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Everybody increases the money supply everyday. It’s normal - because money is an elastic concept. Trade credit increases the money supply. There is no distinc

• adam_arthur 5y ago
  Yes, credit is another mechanism to alter money supply. But you know the Fed has many levers to control this, such as fed funds rate, bank reserve ratios? It's part of their job to optimize these levers. Yet they choose to create moral hazard and unaffordable housing through excessively easy policy (supply chain disruptions anyone?) Demand has been artificially distorted far beyond baseline, is the core of the supply chain issues. If you looked at the actual economic data and retail sales, personal income numbers. Expansion of the money supply is not some magical thing that just happens in a totally free market fashion. If it were free market, the cost to borrow would be much higher, thus lower effective money supply, I assure you. The distortion of long term treasury rates is much worse than their distortions of short term rates. That's why they're so afraid to end QE. They know, if subjected to free market forces, long term treasury yields will spike and cause valuations to tank. Personally I think the Fed should stop focusing on the market. That's not their job