4 ms·

Worth noting that this "dollar short squeeze" is the exact opposite of the most common conspiracy theory about the dollar: that the Fed is printing them like it

by khuey 5y ago

Worth noting that this "dollar short squeeze" is the exact opposite of the most common conspiracy theory about the dollar: that the Fed is printing them like its going out of style (through quantitative easing and whatnot) and destroying their value.

willcipriano 5y ago
Conspiracy theory?[0] [0]https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- webinvest 5y ago
  18880 to 21200 this year is a 12.78% increase. Last year 2020, it said M2 grew 25%. It’s notable that the calculation for M2 changed. “Before May 2020, M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000)” “Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000)” Does that mean savings accounts and money market accounts are no longer included in M2?
  - Majromax 5y ago
    From https://www.federalreserve.gov/feeds/h6.html https://www.federalreserve.gov/feeds/h6.html >> Consequently, [February 23 2021]'s H.6 statistical release combines release items "Savings deposits" and "Other checkable deposits" retroactively back to May 2020 and includes the resulting sum, reported as "Other liquid deposits," in the M1 monetary aggregate. This action increases the M1 monetary aggregate significantly while leaving the M2 monetary aggregate unchanged.
    - webinvest 5y ago
      Okay so they were moved to M1 —- which is included in M2 so M2 aggregate is unchanged.
- hervature 5y ago
  I'm not sure what exactly you are trying to point out? The jump in 2020? The exponential curve? The exponential curve is inflation in action. That is, 1.03^x is an exponential function that represents the 3% inflation target. I think the jump wouldn't even be noticed by laymen. But, my two cents, is that I think modern monetary theory (a contested theory) would say that printing money to control unemployment does not necessarily lead to inflation. This is kind of what we're seeing?
  - willcipriano 5y ago
    The nearly vertical line over the past two years, yes. I don't think you can call simple supply and demand a conspiracy theory. If MMT theorists said that wouldn't cause inflation, I'd call that a conspiracy theory soundly disproven[0]. [0]https://www.pbs.org/newshour/economy/u-s-consumer-prices-spiked-6-2-percent-in-past-year-highest-inflation-rate-since-1990 https://www.pbs.org/newshour/economy/u-s-consumer-prices-spi...
    - the_gastropod 5y ago
      This take is the equivalent of taking a snowball into the halls of congress to refute climate change. We're in the midst of a global pandemic that's had dramatic impacts on international supply chains. Of course prices are volatile. To use this as evidence of the general "LOL PRINTER GO BRRR, SO INFLATION" argument—that, frankly, is a conspiracy theory popular today because of everyone's sudden infatuation with Austrian economics via Bitcoin obsession—is kinda myopic and missing the point.
      - willcipriano 5y ago
        My thesis is simple and has remained unchanged since early 2020 when the printing began. Creation of additional currency without the creation of additional demand reduces its value relative to other goods. To your point, a global economic shutdown would to my mind reduce demand for currency, therefore the creation of money in the past few years will cause inflation particularly as velocity picks back up[0]. I could be wrong, but that's a conspiracy theory? Like bigfoot or the moon landing? Come on. Your ideas can't be that fragile to have to resort to name calling like that. [0]https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
onlyrealcuzzo 5y ago
Anyone thinking that dollars are going to go up in value is seriously loony. Dollars only go down in value. We keep printing more of them. At the same time, we aren't printing as much land and productive assets to keep pace... The entire US economy has become dependent upon asset prices going up. The easiest way to achieve that is to make dollars go down. Conveniently, there is a branch of the government (The Fed) - who answers to no one - and who has the power to print dollars. Sure, some American companies actually do things. But a startling amount of wealth in this country is tied up in R/E and derivatives. If dollars go up and asset prices go down - this explodes spectacularly. The Fed chairmen are all relatively wealthy. IIRC, Ben Bernanke was - by far - the poorest Chairmen ever. At the time he was elected, he had a net worth of $2.5M - inflation adjusted would be >$5M. That's still similar to the type of wealth you read about in Jane Austen books...
- dontcare007 5y ago
  FYI: The Fed is NOT a government branch, nor is it part of the government. It is an independent entity.
jerf 5y ago
"Worth noting that this "dollar short squeeze" is the exact opposite of the most common conspiracy theory about the dollar:" No, it's not an "exact opposite". If one accepts the premise that players in the economy do not always yell out all their motivations and fears on the most public channels they can find, which when examined directly seems obvious but people seem to forget about it a few seconds later and resume acting as if the news is in fact full of everyone's private motivations and fears, then one can easily harmonize these two theories into one by wondering if the reason the Fed is printing money like crazy is that they fear horrifying deflation brought on by a dollar squeeze, so they're trying to get ahead of it. Certainly once it starts happening it's too late to react. It's not my personal first guess as to the Fed's primary motivation, but neither is it an idea too crazy to take seriously, and I could easily accept it as a secondary motivation.
- AnimalMuppet 5y ago
  I think that was exactly the motivation in 2008. $4 trillion evaporated in the crash; the Fed created $4 trillion to prevent a collapse. More recently? I'm less clear on that. (Wow, 2008 was 13 years ago? And we haven't had catastrophe in that much time? That was... unexpected.)

by khuey 5y ago

willcipriano 5y ago

Conspiracy theory?[0] [0]https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

webinvest 5y ago
18880 to 21200 this year is a 12.78% increase. Last year 2020, it said M2 grew 25%. It’s notable that the calculation for M2 changed. “Before May 2020, M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000)” “Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000)” Does that mean savings accounts and money market accounts are no longer included in M2?
- Majromax 5y ago
  From https://www.federalreserve.gov/feeds/h6.html https://www.federalreserve.gov/feeds/h6.html >> Consequently, [February 23 2021]'s H.6 statistical release combines release items "Savings deposits" and "Other checkable deposits" retroactively back to May 2020 and includes the resulting sum, reported as "Other liquid deposits," in the M1 monetary aggregate. This action increases the M1 monetary aggregate significantly while leaving the M2 monetary aggregate unchanged.
  - webinvest 5y ago
    Okay so they were moved to M1 —- which is included in M2 so M2 aggregate is unchanged.
hervature 5y ago
I'm not sure what exactly you are trying to point out? The jump in 2020? The exponential curve? The exponential curve is inflation in action. That is, 1.03^x is an exponential function that represents the 3% inflation target. I think the jump wouldn't even be noticed by laymen. But, my two cents, is that I think modern monetary theory (a contested theory) would say that printing money to control unemployment does not necessarily lead to inflation. This is kind of what we're seeing?
- willcipriano 5y ago
  The nearly vertical line over the past two years, yes. I don't think you can call simple supply and demand a conspiracy theory. If MMT theorists said that wouldn't cause inflation, I'd call that a conspiracy theory soundly disproven[0]. [0]https://www.pbs.org/newshour/economy/u-s-consumer-prices-spiked-6-2-percent-in-past-year-highest-inflation-rate-since-1990 https://www.pbs.org/newshour/economy/u-s-consumer-prices-spi...
  - the_gastropod 5y ago
    This take is the equivalent of taking a snowball into the halls of congress to refute climate change. We're in the midst of a global pandemic that's had dramatic impacts on international supply chains. Of course prices are volatile. To use this as evidence of the general "LOL PRINTER GO BRRR, SO INFLATION" argument—that, frankly, is a conspiracy theory popular today because of everyone's sudden infatuation with Austrian economics via Bitcoin obsession—is kinda myopic and missing the point.
    - willcipriano 5y ago
      My thesis is simple and has remained unchanged since early 2020 when the printing began. Creation of additional currency without the creation of additional demand reduces its value relative to other goods. To your point, a global economic shutdown would to my mind reduce demand for currency, therefore the creation of money in the past few years will cause inflation particularly as velocity picks back up[0]. I could be wrong, but that's a conspiracy theory? Like bigfoot or the moon landing? Come on. Your ideas can't be that fragile to have to resort to name calling like that. [0]https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V

onlyrealcuzzo 5y ago

Anyone thinking that dollars are going to go up in value is seriously loony. Dollars only go down in value. We keep printing more of them. At the same time, we aren't printing as much land and productive assets to keep pace... The entire US economy has become dependent upon asset prices going up. The easiest way to achieve that is to make dollars go down. Conveniently, there is a branch of the government (The Fed) - who answers to no one - and who has the power to print dollars. Sure, some American companies actually do things. But a startling amount of wealth in this country is tied up in R/E and derivatives. If dollars go up and asset prices go down - this explodes spectacularly. The Fed chairmen are all relatively wealthy. IIRC, Ben Bernanke was - by far - the poorest Chairmen ever. At the time he was elected, he had a net worth of $2.5M - inflation adjusted would be >$5M. That's still similar to the type of wealth you read about in Jane Austen books...

dontcare007 5y ago
FYI: The Fed is NOT a government branch, nor is it part of the government. It is an independent entity.

jerf 5y ago

"Worth noting that this "dollar short squeeze" is the exact opposite of the most common conspiracy theory about the dollar:" No, it's not an "exact opposite". If one accepts the premise that players in the economy do not always yell out all their motivations and fears on the most public channels they can find, which when examined directly seems obvious but people seem to forget about it a few seconds later and resume acting as if the news is in fact full of everyone's private motivations and fears, then one can easily harmonize these two theories into one by wondering if the reason the Fed is printing money like crazy is that they fear horrifying deflation brought on by a dollar squeeze, so they're trying to get ahead of it. Certainly once it starts happening it's too late to react. It's not my personal first guess as to the Fed's primary motivation, but neither is it an idea too crazy to take seriously, and I could easily accept it as a secondary motivation.

AnimalMuppet 5y ago
I think that was exactly the motivation in 2008. $4 trillion evaporated in the crash; the Fed created $4 trillion to prevent a collapse. More recently? I'm less clear on that. (Wow, 2008 was 13 years ago? And we haven't had catastrophe in that much time? That was... unexpected.)