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And I'm amazed at how gold-bug conservatives so conveniently ignore the previous 13 years of furious money-printing that accompanied near-zero inflation levels.

• inglor_cz 5y ago
  You may also smoke for 13 years with no cancer, then boom, suddenly you have cancer. And those 13 years played a role in its onset. There are expectations built into economy all around. Once enough people expect that the money printing will continue and increase, the change in collective behavior may be fairly sudden.
• jdhn 5y ago
  There's been massive inflation in the previous 13 years of money printing, it's just that it all went to assets such as stocks.
  • mywittyname 5y ago
    Right, so it didn't affect consumer prices for 13 years. So why would anyone believe that it's at fault now? It does seem kind of disingenuous to blame inflation on a something we've been doing for over a decade rather than the major black-swan event that happened two years ago. Especially since pandemic inflation was nearly instant: lockdowns -> shortages -> price gouging.
    • 01100011 5y ago
      I don't know, but I feel like the past 13 years just let the dry powder accumulate. COVID and resulting stimulus and supply shocks were the spark. When speculators saw the market dynamics they were able to use the cheap money to speculate, kicking off a feeding frenzy. Markets are non-linear. I think we crossed an important threshold in March 2020 and the fed wasn't active enough to realize or react to it. That said, you did see asset prices reach questionable levels even before COVID. I pulled most of my money out of the market in late 2019 for that exact reason. I was convinced we were due for a correction then.
  • lovecg 5y ago
    Assuming that’s true, why is that bad? It’s great for people who own these assets and neutral for people who don’t.
  • missedthecue 5y ago
    Can you explain, mechanically speaking, how it went to stocks over the last 13 years?
• yobbo 5y ago
  > the power they wield in the job market This is new. Somehow stimulus/asset inflation is causing this (lower labour market participation).
• nickysielicki 5y ago
  > And I'm amazed at how gold-bug conservatives so conveniently ignore the previous 13 years of furious money-printing that accompanied near-zero inflation levels. Are you aware of the degree to which is ramped up? https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
  • colinmhayes 5y ago
    Why are you looking at m1? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
    • nickysielicki 5y ago
      Because M2 was specifically changed to look less bad.
      • greenpresident 5y ago
        The FED changed its definition of M1 by including deposits that were previously only part of M2. M2 always includes M1. The surge in M1 in April 2020 is because its definition changed. Would you elaborate on why and when you believe M2 was changed to "look less bad"?
        • nickysielicki 5y ago
          You’re right and I both misread and misremembered which definition changed. The better graph to look at is the money base. https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE
      • Bud 5y ago
        Could I have a cite on this, to satisfy my curiosity? What was changed? By whom? Where's the evidence that it was changed on purpose, for this specific reason?
        • 5y ago
• tharne 5y ago
  > And I'm amazed at how gold-bug conservatives so conveniently ignore the previous 13 years of furious money-printing that accompanied near-zero inflation levels. No one's ignoring the last 13 years of furious money printing. What you point out is the exact problem with money printing. When you dump a ton of new money into an economy everything seems fine for a while, until it doesn't. It's kind of like Wily Coyote running off the cliff. Everything is fine at first, but at some point he notices that there's no ground under his feet anymore.
• ItsMonkk 5y ago
  When you print money, but expectations are that you print more money, the value of the money printed goes to assets, not stored as currency, and certainly doesn't appear as inflation in consumption goods. It's only when you slow down or reverse the printing can the inflation 'catch-up' and over-whelm, and the more you slow the higher the wave will be, and the longer you've been printing the more volume the wave will be. The best way to avoid inflation is to only print currency equal to actual productivity increases, the second best way is to continue to print more and more - if you ever let up you'll run into the other end of the cycle. As the second option produces wealth inequality that centralizes decision making and drains efficiency from the market-economy, we should try the former again.
  • anovikov 5y ago
    I tend to think that actual difference between last 2 years vs previous 13 was who the money went to. This time they gave some cash to the poor ($300 stimulus checks), which they never did before, and poor immediately spent it. In the previous 13 years, money was printed almost exclusively for the rich, and they already have everything they want to consume so they invested it, driving up valuations but not consumer prices.
    • ItsMonkk 5y ago
      I agree, partially. Here's[0] a post I made last year predicting inflation on this exact reasoning. But that only explains away transitory inflation as that money given away was temporary. If the wealthy know that the Fed is going to raise rates, and the wealthy know that raising rates will trigger a recession, and the wealthy know that a recession will result is lower asset values, then they will, before this all goes down, start to hoard currency and consumption items that last for ~3 years. Why are used cars prices so high? Used cars will last throughout this recession. The wealthy are already hedging this exact scenario. Hedging that we are at the end of the cycle creates inflation in the hedged items, and the Fed think that raising rates will slow down inflation, when the only thing that slows inflation is the job loss that comes when they have risen rates to much. In fact, by raising rates they will only invite more inflation, as it will cause the wealthy to hedge ever more. [0]: https://news.ycombinator.com/item?id=25646585 https://news.ycombinator.com/item?id=25646585
• disruptalot 5y ago
  There hasn't been "furious money printing" before, at least not in comparison to post covid. Have you seen the M1 money supply? [1] [1] https://tradingeconomics.com/united-states/money-supply-m1 https://tradingeconomics.com/united-states/money-supply-m1 The other misconception I often see is that if prices aren't increasing, then that means inflation is not occurring. Inflation in the sense that money is losing purchasing power, is always happening. It often doesn't perfectly reflect in consumer prices because business are hopefully becoming more efficient at some rate.
  • derac 5y ago
    https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL 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.
    • zionic 5y ago
      https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Now look at the M2, which didn’t change.
  • oldandboring 5y ago
• thow-58d4e8b 5y ago
  It's also amazing how inflation is treated as some mysterious, unpredictable force of nature that just strikes out of the blue. Recently, I've seen a lecture on inflation from Marxist point of view - and it was a refreshingly intuitive take on the subject that I've never heard expressed anywhere else: Inflation is an increase in price level. Who sets the prices? Corporations (or landlords). They may increase the prices either because their inputs are more expensive, or to pad their profits. But all the inputs, in the end, derive from someone's labor. There might genuinely be situations when more labor is required to achieve the same output (e.g. drought for agriculture, or mineral extraction got more difficult), but most of the time, the opposite is true - less labor is required to achieve the same output. If wages do not rise at the same pace as prices, somebody is pocketing that extra money But we never see that inconvenient fact being mentioned...anywhere. Newspapers run headlines like "beef prices up X%", without the corollary - "and the price increase is pocketed by meat packing plant cartel". And it turns out, empirically, that's pretty much what's happening: Corporate profits drive 60% of inflation increases: https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation https://mattstoller.substack.com/p/corporate-profits-drive-6...
  • esarbe 5y ago
    My guess is that the rent takers and corporations simply realized that with Governments trying to stabilize the economy and paying out Covid support money, the little guys for the first time in decades also got some bounty from the money-printing-bonanza the high-finance and large corporations have been enjoying for the last 13 years. When only the rich guys got free moneys and "invested" it into stocks and buybacks, it didn't make any sense to raise prices. Now that the little guys (potentially) have money in their greedy little hands, it is time to raise prices. You can't have ordinary people with money to save, right?
  • makomk 5y ago
    I think you're missing the more important and immediately obvious corrolary to that argument - we're in the middle of a situation right now where more labour is required to achieve the same level of output, due to people off sick, self-isolating, businesses running under capacity due to pandemic restrictions or just being outright closed and their staff paid to stay home, global supply chain disruptions absolutely wrecking efficiency everywhere, and so on, and this has to cause prices to rise faster than wages. Also, you're counting every single retired person's pension as "corporate profits" since they're people who're pocketing money without working (and that's not really wrong in the case of many pension schemes - corporate profits are often exactly where the money is coming from). Actually the ordinary retired are probably more relevant here than the super-wealthy; most of the super-wealthy's money isn't spent on stuff that uses labour, and I doubt they consume such a disproportionate amount of the labour-produced goods and services to make a huge difference, plus a bunch of people retired at once during Covid.