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>It's clear as day on the Fed's balance sheet the reason for inflation Yet there was not this inflation during the Fed balance sheet runup in 2008-2018......

>It's clear as day on the Fed's balance sheet the reason for inflation Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... So maybe your simple claim is not what is the cause. More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? In fact, your total assets graph is misleading. Look at the same graph, under the selected liabilities breakdown - the monetary base has been steady, with no inflation for most of it. The big recent increase is in purchase of Treasuries, which is the money the govt gave to the people to help them through the COVID caused downturn. This is a good use of money, and of course giving people money with no gain in production will lead to inflation, but it's not the Fed at fault - it's elected officials voting for free money.

Gareth321 5y ago
> Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy, despite the aforementioned QE? QE works great following a recession. For quite a number of years later, in turns out. But not forever. At some point the economy recovers and continuing to pour gasoline on it stimulates it beyond the target inflation zone.
- JumpCrisscross 5y ago
  > Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy You and the comment you’re responding to agree on the Fed’s balance sheet being insufficient per se to explain core or non-core PCE. It's a complicated phenomenon.
  - Gareth321 5y ago
    Thanks for clarifying. I guess I missed that.
discardedrefuse 5y ago
> More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? Unsurprisingly, the lion's share of that money handed out for covid relief wasn't given to people. It was corporations that, once again, walked away with most of it. Going back even further, the 2016 tax bill also provisioned way more money to corporations compared to the time-limited-bone they threw at people. While its fair to say handing out money can cause inflation, lets not kid ourselves about who is really getting that money. https://theintercept.com/2020/12/04/covid-irs-corporation-tax-refunds/ https://theintercept.com/2020/12/04/covid-irs-corporation-ta... https://www.washingtonpost.com/graphics/2020/business/coronavirus-bailout-spending/ https://www.washingtonpost.com/graphics/2020/business/corona... https://www.forbes.com/sites/christianweller/2019/05/30/the-2017-tax-cuts-didnt-work-the-data-prove-it/?sh=6130d91d58c1 https://www.forbes.com/sites/christianweller/2019/05/30/the-... https://www.nytimes.com/2018/01/16/us/politics/banks-are-big-winners-from-tax-cut.html https://www.nytimes.com/2018/01/16/us/politics/banks-are-big...
- ChrisLomont 5y ago
  >the lion's share of that money handed out for covid relief wasn't given to people. Wrong [1]. 1.8T directly to people, 1.7T to businesses. I'd not call that a lion's share. >It was corporations that, once again, walked away with most of it. And a significant part of that was to pay, you guessed it, people :) Of the 1.7T to businesses, 835B went to paycheck protection program (i.e., people wages) , 85B to a delay (not handout) of employer payroll tax (so this will be paid back by the businesses), and a significant number of loans, not handouts, that have to be paid back. And keeping companies alive, i.e., jobs available, has vastly better long term economic value than simply giving it to people, since at some point those people will really like having a job for a continued income. Tell me again of the 1.8T given to people, how much was loans that have to be paid back? And what is that ratio for the business side? [1] https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html https://www.nytimes.com/interactive/2022/03/11/us/how-covid-...
caeril 5y ago
> Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Asset prices are prices, they're just not part of the CPI. The early part of the inflation fed almost entirely into financial assets. Take a look at the absolutely INSANE multiple expansion of the S&P 500 for this time period, as well as the INSANE monotonically decreasing yield curve in literally every kind of debt security.
- ChrisLomont 5y ago
  >Take a look at the absolutely INSANE multiple expansion of the S&P 500 for this time period Fed added 3.5T in balance sheet over this time. S&P 500 market cap went from $12T to $23T (and this is not counting all the other market caps from other stocks and exchanges not in S&P 500). It's not unreasonable that investment market caps have increased tens of trillions over this time. So it's pretty hard to claim the Fed injected this money into the stock market. It's much more likely that as the world is changing some companies are viewed as increasing in value due to the products and services being more valuable than before.

Gareth321 5y ago

> Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy, despite the aforementioned QE? QE works great following a recession. For quite a number of years later, in turns out. But not forever. At some point the economy recovers and continuing to pour gasoline on it stimulates it beyond the target inflation zone.

JumpCrisscross 5y ago
> Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy You and the comment you’re responding to agree on the Fed’s balance sheet being insufficient per se to explain core or non-core PCE. It's a complicated phenomenon.
- Gareth321 5y ago
  Thanks for clarifying. I guess I missed that.

discardedrefuse 5y ago

> More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? Unsurprisingly, the lion's share of that money handed out for covid relief wasn't given to people. It was corporations that, once again, walked away with most of it. Going back even further, the 2016 tax bill also provisioned way more money to corporations compared to the time-limited-bone they threw at people. While its fair to say handing out money can cause inflation, lets not kid ourselves about who is really getting that money. https://theintercept.com/2020/12/04/covid-irs-corporation-tax-refunds/ https://theintercept.com/2020/12/04/covid-irs-corporation-ta... https://www.washingtonpost.com/graphics/2020/business/coronavirus-bailout-spending/ https://www.washingtonpost.com/graphics/2020/business/corona... https://www.forbes.com/sites/christianweller/2019/05/30/the-2017-tax-cuts-didnt-work-the-data-prove-it/?sh=6130d91d58c1 https://www.forbes.com/sites/christianweller/2019/05/30/the-... https://www.nytimes.com/2018/01/16/us/politics/banks-are-big-winners-from-tax-cut.html https://www.nytimes.com/2018/01/16/us/politics/banks-are-big...

ChrisLomont 5y ago
>the lion's share of that money handed out for covid relief wasn't given to people. Wrong [1]. 1.8T directly to people, 1.7T to businesses. I'd not call that a lion's share. >It was corporations that, once again, walked away with most of it. And a significant part of that was to pay, you guessed it, people :) Of the 1.7T to businesses, 835B went to paycheck protection program (i.e., people wages) , 85B to a delay (not handout) of employer payroll tax (so this will be paid back by the businesses), and a significant number of loans, not handouts, that have to be paid back. And keeping companies alive, i.e., jobs available, has vastly better long term economic value than simply giving it to people, since at some point those people will really like having a job for a continued income. Tell me again of the 1.8T given to people, how much was loans that have to be paid back? And what is that ratio for the business side? [1] https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html https://www.nytimes.com/interactive/2022/03/11/us/how-covid-...

caeril 5y ago

> Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Asset prices are prices, they're just not part of the CPI. The early part of the inflation fed almost entirely into financial assets. Take a look at the absolutely INSANE multiple expansion of the S&P 500 for this time period, as well as the INSANE monotonically decreasing yield curve in literally every kind of debt security.

ChrisLomont 5y ago
>Take a look at the absolutely INSANE multiple expansion of the S&P 500 for this time period Fed added 3.5T in balance sheet over this time. S&P 500 market cap went from $12T to $23T (and this is not counting all the other market caps from other stocks and exchanges not in S&P 500). It's not unreasonable that investment market caps have increased tens of trillions over this time. So it's pretty hard to claim the Fed injected this money into the stock market. It's much more likely that as the world is changing some companies are viewed as increasing in value due to the products and services being more valuable than before.