4 ms·

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

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

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