8 ms·

40% of US dollars in existence were printed in the last 12 months

49 points by k__ 5y ago

kchoudhu 5y ago
And we care about what this twitter random thinks about monetary policy because...?
- dang 5y ago
  "Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
alexnewman 5y ago
1) Printed? Is he talking about cash? 2) The gov does not print money. Banks do. To give loans. 3) The gov is not your household
- rco8786 5y ago
  Don’t follow #2. Governments do indeed print money. Banks do not. What am I missing.
  - romanhn 5y ago
    Check out fractional reserve banking - banks do indeed add to the overall money supply with every new loan.
- anm89 5y ago
  You are drastically misunderstanding arguments that you are parroting. When you see a physical dollar bill , the federal government, specifically the Beaureu of engraving and printing, printed that money. Which is however not what people mean when they say printing money in this context. In that case they are talking about monetary policy, generally old-school OMO or recently it's variation QE which expands the feds balance sheet with recently created money ( ie they print the money digitally to expand their balance sheet) Banks engaging in fractional reserve lending does increase the money supply but economists and the financial press do not refer to this as printing money, they refer to it as lending. And finally the "the government isn't a household" argument has grains of truth but is also incredibly trite and fails to understand the many ways in which they are accountable to the same forces a household is accountable to.
- imtringued 5y ago
  >The gov is not your household That's true but the funny part is that people misunderstand it in an especially contrived way. A companies job is to increase its net worth to make profits for its investors. A government's job is to increase its net worth to provide public services to its citizens. The goal behind investments is to achieve an increase in your net worth. Whether you spend your own money or borrow money doesn't really matter, the point is that you make the investments that you think you need. Businesses should invest for obvious reasons. Governments should invest too but in traditional areas like infrastructure, health care or education. Businesses do not do "austerity" full stop. They borrow heavily to grow. Households do not do austerity either, they borrow heavily to buy real estate. Strangely enough it is governments that should do austerity and be responsible and stop investing for future benefits. It's basically just anti government rhetoric. When a $250k/year household borrows $2 million to buy a house nobody bats an eye even though that household has a 800% debt to household income ratio.
sleepysysadmin 5y ago
Verifying the numbers. M0 money supply in late 2019 was about 3.5 trillion. Today it's about 6.5 trillion. That's not locked in inflation, that's just money sitting in accounts. M1 from 2017 to late 2019 was around 5 trillion. Maybe a slight increase over those years. Today it's about 20 trillion. So about 400%? That's hyperinflation coming if nothing is done to fix it. Technically this is out of the hands of the government but there are things they can do to fix this. M2 is where we are locked in. Again late 2019 we're in the 1.5 trillion area. Today we're about 2.1 trillion. That's roughly 40% inflation locked in. The 40% won't come all in 1 year, but 5% inflation at the moment certainly isn't covering it. 0.25% fed funds rate is also tremendously lacking.
specialist 5y ago
"Minted", not "printed". Most (>95%?) currency is now digital. OC later writes: > The lesson is to convert dollars to assets ASAP Ya. Because runaway inflation. Any day now. Just like after the last bailout [2009]. "Inflation, consumer prices for the United States" https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA Not.
- mandelbrotwurst 5y ago
  Historically, minting and printing were both physical processes.
- dragonwriter 5y ago
  > "Minted", not "printed". Most (>95%?) currency is now digital. Coin is minted. Paper is printed. Fiat money that exists as digital record of accounts is neither minted nor printed (though frequently metaphorically referred to in the latter way), but created in credit transactions.
  - shoto_io 5y ago
    Ah seems someone has a real understand how these things work. I always wondered: how do you “print” money these days!? How does the credit transaction brings money into the system?
    - colejohnson66 5y ago
      It’s banks lending out the money in accounts (where savings interest comes from). If the bank has $1B from user accounts and lends out $300M of that, $300M was created out of thin air because the accounts still have $1B (fractional reserve). But then the question becomes: when the loan is paid back, is the money “destroyed” (less interest)?
      - shoto_io 5y ago
        Ok, and how do banks get the money in the first place?
8bitsrule 5y ago
If I understand money (who does?) then: if I borrow $500,000 to spend today (at low interest), and pay it back, as time goes by, with money worth only $300,000 (today) ... sounds like a net gain.
- mhluongo 5y ago
  It sounds like you understand money! For bonus points, at whose expense is this happening?
  - voisin 5y ago
    At the expense of people with investments in fixed return assets (cash, bonds), and those whose income does not keep pace with inflation.
    - nradov 5y ago
      If investors expect inflation to increase they can hedge that risk with TIPS. https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
      - voisin 5y ago
        These are adjusted based on CPI, which I think many intelligent observers believe to be a massively faulty metric for inflation.
  - deleted 5y ago
    [deleted]
- kukx 5y ago
  It is a gamble. The interests can go up and then you could be cooked. And anyway you need to find a way to get ahead of the inflation with this money. Sure it is an opportunity but not without risks.
  - 5y ago
gus_massa 5y ago
Is this an 40% increase of the total number of "dollars" or just and 40% increase of the total number of "dollars in bills + coins"? Most of the dollars are only a abstract entry in a database, not a piece of paper. Increasing the total dollars (bills + coins + database + whatever [1]) would be very bad. Increasing only the number physical tokens that people sometimes use to exchange abstract dollars is probably only a rounding error. [1] https://en.wikipedia.org/wiki/Money_supply https://en.wikipedia.org/wiki/Money_supply
- sleepysysadmin 5y ago
  >Most of the dollars are only a abstract entry in a database, not a piece of paper. The abstract amount of increase was more than 400%. 40% is paper or real inflation locked in.
- voisin 5y ago
  Looks like total dollars (not just physical) to me given that FRED link above (https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL)
- dogma1138 5y ago
  This describes bank money so it’s essentially everything you would normally describe as money not just physical currency.
- throw0101a 5y ago
  > Most of the dollars are only a abstract entry in a database, not a piece of paper. More than that, the "dollars" created by the Fed are really reserve deposits which are given to financial institutions who have accounts with the Fed. Those reserves are only useable in the inter-bank system that the Fed runs and cannot enter the 'real' economy. The "money" of the economy is created by private banks through loans out of thin air—no Fed required: > In many market based systems such as the USA, the money supply is essentially privatized and controlled by private banks that compete to create loans which create deposits (money). Contrary to popular opinion, governments in such a system do not directly control the money supply nor do they create most of the money. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 Most transactions are done with digital transfers by crediting and debiting accounts. Once your loan is approved your account is credited and *poof* money that you can use is created.
curtis3389 5y ago
Without any citations and the vague language, I don't know how we're supposed to take this seriously.
- H8crilA 5y ago
  How about just opening FRED? https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE If you want more detail you should probably first learn the basics of "money".
- nradov 5y ago
  You can just look at the M1 money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL Of course that doesn't give the whole picture. There are other relevant metrics beyond M1.
  - ben_w 5y ago
    I think I’m in the same position as @curtis3389: I can look at the surprising — nay, shocking — graph, but I have no idea if I should care, as the one thing it definitely doesn’t mean is the 400% inflation that graph naively implies. As you say, there are other relevant metrics; I don’t know those metrics, I just know they must exist.
  - rrss 5y ago
    How should I interpret this? There’s a huge jump in may 2020, but apparently the metric was redefined in may 2020 to include more stuff? from the Q&A page linked at the bottom: > Recognizing savings deposits as a transaction account as of May 2020 will cause a series break in the M1 monetary aggregate. Beginning with the May 2020 observation, M1 will increase by the size of the industry total of savings deposits, which amounted to approximately $11.2 trillion
    - lifeisstillgood 5y ago
      I think you have hit the nail on the head. Look at the M2 measure - https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL - it's a (scary / steady) growth from the 80s to now with a jump in covid. It does not show the vast leap M1 does - and mostly because the M1 metric itself has changed - not the underlying amount of money in the world. I mean that M1 jump in "real" numbers would mean a creation of 16 Trillion dollars - insane
anm89 5y ago
A few sources I have seen put the entire multi year cost of world war 2 in 2021 dollars at $4.1T. Where as it looks like congress has spent ~$4.5T fighting covid in the last year and that's before looking at fed balance sheet increases of ~$3.5t. So we have solidly spent more than WW2, almost double in a year or covid relief, a lot of which was fed balance sheet expansion(ie printed money) I independently came up with this but it looks like others have made the same observation https://www.chicagotribune.com/opinion/commentary/ct-opinion-covid-relief-package-cost-obrien-20210312-3bi5g7uxgfe6ngbfutj7luudey-story.html https://www.chicagotribune.com/opinion/commentary/ct-opinion... In fact the CT makes the claim that covid relief has almost equaled the cost of all American wars combined. Pretty mind blowing.
- bildung 5y ago
  It's always important to compare the whole economy, not just a single number. For context, the median income in 1940 was $18680 in 2021 dollars ($956 in 1940, https://www.npr.org/2012/04/02/149575704/the-1940-census-72-year-old-secrets-revealed https://www.npr.org/2012/04/02/149575704/the-1940-census-72-...) So in terms of the income of the average US man[1] in 1940 the WW2 cost was double the nominal number alone. [1] The source above explicitly says man, not person, so presumably the median household income was even less than half of today's numbers.
- okl 5y ago
  I think those numbers should be given relative to GDP or per-capita. Since 1940 the number of US residents has more than doubled, US GDP has increased by 10x.
- emerged 5y ago
  It’s infuriating every time someone even refers to these things as “COVID relief” because that isn’t what it was. That the banner held up to make everyone support it, but that isn’t what it was. No matter how many times people repeat the semantic trick I refuse to accept the lie.
jlturner 5y ago
It’s hard to tell looking at FRED but it seems like it may be due to a change in how they do their accounting starting in May of 2020 (when all the dollars “seem” to appear). From FRED: Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions. Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.
- throw0101a 5y ago
  There's a weblog post about this by the Fed itself: > […] the modification of Regulation D in late April has effectively rendered savings accounts almost indistinguishable from checking accounts from the perspective of depositors and banks. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information. * https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
tomerv 5y ago
Funny that some of the advice in that thread is to buy crypto, when ~99% of crypto coins were mined in the last 12 months.

49 points by k__ 5y ago

kchoudhu 5y ago

And we care about what this twitter random thinks about monetary policy because...?

dang 5y ago
"Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

alexnewman 5y ago

1) Printed? Is he talking about cash? 2) The gov does not print money. Banks do. To give loans. 3) The gov is not your household

rco8786 5y ago
Don’t follow #2. Governments do indeed print money. Banks do not. What am I missing.
- romanhn 5y ago
  Check out fractional reserve banking - banks do indeed add to the overall money supply with every new loan.
anm89 5y ago
You are drastically misunderstanding arguments that you are parroting. When you see a physical dollar bill , the federal government, specifically the Beaureu of engraving and printing, printed that money. Which is however not what people mean when they say printing money in this context. In that case they are talking about monetary policy, generally old-school OMO or recently it's variation QE which expands the feds balance sheet with recently created money ( ie they print the money digitally to expand their balance sheet) Banks engaging in fractional reserve lending does increase the money supply but economists and the financial press do not refer to this as printing money, they refer to it as lending. And finally the "the government isn't a household" argument has grains of truth but is also incredibly trite and fails to understand the many ways in which they are accountable to the same forces a household is accountable to.
imtringued 5y ago
>The gov is not your household That's true but the funny part is that people misunderstand it in an especially contrived way. A companies job is to increase its net worth to make profits for its investors. A government's job is to increase its net worth to provide public services to its citizens. The goal behind investments is to achieve an increase in your net worth. Whether you spend your own money or borrow money doesn't really matter, the point is that you make the investments that you think you need. Businesses should invest for obvious reasons. Governments should invest too but in traditional areas like infrastructure, health care or education. Businesses do not do "austerity" full stop. They borrow heavily to grow. Households do not do austerity either, they borrow heavily to buy real estate. Strangely enough it is governments that should do austerity and be responsible and stop investing for future benefits. It's basically just anti government rhetoric. When a $250k/year household borrows $2 million to buy a house nobody bats an eye even though that household has a 800% debt to household income ratio.

sleepysysadmin 5y ago

Verifying the numbers. M0 money supply in late 2019 was about 3.5 trillion. Today it's about 6.5 trillion. That's not locked in inflation, that's just money sitting in accounts. M1 from 2017 to late 2019 was around 5 trillion. Maybe a slight increase over those years. Today it's about 20 trillion. So about 400%? That's hyperinflation coming if nothing is done to fix it. Technically this is out of the hands of the government but there are things they can do to fix this. M2 is where we are locked in. Again late 2019 we're in the 1.5 trillion area. Today we're about 2.1 trillion. That's roughly 40% inflation locked in. The 40% won't come all in 1 year, but 5% inflation at the moment certainly isn't covering it. 0.25% fed funds rate is also tremendously lacking.

specialist 5y ago

"Minted", not "printed". Most (>95%?) currency is now digital. OC later writes: > The lesson is to convert dollars to assets ASAP Ya. Because runaway inflation. Any day now. Just like after the last bailout [2009]. "Inflation, consumer prices for the United States" https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA Not.

mandelbrotwurst 5y ago
Historically, minting and printing were both physical processes.
dragonwriter 5y ago
> "Minted", not "printed". Most (>95%?) currency is now digital. Coin is minted. Paper is printed. Fiat money that exists as digital record of accounts is neither minted nor printed (though frequently metaphorically referred to in the latter way), but created in credit transactions.
- shoto_io 5y ago
  Ah seems someone has a real understand how these things work. I always wondered: how do you “print” money these days!? How does the credit transaction brings money into the system?
  - colejohnson66 5y ago
    It’s banks lending out the money in accounts (where savings interest comes from). If the bank has $1B from user accounts and lends out $300M of that, $300M was created out of thin air because the accounts still have $1B (fractional reserve). But then the question becomes: when the loan is paid back, is the money “destroyed” (less interest)?
    - shoto_io 5y ago
      Ok, and how do banks get the money in the first place?

8bitsrule 5y ago

If I understand money (who does?) then: if I borrow $500,000 to spend today (at low interest), and pay it back, as time goes by, with money worth only $300,000 (today) ... sounds like a net gain.

mhluongo 5y ago
It sounds like you understand money! For bonus points, at whose expense is this happening?
- voisin 5y ago
  At the expense of people with investments in fixed return assets (cash, bonds), and those whose income does not keep pace with inflation.
  - nradov 5y ago
    If investors expect inflation to increase they can hedge that risk with TIPS. https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
    - voisin 5y ago
      These are adjusted based on CPI, which I think many intelligent observers believe to be a massively faulty metric for inflation.
- deleted 5y ago
  [deleted]
kukx 5y ago
It is a gamble. The interests can go up and then you could be cooked. And anyway you need to find a way to get ahead of the inflation with this money. Sure it is an opportunity but not without risks.
- 5y ago

gus_massa 5y ago

Is this an 40% increase of the total number of "dollars" or just and 40% increase of the total number of "dollars in bills + coins"? Most of the dollars are only a abstract entry in a database, not a piece of paper. Increasing the total dollars (bills + coins + database + whatever [1]) would be very bad. Increasing only the number physical tokens that people sometimes use to exchange abstract dollars is probably only a rounding error. [1] https://en.wikipedia.org/wiki/Money_supply https://en.wikipedia.org/wiki/Money_supply

sleepysysadmin 5y ago
>Most of the dollars are only a abstract entry in a database, not a piece of paper. The abstract amount of increase was more than 400%. 40% is paper or real inflation locked in.
voisin 5y ago
Looks like total dollars (not just physical) to me given that FRED link above (https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL)
dogma1138 5y ago
This describes bank money so it’s essentially everything you would normally describe as money not just physical currency.
throw0101a 5y ago
> Most of the dollars are only a abstract entry in a database, not a piece of paper. More than that, the "dollars" created by the Fed are really reserve deposits which are given to financial institutions who have accounts with the Fed. Those reserves are only useable in the inter-bank system that the Fed runs and cannot enter the 'real' economy. The "money" of the economy is created by private banks through loans out of thin air—no Fed required: > In many market based systems such as the USA, the money supply is essentially privatized and controlled by private banks that compete to create loans which create deposits (money). Contrary to popular opinion, governments in such a system do not directly control the money supply nor do they create most of the money. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 Most transactions are done with digital transfers by crediting and debiting accounts. Once your loan is approved your account is credited and *poof* money that you can use is created.

curtis3389 5y ago

Without any citations and the vague language, I don't know how we're supposed to take this seriously.

H8crilA 5y ago
How about just opening FRED? https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE If you want more detail you should probably first learn the basics of "money".
nradov 5y ago
You can just look at the M1 money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL Of course that doesn't give the whole picture. There are other relevant metrics beyond M1.
- ben_w 5y ago
  I think I’m in the same position as @curtis3389: I can look at the surprising — nay, shocking — graph, but I have no idea if I should care, as the one thing it definitely doesn’t mean is the 400% inflation that graph naively implies. As you say, there are other relevant metrics; I don’t know those metrics, I just know they must exist.
- rrss 5y ago
  How should I interpret this? There’s a huge jump in may 2020, but apparently the metric was redefined in may 2020 to include more stuff? from the Q&A page linked at the bottom: > Recognizing savings deposits as a transaction account as of May 2020 will cause a series break in the M1 monetary aggregate. Beginning with the May 2020 observation, M1 will increase by the size of the industry total of savings deposits, which amounted to approximately $11.2 trillion
  - lifeisstillgood 5y ago
    I think you have hit the nail on the head. Look at the M2 measure - https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL - it's a (scary / steady) growth from the 80s to now with a jump in covid. It does not show the vast leap M1 does - and mostly because the M1 metric itself has changed - not the underlying amount of money in the world. I mean that M1 jump in "real" numbers would mean a creation of 16 Trillion dollars - insane

anm89 5y ago

A few sources I have seen put the entire multi year cost of world war 2 in 2021 dollars at $4.1T. Where as it looks like congress has spent ~$4.5T fighting covid in the last year and that's before looking at fed balance sheet increases of ~$3.5t. So we have solidly spent more than WW2, almost double in a year or covid relief, a lot of which was fed balance sheet expansion(ie printed money) I independently came up with this but it looks like others have made the same observation https://www.chicagotribune.com/opinion/commentary/ct-opinion-covid-relief-package-cost-obrien-20210312-3bi5g7uxgfe6ngbfutj7luudey-story.html https://www.chicagotribune.com/opinion/commentary/ct-opinion... In fact the CT makes the claim that covid relief has almost equaled the cost of all American wars combined. Pretty mind blowing.

bildung 5y ago
It's always important to compare the whole economy, not just a single number. For context, the median income in 1940 was $18680 in 2021 dollars ($956 in 1940, https://www.npr.org/2012/04/02/149575704/the-1940-census-72-year-old-secrets-revealed https://www.npr.org/2012/04/02/149575704/the-1940-census-72-...) So in terms of the income of the average US man[1] in 1940 the WW2 cost was double the nominal number alone. [1] The source above explicitly says man, not person, so presumably the median household income was even less than half of today's numbers.
okl 5y ago
I think those numbers should be given relative to GDP or per-capita. Since 1940 the number of US residents has more than doubled, US GDP has increased by 10x.
emerged 5y ago
It’s infuriating every time someone even refers to these things as “COVID relief” because that isn’t what it was. That the banner held up to make everyone support it, but that isn’t what it was. No matter how many times people repeat the semantic trick I refuse to accept the lie.

jlturner 5y ago

It’s hard to tell looking at FRED but it seems like it may be due to a change in how they do their accounting starting in May of 2020 (when all the dollars “seem” to appear). From FRED: Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions. Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.

throw0101a 5y ago
There's a weblog post about this by the Fed itself: > […] the modification of Regulation D in late April has effectively rendered savings accounts almost indistinguishable from checking accounts from the perspective of depositors and banks. Accordingly, the composition of M2 between M1 and non-M1 components conveys little economic information. * https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

tomerv 5y ago

Funny that some of the advice in that thread is to buy crypto, when ~99% of crypto coins were mined in the last 12 months.