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We printed 40% of all dollars ever printed last year. (!!!) I’m sure the EU copied that motion as did others. Why is anyone surprised that everything costs mor

We printed 40% of all dollars ever printed last year. (!!!) I’m sure the EU copied that motion as did others. Why is anyone surprised that everything costs more when everyone has more money? I’ve seen my investment increase massively the last year and I don’t assume it’s because I’m a genius. The rich just got a lot richer.

throwawayboise 5y ago
Has the value of your investments really increased that much, or are rising stock prices just reflective of the lowered value of the dollar?
- teraflop 5y ago
  The S&P 500 is up 31% compared to a year ago, and the US Consumer Price Index has only increased 5.4% over the same time period.
  - krrrh 5y ago
    I know it’s almost becoming a cliche to post the “chart of the century”, but CPI is not effectively capturing inflation. The money has to go somewhere. https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
    - adam_arthur 5y ago
      Rents up 15% YTD nationally, while CPI shows something like 3%. There are a long list of reasons why, but the rent factor in CPI is likely to produce a few percent gain on it's own, given it's weighting in the measure. (CPI lags market)
    - enraged_camel 5y ago
      Is there a version of that chart that includes 2021?
  - est31 5y ago
    The CPI just lags behind. The signs point towards further price increases in the future. In some segments, we've already seen similar increases recently, or even greater ones, e.g. with GPUs or construction material.
  - systemvoltage 5y ago
    YoY will reflect the massive crash we had last year. Compare it with 2019 levels.
    - teraflop 5y ago
      No, as of 1 year ago the stock market had already recovered and exceeded its pre-pandemic levels. But sure, let's look at a few other intervals: Compared to 2 years ago, the S&P 500 is up 51%, and the CPI is up 6.8%. Compared to 3 years ago, the S&P 500 is up 63%, and the CPI is up 8.7%. etc. Even if you think the CPI is somewhat underestimating inflation, it's clear that stock prices have been rising much faster than the value of the dollar is falling.
  - kennethh 5y ago
    Most of the new riches go to people who already have more than they need so they save it. Therefore you get asset inflation and to a lesser degree price increases in consumer goods. US Consumer Price Index is also showing less inflation than most people would experience themselves. http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts show the both the new and the old CPI inflation numbers. If price of beef increase a lot and people instead eat chicken the beef counts for less in the CPI. There is also a modifier if the the product have improved, ie the TV is a lot better than the earlier one.
- imtringued 5y ago
  Other countries are doing much worse. They are buying USD and it has strengthened (=appreciated against other currencies) as a result of that. https://www.tradingview.com/symbols/TVC-DXY/ https://www.tradingview.com/symbols/TVC-DXY/
JanisL 5y ago
I think there's a part of this that most people don't consider which is the eurodollar system. A lot of money is created by the private sector via banks and in a typical time the majority of money creation is actually done by the private sector. In the case of the US dollar being the gloabl reserve currency and used for global trade much of the money creation is done via offshore banks. So if this eurodollar system stops creating new money at the same rates as before then it's entirely possible for hard currency creation to go up without it being as inflationary as it would otherwise appear.
mtoner23 5y ago
No we did not print 40% of all money last year, QE is not printing money, its an asset swap. This money did not go into anyone's pockets. The Rich did not get a a lot richer compared to everyone else the bottom quartile of earners actually see their wages increasing the fastest of anyone right now. Saving are up, demand is high, Things are good! https://twitter.com/rortybomb/status/1448767207899545609?s=20 https://twitter.com/rortybomb/status/1448767207899545609?s=2...
- titzer 5y ago
  This is straight from Investopedia: > To execute quantitative easing, central banks increase the supply of money by buying government bonds and other securities. Increasing the supply of money lowers interest rates. When interest rates are lower, banks can lend with easier terms. Quantitive easing is typically implemented when interest rates are already near zero, because, at this point, central banks have fewer tools to influence economic growth. Ok, the Fed doesn't "print" money, the mechanism is more convoluted than that. But it absolutely does inject money into the system, which is ultimately backed by "reserves" which are created out of nothing.
  - mdavidn 5y ago
    Well, strictly speaking, the money is backed by the promise to repay the bond with interest. At that point in the future, the money will disappear from existence.
    - nly 5y ago
      The bonds in question are Treasuries, so when the money is repaid it is repaid by the Treasury. Every one of these bonds represents future borrowing (if rolling over the debt) or future tax revenue. It's the secondary effects of buying these bonds that is stimulative. Lower treasury yields means investors seek higher yields elsewhere (e.g. in stocks, corporate bonds etc etc.). They buy those, driving up prices, which in turn drives down yields there too. In any case, bond yields have been falling for decades, so if anything the GFC and COVID have just nudged things along. People are now questioning whether it's even worth owning investment grade bonds. People who want a hedge against the stock market are beginning to look at other asset classes. The wealthy are moving in to increasingly exotic and diversified asset classes. Things like forestry, commodities, private equity etc are now becoming accessible to the moderately well off and not just the super wealthy. Money managers are pushing ever more speculative investments to retail (crypto, ARK funds etc)
flexie 5y ago
That's just part of the money supply. M2 increased as well, but perceptually much less. There is no evidence of hyperinflation as of now, but we certainly have an inflation hype. The items I buy in the supermarket are same price as before. My rent is the same as before. Gasoline is up, but I barely use any of it now when I work from home.
- throwawaygh 5y ago
  > The items I buy in the supermarket are same price as before. My rent is the same as before. Gasoline is up, but I barely use any of it now when I work from home. And, more importantly, it's merely... up. Still well below 2014 highs. There's a real concern that the wildcat producers won't come online this time. But on the other hand a huge shift to electrification hitting demand at exactly the point where you would've been counting on even sleepy wildcat for supply to come back online (sustained $100/barrel or so).
throwawaygh 5y ago
> We printed 40% of all dollars ever printed last year. (!!!) Stop repeating this bullshit. It's is a reporting artifact that doesn't mean what you think it means. $11.2T that wasn't previously reported in M1 was added to the definition in May 2020 due to regulatory changes prior to 2020. That money didn't poof out of thin air; it already existed prior to May 2020. The step change that happened in May 2020 has absolutely nothing to do with anything real... that massive discontinuity (which happened before the major stimulus spending, btw) is almost entirely attributable the definition of M1 changing. See https://news.ycombinator.com/item?id=28818494 https://news.ycombinator.com/item?id=28818494 for more discussion.
- adam_arthur 5y ago
  Why mention stimulus when fiscal policy has nothing to do with money supply? The money supply changes when the Fed decides to print money to acquire assets, which has nothing to do with congressional legislation.
  - throwawaygh 5y ago
    > Why mention stimulus when fiscal policy has nothing to do with money supply? Why, indeed. (More explicitly: I'm pretty clearly critiquing to an implicit conflation of the two, not positing one.) > The money supply changes when the Fed decides to print money to acquire assets, which has nothing to do with congressional legislation. Just to be pedantic since this whole thing 40% defies any presumption of reasonable numeracy... this is entirely irrelevant to the bat-shit insanity 40% claim. If the Fed changed the statutory definition of M1 to now include $11 trillion that definition 100% existed previously but wasn't part of the formal statutory definition of M1. So M1 "increased" in one immediate massive instantaneous step change by exactly $11 trillion. Shocker! Again, not because anything real changed in the actual money supply. But because a bunch of money that definitely did already exist previously but wasn't part of a definition denoted by "M1" was added to the definition of "M1".
    - adam_arthur 5y ago
      M2 is the more commonly referenced money supply figure. Have you looked at the M2 money supply lately? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Very obviously massive amount of money printing. Order of magnitude more than was ever done during the GFC. Roughly 30% of the money supply printed in the span of 18 months. And they keep going, every day printing billions. This was meant to be an emergency procedure to save the economy, and it made sense at the very initial stages. Now it just acts as a hyper accelerant towards wealth inequality. Yet we have many cheering it on, talking about nominal wage gains, as people become poorer in real terms. Or because their stock portfolio/house is appreciating. Unfortunately the Fed has fallen to both populism and political pressure. It's been obvious for months that the best risk adjusted policy was to begin tightening long ago. I say risk adjusted, because if they're wrong about transitory inflation, they will have to hike suddenly and induce a recession. So we risk a recession and we gained what? The economy is overheating right now, as is very obvious by retail sales being elevated 20% above baseline (resulting in shortages) and the widest gap between job openings and job seekers in history. The Fed is meant to smooth peaks and troughs in the business cycle, not pour gasoline on them.
breezeTrowel 5y ago
> We printed 40% of all dollars ever printed last year. (!!!) Do you have a citation for that claim? I can't find anything like what you're stating. If you're talking about the huge increase in the M1 money supply, that "increase" comes from a regulatory change that took place in April of 2020 that now includes savings accounts in the M1 measurement (thus bringing it closer in line with M2). See: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more... If you're talking about actual printed Federal Reserve notes, that's also not the case. See: https://www.federalreserve.gov/paymentsystems/coin_currency_orders.htm https://www.federalreserve.gov/paymentsystems/coin_currency_... and https://www.federalreserve.gov/paymentsystems/coin_data.htm#volval https://www.federalreserve.gov/paymentsystems/coin_data.htm#... As for: * > Why is anyone surprised that everything costs more when everyone has more money?* Everything doesn't cost more because "everyone has more money". If anything, recent wage increases have finally allowed some Americans to catch up to the massive increases in housing, education, etc. As for prices going up, that's due to massive, ongoing supply chain constraints. No monetary policy is going to change that. You can read all about it in various articles linked to here on HN. If you need more evidence, look at the price of gold over the past year: https://www.kitco.com/scripts/hist_charts/yearly_graphs.plx?au00-pres=on&submitauC=View+Charts https://www.kitco.com/scripts/hist_charts/yearly_graphs.plx?... Gold, a common inflation hedge, is down over six and a half percent since this time last year. In fact, it peaked around August 5th/6th, 2020 at $2,067.15 and has been trending downward since. Other commodity prices, which were depressed in 2020 due to COVID-19 suppressing demand, have now swung the other way and are definitely higher than they were a few years ago. However, most of them are still below their ~2014 peaks. That said, it looks like there may be some relief on the supply chain front. There was a meeting at the White House a few days back between the President and "shipping companies, mega-retailers and unions" to deal with ongoing supply issues. It now looks like some backed-up West Coast ports will now operate 24/7. We still have a dearth of truckers due to the 2019 US transportation and manufacturing recession (see: https://www.businessinsider.com/why-trucking-industry-slowdown-trucker-job-loss-2019-7 https://www.businessinsider.com/why-trucking-industry-slowdo... ) and subsequent overall slowdown during 2020 due to COVID-19, but things are slowly improving. We might see the supply chain issues easing soon. Container shipping rates may have already peaked (see: https://www.bloomberg.com/news/newsletters/2021-10-11/supply-chain-latest-container-shipping-rates-are-drifting-lower https://www.bloomberg.com/news/newsletters/2021-10-11/supply... ) and with increased port operating times, we'll hopefully see a reduction in transportation costs which, as of right now, are a major part of price increases. Then there's the whole semiconductor manufacturing pipeline bottleneck but, as more chipfabs are being constructed worldwide, that should provide relief for those of us hankering after GPUs, CPUs, and whatnot, and should help automakers move inventory.

throwawayboise 5y ago

Has the value of your investments really increased that much, or are rising stock prices just reflective of the lowered value of the dollar?

teraflop 5y ago
The S&P 500 is up 31% compared to a year ago, and the US Consumer Price Index has only increased 5.4% over the same time period.
- krrrh 5y ago
  I know it’s almost becoming a cliche to post the “chart of the century”, but CPI is not effectively capturing inflation. The money has to go somewhere. https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3/ https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
  - adam_arthur 5y ago
    Rents up 15% YTD nationally, while CPI shows something like 3%. There are a long list of reasons why, but the rent factor in CPI is likely to produce a few percent gain on it's own, given it's weighting in the measure. (CPI lags market)
  - enraged_camel 5y ago
    Is there a version of that chart that includes 2021?
- est31 5y ago
  The CPI just lags behind. The signs point towards further price increases in the future. In some segments, we've already seen similar increases recently, or even greater ones, e.g. with GPUs or construction material.
- systemvoltage 5y ago
  YoY will reflect the massive crash we had last year. Compare it with 2019 levels.
  - teraflop 5y ago
    No, as of 1 year ago the stock market had already recovered and exceeded its pre-pandemic levels. But sure, let's look at a few other intervals: Compared to 2 years ago, the S&P 500 is up 51%, and the CPI is up 6.8%. Compared to 3 years ago, the S&P 500 is up 63%, and the CPI is up 8.7%. etc. Even if you think the CPI is somewhat underestimating inflation, it's clear that stock prices have been rising much faster than the value of the dollar is falling.
- kennethh 5y ago
  Most of the new riches go to people who already have more than they need so they save it. Therefore you get asset inflation and to a lesser degree price increases in consumer goods. US Consumer Price Index is also showing less inflation than most people would experience themselves. http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts show the both the new and the old CPI inflation numbers. If price of beef increase a lot and people instead eat chicken the beef counts for less in the CPI. There is also a modifier if the the product have improved, ie the TV is a lot better than the earlier one.
imtringued 5y ago
Other countries are doing much worse. They are buying USD and it has strengthened (=appreciated against other currencies) as a result of that. https://www.tradingview.com/symbols/TVC-DXY/ https://www.tradingview.com/symbols/TVC-DXY/

JanisL 5y ago

I think there's a part of this that most people don't consider which is the eurodollar system. A lot of money is created by the private sector via banks and in a typical time the majority of money creation is actually done by the private sector. In the case of the US dollar being the gloabl reserve currency and used for global trade much of the money creation is done via offshore banks. So if this eurodollar system stops creating new money at the same rates as before then it's entirely possible for hard currency creation to go up without it being as inflationary as it would otherwise appear.

mtoner23 5y ago

No we did not print 40% of all money last year, QE is not printing money, its an asset swap. This money did not go into anyone's pockets. The Rich did not get a a lot richer compared to everyone else the bottom quartile of earners actually see their wages increasing the fastest of anyone right now. Saving are up, demand is high, Things are good! https://twitter.com/rortybomb/status/1448767207899545609?s=20 https://twitter.com/rortybomb/status/1448767207899545609?s=2...

titzer 5y ago
This is straight from Investopedia: > To execute quantitative easing, central banks increase the supply of money by buying government bonds and other securities. Increasing the supply of money lowers interest rates. When interest rates are lower, banks can lend with easier terms. Quantitive easing is typically implemented when interest rates are already near zero, because, at this point, central banks have fewer tools to influence economic growth. Ok, the Fed doesn't "print" money, the mechanism is more convoluted than that. But it absolutely does inject money into the system, which is ultimately backed by "reserves" which are created out of nothing.
- mdavidn 5y ago
  Well, strictly speaking, the money is backed by the promise to repay the bond with interest. At that point in the future, the money will disappear from existence.
  - nly 5y ago
    The bonds in question are Treasuries, so when the money is repaid it is repaid by the Treasury. Every one of these bonds represents future borrowing (if rolling over the debt) or future tax revenue. It's the secondary effects of buying these bonds that is stimulative. Lower treasury yields means investors seek higher yields elsewhere (e.g. in stocks, corporate bonds etc etc.). They buy those, driving up prices, which in turn drives down yields there too. In any case, bond yields have been falling for decades, so if anything the GFC and COVID have just nudged things along. People are now questioning whether it's even worth owning investment grade bonds. People who want a hedge against the stock market are beginning to look at other asset classes. The wealthy are moving in to increasingly exotic and diversified asset classes. Things like forestry, commodities, private equity etc are now becoming accessible to the moderately well off and not just the super wealthy. Money managers are pushing ever more speculative investments to retail (crypto, ARK funds etc)

flexie 5y ago

That's just part of the money supply. M2 increased as well, but perceptually much less. There is no evidence of hyperinflation as of now, but we certainly have an inflation hype. The items I buy in the supermarket are same price as before. My rent is the same as before. Gasoline is up, but I barely use any of it now when I work from home.

throwawaygh 5y ago
> The items I buy in the supermarket are same price as before. My rent is the same as before. Gasoline is up, but I barely use any of it now when I work from home. And, more importantly, it's merely... up. Still well below 2014 highs. There's a real concern that the wildcat producers won't come online this time. But on the other hand a huge shift to electrification hitting demand at exactly the point where you would've been counting on even sleepy wildcat for supply to come back online (sustained $100/barrel or so).

throwawaygh 5y ago

> We printed 40% of all dollars ever printed last year. (!!!) Stop repeating this bullshit. It's is a reporting artifact that doesn't mean what you think it means. $11.2T that wasn't previously reported in M1 was added to the definition in May 2020 due to regulatory changes prior to 2020. That money didn't poof out of thin air; it already existed prior to May 2020. The step change that happened in May 2020 has absolutely nothing to do with anything real... that massive discontinuity (which happened before the major stimulus spending, btw) is almost entirely attributable the definition of M1 changing. See https://news.ycombinator.com/item?id=28818494 https://news.ycombinator.com/item?id=28818494 for more discussion.

adam_arthur 5y ago
Why mention stimulus when fiscal policy has nothing to do with money supply? The money supply changes when the Fed decides to print money to acquire assets, which has nothing to do with congressional legislation.
- throwawaygh 5y ago
  > Why mention stimulus when fiscal policy has nothing to do with money supply? Why, indeed. (More explicitly: I'm pretty clearly critiquing to an implicit conflation of the two, not positing one.) > The money supply changes when the Fed decides to print money to acquire assets, which has nothing to do with congressional legislation. Just to be pedantic since this whole thing 40% defies any presumption of reasonable numeracy... this is entirely irrelevant to the bat-shit insanity 40% claim. If the Fed changed the statutory definition of M1 to now include $11 trillion that definition 100% existed previously but wasn't part of the formal statutory definition of M1. So M1 "increased" in one immediate massive instantaneous step change by exactly $11 trillion. Shocker! Again, not because anything real changed in the actual money supply. But because a bunch of money that definitely did already exist previously but wasn't part of a definition denoted by "M1" was added to the definition of "M1".
  - adam_arthur 5y ago
    M2 is the more commonly referenced money supply figure. Have you looked at the M2 money supply lately? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Very obviously massive amount of money printing. Order of magnitude more than was ever done during the GFC. Roughly 30% of the money supply printed in the span of 18 months. And they keep going, every day printing billions. This was meant to be an emergency procedure to save the economy, and it made sense at the very initial stages. Now it just acts as a hyper accelerant towards wealth inequality. Yet we have many cheering it on, talking about nominal wage gains, as people become poorer in real terms. Or because their stock portfolio/house is appreciating. Unfortunately the Fed has fallen to both populism and political pressure. It's been obvious for months that the best risk adjusted policy was to begin tightening long ago. I say risk adjusted, because if they're wrong about transitory inflation, they will have to hike suddenly and induce a recession. So we risk a recession and we gained what? The economy is overheating right now, as is very obvious by retail sales being elevated 20% above baseline (resulting in shortages) and the widest gap between job openings and job seekers in history. The Fed is meant to smooth peaks and troughs in the business cycle, not pour gasoline on them.

breezeTrowel 5y ago

> We printed 40% of all dollars ever printed last year. (!!!) Do you have a citation for that claim? I can't find anything like what you're stating. If you're talking about the huge increase in the M1 money supply, that "increase" comes from a regulatory change that took place in April of 2020 that now includes savings accounts in the M1 measurement (thus bringing it closer in line with M2). See: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more... If you're talking about actual printed Federal Reserve notes, that's also not the case. See: https://www.federalreserve.gov/paymentsystems/coin_currency_orders.htm https://www.federalreserve.gov/paymentsystems/coin_currency_... and https://www.federalreserve.gov/paymentsystems/coin_data.htm#volval https://www.federalreserve.gov/paymentsystems/coin_data.htm#... As for: * > Why is anyone surprised that everything costs more when everyone has more money?* Everything doesn't cost more because "everyone has more money". If anything, recent wage increases have finally allowed some Americans to catch up to the massive increases in housing, education, etc. As for prices going up, that's due to massive, ongoing supply chain constraints. No monetary policy is going to change that. You can read all about it in various articles linked to here on HN. If you need more evidence, look at the price of gold over the past year: https://www.kitco.com/scripts/hist_charts/yearly_graphs.plx?au00-pres=on&submitauC=View+Charts https://www.kitco.com/scripts/hist_charts/yearly_graphs.plx?... Gold, a common inflation hedge, is down over six and a half percent since this time last year. In fact, it peaked around August 5th/6th, 2020 at $2,067.15 and has been trending downward since. Other commodity prices, which were depressed in 2020 due to COVID-19 suppressing demand, have now swung the other way and are definitely higher than they were a few years ago. However, most of them are still below their ~2014 peaks. That said, it looks like there may be some relief on the supply chain front. There was a meeting at the White House a few days back between the President and "shipping companies, mega-retailers and unions" to deal with ongoing supply issues. It now looks like some backed-up West Coast ports will now operate 24/7. We still have a dearth of truckers due to the 2019 US transportation and manufacturing recession (see: https://www.businessinsider.com/why-trucking-industry-slowdown-trucker-job-loss-2019-7 https://www.businessinsider.com/why-trucking-industry-slowdo... ) and subsequent overall slowdown during 2020 due to COVID-19, but things are slowly improving. We might see the supply chain issues easing soon. Container shipping rates may have already peaked (see: https://www.bloomberg.com/news/newsletters/2021-10-11/supply-chain-latest-container-shipping-rates-are-drifting-lower https://www.bloomberg.com/news/newsletters/2021-10-11/supply... ) and with increased port operating times, we'll hopefully see a reduction in transportation costs which, as of right now, are a major part of price increases. Then there's the whole semiconductor manufacturing pipeline bottleneck but, as more chipfabs are being constructed worldwide, that should provide relief for those of us hankering after GPUs, CPUs, and whatnot, and should help automakers move inventory.