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Consumer spending has gone down. Too many dollars cannot be the problem if they aren't being spent! You might say "oh, well the rich are bidding up gas and foo
by Ericson2314 5y ago
Consumer spending has gone down. Too many dollars cannot be the problem if they aren't being spent!
You might say "oh, well the rich are bidding up gas and food prices, poor people can't afford and ummmm drive and eat less". It sounds silly and it should but even if that were happening, and was the sole causal factor, it would mean the food and gas markets were not clearing, and that is clearly also not happening.
And even if that were happening the sellers would be being irrational. For surely they would lower prices after the rich were fed and gassed up so they could sell the remainder of their goods, and make more money. (the profit rate would go down but the total profits would go up.)
No matter how you cut it, the Monetarist story is false and ridiculous given the evidence.
- javert 5y agoOverprinting money causes massive economic distortion. For instance, the rich who get the money first are buying up all the houses, turning the US into a nation of renters. Another example--the federal government enables "easy money" as higher education loans, which has enabled universities to massively overcharge for mostly low quality education.
- Ericson2314 5y agoYes inequality is inefficient. The monitarists' conception of inflation is a temporary distortion where all the money stock and flows pick up. What you are describing is a spacial distortion where certain people / goods get unfair treatment. The latter is indeed quite dubious, but it's not the same as the former! Conventional monetary policy is lame and fairly ineffective, but I have seen claims that raising rates is better at destimulating than lowering is at stimulating. What a tough nuance to convey!
- topkai22 5y ago> … turning the US into a nation of renters. The data doesn’t seem to support this, at least not yet. The owner occupancy of units has been increasing since 2016 and increased after 2020. The increase in housing prices has been extraordinary, but seems in large part due to people who actually intend to live in that housing. See: https://fred.stlouisfed.org/series/EOWNOCCUSQ176N https://fred.stlouisfed.org/series/EOWNOCCUSQ176N https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N
- Ericson2314 5y agoI wish it were true, because single family house homeownership is an unsustainable 1950s meme. Better we take the red pill asap and get on with appartments.
- pphysch 5y agoConsumers haven't gotten a stimulus payment in a year. Consumers are not Primary Dealers getting huge amounts of cash every month through QE.
- Ericson2314 5y agoPrimary Dealers aren't bidding up gasoline.
- nabla9 5y ago> Consumer spending has gone down. It did go down. Now its back to normal. https://fred.stlouisfed.org/graph/fredgraph.png?g=KOBi https://fred.stlouisfed.org/graph/fredgraph.png?g=KOBi
- bko 5y ago> Consumer spending has gone down. Too many dollars cannot be the problem if they aren't being spent! Source? This is what I could find: Personal Consumption Expenditures Also savings rate has gone back down after a spike that coincided with stimulus payments https://fred.stlouisfed.org/series/PCE https://fred.stlouisfed.org/series/PCE https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
- Ericson2314 5y agohttps://twitter.com/M_C_Klein/status/1480538926398029824 https://twitter.com/M_C_Klein/status/1480538926398029824 See clarification tweet that this is about cumulative spending not the current rate of spending. That makes sense since my argument was about total profits vs profit rate and similar. Now it could catch up, or Omicron could blow over and we continue fixing supply chain issues. The traffic jam is just the echo of the initial accident, remember.