4 ms·

> Many economists are skeptical. Andrew Hunter, senior US economist at Capital Economics, said the relationship between the money supply and inflation has “in r

> 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.
bnlg 5y ago
> Clearly that didn’t happen. In the basket of goods that statistics use to "prove" there is no inflation.
- amanaplanacanal 5y ago
  My understanding is that the basket is based on what consumers actually spend their dollars on. Maybe there's a better way to do it, but I'm not sure what that would be.
  - neural_thing 5y ago
    Getting rid of hedonic adjustment and dropping the "owner rent equivalent" in favor of actual rent/housing prices is a start
lamontcg 5y ago
High stock prices aren't considered inflation by economists, they're considered asset bubbles. They're not wrong, they're just speaking a different language than you are and don't agree with the definition of inflation. This is because asset bubbles tend to pop over the long term and come back down to ground. There's the idea of Cantillon effects where there's inflation in the kinds of things that rich people spend their money on. But that theory has attached to it the notion that inflation necessarily trickles down from there as the wealth trickles out, and economists will object to that because like the quote says it just hasn't been observed to happen (consistent with the fact that the rich keep getting richer and the poor keep getting poorer in this economy, and we're doing the opposite of "raising all boats").

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.

bnlg 5y ago

> Clearly that didn’t happen. In the basket of goods that statistics use to "prove" there is no inflation.

amanaplanacanal 5y ago
My understanding is that the basket is based on what consumers actually spend their dollars on. Maybe there's a better way to do it, but I'm not sure what that would be.
- neural_thing 5y ago
  Getting rid of hedonic adjustment and dropping the "owner rent equivalent" in favor of actual rent/housing prices is a start

lamontcg 5y ago

High stock prices aren't considered inflation by economists, they're considered asset bubbles. They're not wrong, they're just speaking a different language than you are and don't agree with the definition of inflation. This is because asset bubbles tend to pop over the long term and come back down to ground. There's the idea of Cantillon effects where there's inflation in the kinds of things that rich people spend their money on. But that theory has attached to it the notion that inflation necessarily trickles down from there as the wealth trickles out, and economists will object to that because like the quote says it just hasn't been observed to happen (consistent with the fact that the rich keep getting richer and the poor keep getting poorer in this economy, and we're doing the opposite of "raising all boats").