5y ago
        I Bonds are the closest thing I can think of.
- lubujackson 5y ago
  Technically "reserves" only exist to insure against loans the banks make. Money is generally added to the economy by the banks when they trade cash for debt (i.e. make a loan). The whole idea behind giving banks more reserves is so that they can make more loans, which are capped by the government at some % of the bank's reserves. So really the government is tweaking things for banks to get around their own rules... but none of this matters if banks aren't near their cap in loans, which none of them are. So it really is just political theater to make it seem like things are getting done. Once you understand that, the supression of interest rates makes a lot more sense, because it is another way to encourage new loans (and keep existing ones manageable).
dragonwriter 5y ago
> Can you buy stocks with central bank reserves? That kind of depends on who you are. If you are a central bank, and particularly one of the central banks that doesn't, by policy, not buy that class of securities, yes, you can (e.g., the Bank of Japan does.) If you are not a central bank, you can't buy anything with central bank reserves, and if you are, say, the Fed, you could, but you've made a policy choice not to.

wobblyasp 5y ago

> Many economists are skeptical. Andrew Hunter, senior US economist at Capital Economics, said the relationship between the money supply and inflation has “in reality” been “pretty weak or arguably non-existent for a few decades now”. > “We had these same concerns back in 2008/9, that it was going to trigger a surge in inflation. Clearly that didn’t happen.”

refurb 5y ago
Based on this same logic I could see someone saying, in 2005, “despite loosening lending requirements back in the late 1990’s, we had these same concerns of instability in mortgages that would result in a housing collapse. Clearly that didn’t happen.”
- filoleg 5y ago
  The difference is that between late 90s and 2008, there has been a single decade at most. However, at this point, we are talking about a few decades with many predicted catalysts actually happening, but not the inflation surge itself.
  - refurb 5y ago
    The money supply was rapidly expanded in 2008. That’s 13 years ago and we’ve seen massive asset inflation since. There is ample reason to think it might still blow up in our faces.
  - klipt 5y ago
    Certain costs have drastically inflated during that time. Healthcare. Education. Housing.
    - rualca 5y ago
      Do housing prices actually reflect inflation at this point in time? The underlying hypothesis is that institutional investors are dumping their cash into real estate as an alternative to low-rise investments that recently started to pay negative interest rates. In fact, we are starting to see places around the world whose local government started blocking real estate purchases from institutional investors as they were pricing families out of the market.

deleted 5y ago

[deleted]