5 ms·

Right, vs REAL inflation, which is measured by whatever I think happens to be too expensive right now.

willcipriano 5y ago
I mostly just look at the money supply. Print 10% more money, that's 10% inflation. It may not be uniform throughout the economy, or take effect immediately but that's 10% more money chasing the same assets. It's all has to go somewhere.
- haskellandchill 5y ago
  Money supply in theory is chasing actual economic effects such as growth, so your view of just one side is not very meaningful. The flaw is in considering assets static.
  - willcipriano 5y ago
    To some extent sure but were 2020 and 2021 boom years in terms of productivity, because they were certainly boom years in terms of money printing.
- munk-a 5y ago
  What is the actual money supply though - if I earn 1k and put it in a bank and it gets loaned out to someone else is there now 2k in circulation since my money is insured? Only a teensy tiny portion of "value" in the economy is actually on printed bills - but even the abstract value we can track won't tell the whole story.
  - epistasis 5y ago
    One note, is that bank loans are not taken from deposits anymore, that story we were told as children does not reflect modern banking. There's not even "fractional reserve" so much anymore, just "stress tests." So banks really do own a printing press when it comes to money, which is sometime called horizontal money, as opposed to the "vertical" money that comes from a monetary sovereign.
- the_gastropod 5y ago
  This is just incorrect. Value is added to the economy every day. Take the home you're living in. That probably did not exist 100 years ago (and if it did, it certainly wasn't as nice as it is today). That's new value, and having money in circulation to correspond to that value makes perfect sense.
- throw0101a 5y ago
  > Print 10% more money, that's 10% inflation. No: If you're approved for a $100K loan, you are credited with $100K balance to draw from your account, and the money supply is recorded as going up by $100K. But if you don't withdraw any money from the account (e.g., a HELOC that you intended only for emergencies), then how can it be inflationary if it's not circulating in the economy? But it is registered as increased money supply.
  - noduerme 5y ago
    Do a lot of people take out loans they never use? If you get a loan to buy a house, the seller gets the money immediately and uses it to buy another house. You've just put a whole house's worth of debt into circulation.
    - throw0101a 5y ago
      > Do a lot of people take out loans they never use? Many business may have them. As I mentioned, HELOCs are a thing as well. Neither may be used to the absolute limit, but only on an as-needed basis.
- whimsicalism 5y ago
  Velocity effects are extremely important. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
lazide 5y ago
When a couple markets in housing are going up like crazy? Sure. When essentially all asset classes or supply constrained service/goods globally are going up everywhere at record rates? It’s hard to not see the need to at least consider it. Especially after the massive amount of money printing still ongoing.
quickthrower2 5y ago
Cheap TVs but have to rent forever, landlord caused cockroach infestation to get me to leave rent control. But a 720p TV is cheap!

I mostly just look at the money supply. Print 10% more money, that's 10% inflation. It may not be uniform throughout the economy, or take effect immediately but that's 10% more money chasing the same assets. It's all has to go somewhere.

haskellandchill 5y ago
Money supply in theory is chasing actual economic effects such as growth, so your view of just one side is not very meaningful. The flaw is in considering assets static.
- willcipriano 5y ago
  To some extent sure but were 2020 and 2021 boom years in terms of productivity, because they were certainly boom years in terms of money printing.
munk-a 5y ago
What is the actual money supply though - if I earn 1k and put it in a bank and it gets loaned out to someone else is there now 2k in circulation since my money is insured? Only a teensy tiny portion of "value" in the economy is actually on printed bills - but even the abstract value we can track won't tell the whole story.
- epistasis 5y ago
  One note, is that bank loans are not taken from deposits anymore, that story we were told as children does not reflect modern banking. There's not even "fractional reserve" so much anymore, just "stress tests." So banks really do own a printing press when it comes to money, which is sometime called horizontal money, as opposed to the "vertical" money that comes from a monetary sovereign.
the_gastropod 5y ago
This is just incorrect. Value is added to the economy every day. Take the home you're living in. That probably did not exist 100 years ago (and if it did, it certainly wasn't as nice as it is today). That's new value, and having money in circulation to correspond to that value makes perfect sense.
throw0101a 5y ago
> Print 10% more money, that's 10% inflation. No: If you're approved for a $100K loan, you are credited with $100K balance to draw from your account, and the money supply is recorded as going up by $100K. But if you don't withdraw any money from the account (e.g., a HELOC that you intended only for emergencies), then how can it be inflationary if it's not circulating in the economy? But it is registered as increased money supply.
- noduerme 5y ago
  Do a lot of people take out loans they never use? If you get a loan to buy a house, the seller gets the money immediately and uses it to buy another house. You've just put a whole house's worth of debt into circulation.
  - throw0101a 5y ago
    > Do a lot of people take out loans they never use? Many business may have them. As I mentioned, HELOCs are a thing as well. Neither may be used to the absolute limit, but only on an as-needed basis.
whimsicalism 5y ago
Velocity effects are extremely important. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V

lazide 5y ago

When a couple markets in housing are going up like crazy? Sure. When essentially all asset classes or supply constrained service/goods globally are going up everywhere at record rates? It’s hard to not see the need to at least consider it. Especially after the massive amount of money printing still ongoing.

quickthrower2 5y ago

Cheap TVs but have to rent forever, landlord caused cockroach infestation to get me to leave rent control. But a 720p TV is cheap!