4 ms·

It boggles me how there can _not_ be a cause-effect between printing money and inflation. Is it linear? No. Is it the only possible cause? No. Is it a cause?

It boggles me how there can _not_ be a cause-effect between printing money and inflation. Is it linear? No. Is it the only possible cause? No. Is it a cause? I think the obvious answer is yes, but obvious answers have been wrong before.

imtringued 5y ago
Low interest rates imply that everyone and their dog are saving money and don't give a damn about what the central banks are doing.
lbreakjai 5y ago
The money printed is not going to you. The sort of person that benefitted from the over-abundance of cheap money isn't exactly the sort that's waiting on a $1000 windfall to buy steak and upgrade their TV. Look at the stock market and real estate and tell me there's no link between the money printing and inflation.
thow-58d4e8b 5y ago
Mostly because what people refer to as "printing money" isn't really printing money, but more of a "reversible exchange of one class of assets for another class of assets of equal value". The central banks are not allowed to just create new money to give everyone working there a huge bonus, it always has to be swapped for a credible promise of future repayment. Banks take it up, since the rates are/were at near 0%, but people/businesses are not confident about their future money flows to take on new loans. Hence the new money just sits at banks and never reaches the real economy. Helicopter money (1) does cause inflation, but the reason that the inflation has been stubbornly low for a decade is precisely because the central banks are forbidden from doing helicopter money (1) https://en.wikipedia.org/wiki/Helicopter_money https://en.wikipedia.org/wiki/Helicopter_money
- harambae 5y ago
  >"printing money" isn't really printing money, but more of a "reversible exchange of one class of assets for another class of assets of equal value" When was the last time the Federal Reserve balance sheet went down? [0] And if it's of equal value, why doesn't someone want to buy it from them? [0] https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL
barrenko 5y ago
Printing more money basically means that people (institutions) closer to the source of money get it cheaper and that effect compounds nastily.
- pwm 5y ago
  https://en.wikipedia.org/wiki/Cantillon_Effect https://en.wikipedia.org/wiki/Cantillon_Effect

imtringued 5y ago

Low interest rates imply that everyone and their dog are saving money and don't give a damn about what the central banks are doing.

lbreakjai 5y ago

The money printed is not going to you. The sort of person that benefitted from the over-abundance of cheap money isn't exactly the sort that's waiting on a $1000 windfall to buy steak and upgrade their TV. Look at the stock market and real estate and tell me there's no link between the money printing and inflation.

thow-58d4e8b 5y ago

Mostly because what people refer to as "printing money" isn't really printing money, but more of a "reversible exchange of one class of assets for another class of assets of equal value". The central banks are not allowed to just create new money to give everyone working there a huge bonus, it always has to be swapped for a credible promise of future repayment. Banks take it up, since the rates are/were at near 0%, but people/businesses are not confident about their future money flows to take on new loans. Hence the new money just sits at banks and never reaches the real economy. Helicopter money (1) does cause inflation, but the reason that the inflation has been stubbornly low for a decade is precisely because the central banks are forbidden from doing helicopter money (1) https://en.wikipedia.org/wiki/Helicopter_money https://en.wikipedia.org/wiki/Helicopter_money

harambae 5y ago
>"printing money" isn't really printing money, but more of a "reversible exchange of one class of assets for another class of assets of equal value" When was the last time the Federal Reserve balance sheet went down? [0] And if it's of equal value, why doesn't someone want to buy it from them? [0] https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL

barrenko 5y ago

Printing more money basically means that people (institutions) closer to the source of money get it cheaper and that effect compounds nastily.

pwm 5y ago
https://en.wikipedia.org/wiki/Cantillon_Effect https://en.wikipedia.org/wiki/Cantillon_Effect