14 ms·

This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but a

This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.

api 4y ago
Central banks have one hammer really: interest rates. Everything is a nail.
- gonzo41 4y ago
  QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
  - mym1990 4y ago
    Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
    - WaxProlix 4y ago
      This entire conversation is about how those entities don't seem to be doing a particularly good job.
      - mym1990 4y ago
        And that is a very valid concern, but the Fed is not the one to address that problem.
- Robotbeat 4y ago
  Right. It’s really up to businesses and governments. Businesses to make productive investments and governments to make the appropriate counter-cyclical investments (beyond just interest rates) to keep the productive investments more attractive than the non-productive speculative ones for businesses.
- marcosdumay 4y ago
  Governments as a whole have a lot of different hammers for monetary policy. It's just that every other one depends on the Congress understanding the problem and cooperating.
  - rib3ye 4y ago
    Central banks are not governmental organizations.
    - gumby 4y ago
      Technically they are (everybody who works for the Fed or the Bank of England gets a governmenT paycheck) and in a technical sense they aren’t, or try not to be (independent balance sheets). But they are involved in policy decisions, being consulted and themselves asking. They do t have an independent mission the way, say, a trucking company does.
    - WalterBright 4y ago
      The Federal Reserve banks are.
      - arminiusreturns 4y ago
        No they are not, though it's easy to understand the confusion. From the SF Feds website: The Board of Governors—Located in Washington, D.C., Board members are appointed by the U.S. President and confirmed by the U.S. Senate. Board members and staff are civil service employees. The 12 regional Reserve Banks—Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are not civil service. The Federal Open Market Committee (FOMC)—Composed of the Federal Reserve Governors and the Federal Reserve Bank presidents, the FOMC is charged with conducting monetary policy.
        WalterBright 4y ago
        Yes, I'm aware of the legal fiction that they are not part of the government. But they are, as they are run by people appointed by the government, and therefore serve the government.
- vkou 4y ago
  Yes, but governments have other hammers, called tax rates, and deficit spending.
Robotbeat 4y ago
The money can find a productive outlet, it’s just that for the last 5 years or so, speculative investments (that weren’t productive) had a much higher rate of return. Which is too bad as the productive investments like building a solar power plant really benefitted from the low interest rates that drove the non-productive speculative bubble. non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. But that often only happens when you increase interest rates above that which productive investments like solar power plants often need. And so you get contraction as even the productive investments are starved of funding. Oh well, at least the solar power plant hasn’t lost all its value.
- mftb 4y ago
  This was a really interesting thread. I see what you guys are talking about all around me, the mis-used liquidity or whatever you want to call it. I don't know anything about finance, so I don't know how to respond to the people, but I feel like saying all the time, "Hey you know someday you're gonna need that money."
- ripe 4y ago
  > non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers. This system incentivizes pump-and-dump.
  - kurthr 4y ago
    That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficient market (and you could argue whether infrastructure or medicine or income insurance even make sense as markets) are not the same. Most markets that have many individual consumers require regulation to be even close to efficient. Like political and financial enforcement they are too easy to manipulate and the consequences of malfeasance are substantially less than the profits to be made.
tremon 4y ago
In my view, it's not a failure of any central bank. The additional liquidity is generated by other banks, in the form of overvaluations and financial constructions that allow loans without backing securities.
- trashtester 4y ago
  This is not a case of either-or. But central banks have more power than anyone else, as they are the only ones who can truely "print money".
WalterBright 4y ago
All that extra cash looking for a use is what causes inflation. It all goes back to supply & demand.
dominotw 4y ago
why is the housing market not budging. Its just lagging other assets?
- m0llusk 4y ago
  Hard to say, but it has always been like that. Housing prices are extremely sticky. With corrections most of the work ends up being done by inflation while prices stagnate. One peculiar advantage to the burst of inflation is that it could help the housing bubble correct itself relatively quickly.
- lotsofpulp 4y ago
  Supply and demand, of course.
- waynesonfire 4y ago
  Because variable rate mortgages.. and once that gets expensive maybe well see 50 year mortgages.
- nostrademons 4y ago
  Housing always lags, usually by 18-24 months. Real estate transactions are slow - they require a bunch of research, non-fungible goods in an illiquid market, physically scoping out properties, financing sources that are notoriously sluggish and thorough in their diligence, and a slow closing process. And the sellers don't need to sell - they can just hold onto their places and live in them or rent them out. That means that when money dries up in the housing market, liquidity dries up before prices drop: people just hold onto their houses and don't sell them rather than take the loss. This also means that housing is pretty resilient to recessions that last < 1 year. Nationwide the '73, '80, '82, '91, and '01 recessions were barely blips to housing prices [1]. It takes a sustained downturn of > 4 years or so in a regional economy to make a serious dent in housing prices. [1] https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
cwkoss 4y ago
There would need to be some tight regs to make that work, or else large companies would buy up all the housing supply and force everyone to pay them rent. I think individual home ownership is important, and thats not where I'd want to start cutting. Credit for second homes being less cheap - totally onboard.
- pas 4y ago
  or credit for more sustainable, more efficient housing, credit for long term transformative city projects, and so on. but this has to be counterbalanced with higher rate credit for other things otherwise inflation happens (assuming low unemployment).
eecc 4y ago
Wasn’t that the Soviet double ruble system? Whenever the Politburo wanted to find a mega project the money was wished into existence and things happened (just as it’s done today) yet it was illiquid and only usable in a sealed silo, separate from the normal exchange ruble. Wonder how a similar mechanism would work today
- deleted 4y ago
  [deleted]
- himlion 4y ago
  That sounds interesting. Can you link to any reference on this? I tried googling but didn't turn up much.
  - mambru 4y ago
    https://en.wikipedia.org/wiki/Beryozka_(Russian_retail_store) https://en.wikipedia.org/wiki/Beryozka_(Russian_retail_store...
    - golergka 4y ago
      That's not what the parent comment is talking about. Berezka stores were originally created to earn dollars by selling Soviet wares to tourists, and later gradually reoriented towards the few Soviet citizens who earned dollars and looked for some way to spend them. Not to be confused with other special stores unavailable to ordinary citizens that supplied party members. What parent comment is talking about was the system of cash and cashless (безнал) roubles. Cashless roubles were used for industry purposes and couldn't be converted to the ordinary roubles available to the population. When USSR allowed cooperation (primitive private business) in the late 80s, it was used by many officials as a tool to convert the cashless roubles from the organization's they controlled into real currency in their private pockets. And a lot of oligarchs (including Khodorkovsky) got their fortunes that way. It's ironic that now ordinary Russians blame the chaos and injustice of the 90s on capitalism and free market, whereas a lot of that was created by a state economy system and exploited by corrupt beurocracy of a communist party.
im_down_w_otp 4y ago
The central bank doesn't control policies like that though. They have scant few actual knobs to turn on their own without Congressional intervention.
- boucher 4y ago
  The fed actually has more tools than the ones it currently uses, some of which have been used in the past. Robert Hockett has written a lot about productive investments via the federal reserve banks, and how that could be used to transform the economy. Here's one recent paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4023614 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4023614 He wrote a short book about it as well: https://www.amazon.com/Financing-Green-New-Deal-Renewal/dp/3030484491 https://www.amazon.com/Financing-Green-New-Deal-Renewal/dp/3...
  - im_down_w_otp 4y ago
    Thanks for the links. I'll pick up that book. One thing I've been a long-time advocate for is States setting up their own banks akin to that of North Dakota's. If for no other reason than to have a way to leverage national monetary policy for regional aims, so that when the Federal government rushes to the aid of Wall Street (e.g. by flooding it with cheap liquidity) there's a way for State governments to more directly interact with those mechanisms themselves for their benefit. I strongly suspect significant challenges in setting up effective and responsive governance and incentive structures to keep such things from not becoming their own instruments of abuse, but ever since watching 2008 unfold it's bothered me how easy it is to leave States twisting in the wind while the balance sheets of financial institutions are made whole by feeding at the Fed liquidity trough. One of the basic premises of "States rights", as it were, is that it's supposed to offer lots of little "laboratories of democracy", but as it stands right now there's no good way to actually finance those laboratories to invest in ambitious things. So, what we mostly end up with instead is only the downside of using "States rights" in the only way that it's cheap to do so, which is usually by restricting or denying things. It's much harder to get the upside of investing in things without all the latitude that the Federal government enjoys financially.
JaimeThompson 4y ago
>really large companies to be able to build train lines or advanced manufacturing They would use the money to buy back their own stock.
- astrange 4y ago
  Stock buybacks aren’t spending money any more than putting it in your retirement fund is. They are value neutral.
  - JaimeThompson 4y ago
    They aren't value neutral if you are spending money on buybacks instead of growing / keeping your factories in working order. See Abbott Labs spending 5 billion on buybacks instead of keeping their infant formula factories up to code.
    - astrange 4y ago
      It shouldn't have stopped them from maintenance though; they just didn't feel like doing maintenance. If a company wants to spend money on something they can always get a loan for it and consider issuing the shares out again later if needed. The problem with a share buyback is if you do it and then the share price falls again.
      - gruez 4y ago
        >The problem with a share buyback is if you do it and then the share price falls again. how's that a problem? I get it might seem like you're back to square one if you did a buyback early this year, and the recent market crash brought the share price to before the buyback, but you still permanently: 1. paid out money to the shareholders who sold 2. increased the ownership stake of the remaining shareholders
        astrange 4y ago
        If it falls again, it's not value neutral anymore - it's a transfer to whoever sold. So then the complaint that you could've used the money on maintenance against poisoning babies becomes true.
dr_dshiv 4y ago
> Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless Jesus yes. Economists treat all spending like it is equal in value. Stupidity.
mrjin 4y ago
This is mostly a central banking failure. Take a look around the world, for decades the only thing the central banks have been doing is printing money. If that is ever going to work, put swines in their seat would do their jobs perfectly. To me printing money should only be used as emergency measure just like administering of adrenaline in emergency room and must be reviewed afterwards. Unfortunately such instrument has been abused for a prolonged period as central banks saw no inflations. Of course there was no inflations in central banks' eyes. The first thing was that the definition of CPI was biased and not considering assets. Secondly in a global economy, inflation can happen elsewhere. So in the past decades, China actually absorbed lot of the actual inflations. And lastly and most importantly, the printed money went into the wrong hands. The extra printed money goes to the banks first, then goes to the rich in the form of loans. There is so much money in the market and it would be nice and easy to make money by bumping the assets prices up. So why would anyone put money into anywhere but virtual economies? That's pretty much what happened in recently decades, properties, shares etc. skyrockets but what really make their value changed so much? Nothing but too much money. For the poor, obviously they can hardly get any loans, so they only get their normal pay which would be diluted over time. Crisis happens mostly because the poor doesn't have enough money to spend. Printing money obviously cannot resolve the problem, but it do be able to maintain the momentum a little bit longer by making it worse. The burst got delayed but eventually will come back harder, sooner or later.
- cozos 4y ago
  What does it mean when inflation happens elsewhere? Isn't that kind of a good thing (if not hostile) - because we can buy stuff from "elsewhere" for cheaper?
  - formerkrogemp 4y ago
    This happened during the Asian financial crisis of the late 1980s, late 90s, and early to mid 2000s, depending on the country. Some people speculate that the currencies were manipulated to crash so that people could swoop in and buy assets for cheap in Asian countries. Samsung to this day has large foreign investor ownership for example.
chii 4y ago
> really useful ventures like large infrastructure projects give me an example of large infrastructure projects like this. The only examples i can think of are things which gov't fund via tax payer money, and don't expect to be able to reap private profit off; things like roads, rail, electrification of the grid etc.
- Matl 4y ago
  Why would i.e. fiber infrastructure not be among these?

api 4y ago

Central banks have one hammer really: interest rates. Everything is a nail.

gonzo41 4y ago
QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
- mym1990 4y ago
  Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
  - WaxProlix 4y ago
    This entire conversation is about how those entities don't seem to be doing a particularly good job.
    - mym1990 4y ago
      And that is a very valid concern, but the Fed is not the one to address that problem.
Robotbeat 4y ago
Right. It’s really up to businesses and governments. Businesses to make productive investments and governments to make the appropriate counter-cyclical investments (beyond just interest rates) to keep the productive investments more attractive than the non-productive speculative ones for businesses.
marcosdumay 4y ago
Governments as a whole have a lot of different hammers for monetary policy. It's just that every other one depends on the Congress understanding the problem and cooperating.
- rib3ye 4y ago
  Central banks are not governmental organizations.
  - gumby 4y ago
    Technically they are (everybody who works for the Fed or the Bank of England gets a governmenT paycheck) and in a technical sense they aren’t, or try not to be (independent balance sheets). But they are involved in policy decisions, being consulted and themselves asking. They do t have an independent mission the way, say, a trucking company does.
  - WalterBright 4y ago
    The Federal Reserve banks are.
    - arminiusreturns 4y ago
      No they are not, though it's easy to understand the confusion. From the SF Feds website: The Board of Governors—Located in Washington, D.C., Board members are appointed by the U.S. President and confirmed by the U.S. Senate. Board members and staff are civil service employees. The 12 regional Reserve Banks—Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are not civil service. The Federal Open Market Committee (FOMC)—Composed of the Federal Reserve Governors and the Federal Reserve Bank presidents, the FOMC is charged with conducting monetary policy.
      - WalterBright 4y ago
        Yes, I'm aware of the legal fiction that they are not part of the government. But they are, as they are run by people appointed by the government, and therefore serve the government.
vkou 4y ago
Yes, but governments have other hammers, called tax rates, and deficit spending.

Robotbeat 4y ago

The money can find a productive outlet, it’s just that for the last 5 years or so, speculative investments (that weren’t productive) had a much higher rate of return. Which is too bad as the productive investments like building a solar power plant really benefitted from the low interest rates that drove the non-productive speculative bubble. non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. But that often only happens when you increase interest rates above that which productive investments like solar power plants often need. And so you get contraction as even the productive investments are starved of funding. Oh well, at least the solar power plant hasn’t lost all its value.

mftb 4y ago
This was a really interesting thread. I see what you guys are talking about all around me, the mis-used liquidity or whatever you want to call it. I don't know anything about finance, so I don't know how to respond to the people, but I feel like saying all the time, "Hey you know someday you're gonna need that money."
ripe 4y ago
> non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers. This system incentivizes pump-and-dump.
- kurthr 4y ago
  That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficient market (and you could argue whether infrastructure or medicine or income insurance even make sense as markets) are not the same. Most markets that have many individual consumers require regulation to be even close to efficient. Like political and financial enforcement they are too easy to manipulate and the consequences of malfeasance are substantially less than the profits to be made.

tremon 4y ago

In my view, it's not a failure of any central bank. The additional liquidity is generated by other banks, in the form of overvaluations and financial constructions that allow loans without backing securities.

trashtester 4y ago
This is not a case of either-or. But central banks have more power than anyone else, as they are the only ones who can truely "print money".

WalterBright 4y ago

All that extra cash looking for a use is what causes inflation. It all goes back to supply & demand.

dominotw 4y ago

why is the housing market not budging. Its just lagging other assets?

m0llusk 4y ago
Hard to say, but it has always been like that. Housing prices are extremely sticky. With corrections most of the work ends up being done by inflation while prices stagnate. One peculiar advantage to the burst of inflation is that it could help the housing bubble correct itself relatively quickly.
lotsofpulp 4y ago
Supply and demand, of course.
waynesonfire 4y ago
Because variable rate mortgages.. and once that gets expensive maybe well see 50 year mortgages.
nostrademons 4y ago
Housing always lags, usually by 18-24 months. Real estate transactions are slow - they require a bunch of research, non-fungible goods in an illiquid market, physically scoping out properties, financing sources that are notoriously sluggish and thorough in their diligence, and a slow closing process. And the sellers don't need to sell - they can just hold onto their places and live in them or rent them out. That means that when money dries up in the housing market, liquidity dries up before prices drop: people just hold onto their houses and don't sell them rather than take the loss. This also means that housing is pretty resilient to recessions that last < 1 year. Nationwide the '73, '80, '82, '91, and '01 recessions were barely blips to housing prices [1]. It takes a sustained downturn of > 4 years or so in a regional economy to make a serious dent in housing prices. [1] https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS

cwkoss 4y ago

There would need to be some tight regs to make that work, or else large companies would buy up all the housing supply and force everyone to pay them rent. I think individual home ownership is important, and thats not where I'd want to start cutting. Credit for second homes being less cheap - totally onboard.

pas 4y ago
or credit for more sustainable, more efficient housing, credit for long term transformative city projects, and so on. but this has to be counterbalanced with higher rate credit for other things otherwise inflation happens (assuming low unemployment).

eecc 4y ago

Wasn’t that the Soviet double ruble system? Whenever the Politburo wanted to find a mega project the money was wished into existence and things happened (just as it’s done today) yet it was illiquid and only usable in a sealed silo, separate from the normal exchange ruble. Wonder how a similar mechanism would work today

deleted 4y ago
[deleted]
himlion 4y ago
That sounds interesting. Can you link to any reference on this? I tried googling but didn't turn up much.
- mambru 4y ago
  https://en.wikipedia.org/wiki/Beryozka_(Russian_retail_store) https://en.wikipedia.org/wiki/Beryozka_(Russian_retail_store...
  - golergka 4y ago
    That's not what the parent comment is talking about. Berezka stores were originally created to earn dollars by selling Soviet wares to tourists, and later gradually reoriented towards the few Soviet citizens who earned dollars and looked for some way to spend them. Not to be confused with other special stores unavailable to ordinary citizens that supplied party members. What parent comment is talking about was the system of cash and cashless (безнал) roubles. Cashless roubles were used for industry purposes and couldn't be converted to the ordinary roubles available to the population. When USSR allowed cooperation (primitive private business) in the late 80s, it was used by many officials as a tool to convert the cashless roubles from the organization's they controlled into real currency in their private pockets. And a lot of oligarchs (including Khodorkovsky) got their fortunes that way. It's ironic that now ordinary Russians blame the chaos and injustice of the 90s on capitalism and free market, whereas a lot of that was created by a state economy system and exploited by corrupt beurocracy of a communist party.

im_down_w_otp 4y ago

The central bank doesn't control policies like that though. They have scant few actual knobs to turn on their own without Congressional intervention.

boucher 4y ago
The fed actually has more tools than the ones it currently uses, some of which have been used in the past. Robert Hockett has written a lot about productive investments via the federal reserve banks, and how that could be used to transform the economy. Here's one recent paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4023614 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4023614 He wrote a short book about it as well: https://www.amazon.com/Financing-Green-New-Deal-Renewal/dp/3030484491 https://www.amazon.com/Financing-Green-New-Deal-Renewal/dp/3...
- im_down_w_otp 4y ago
  Thanks for the links. I'll pick up that book. One thing I've been a long-time advocate for is States setting up their own banks akin to that of North Dakota's. If for no other reason than to have a way to leverage national monetary policy for regional aims, so that when the Federal government rushes to the aid of Wall Street (e.g. by flooding it with cheap liquidity) there's a way for State governments to more directly interact with those mechanisms themselves for their benefit. I strongly suspect significant challenges in setting up effective and responsive governance and incentive structures to keep such things from not becoming their own instruments of abuse, but ever since watching 2008 unfold it's bothered me how easy it is to leave States twisting in the wind while the balance sheets of financial institutions are made whole by feeding at the Fed liquidity trough. One of the basic premises of "States rights", as it were, is that it's supposed to offer lots of little "laboratories of democracy", but as it stands right now there's no good way to actually finance those laboratories to invest in ambitious things. So, what we mostly end up with instead is only the downside of using "States rights" in the only way that it's cheap to do so, which is usually by restricting or denying things. It's much harder to get the upside of investing in things without all the latitude that the Federal government enjoys financially.

JaimeThompson 4y ago

>really large companies to be able to build train lines or advanced manufacturing They would use the money to buy back their own stock.

astrange 4y ago
Stock buybacks aren’t spending money any more than putting it in your retirement fund is. They are value neutral.
- JaimeThompson 4y ago
  They aren't value neutral if you are spending money on buybacks instead of growing / keeping your factories in working order. See Abbott Labs spending 5 billion on buybacks instead of keeping their infant formula factories up to code.
  - astrange 4y ago
    It shouldn't have stopped them from maintenance though; they just didn't feel like doing maintenance. If a company wants to spend money on something they can always get a loan for it and consider issuing the shares out again later if needed. The problem with a share buyback is if you do it and then the share price falls again.
    - gruez 4y ago
      >The problem with a share buyback is if you do it and then the share price falls again. how's that a problem? I get it might seem like you're back to square one if you did a buyback early this year, and the recent market crash brought the share price to before the buyback, but you still permanently: 1. paid out money to the shareholders who sold 2. increased the ownership stake of the remaining shareholders
      - astrange 4y ago
        If it falls again, it's not value neutral anymore - it's a transfer to whoever sold. So then the complaint that you could've used the money on maintenance against poisoning babies becomes true.

dr_dshiv 4y ago

> Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless Jesus yes. Economists treat all spending like it is equal in value. Stupidity.

mrjin 4y ago

This is mostly a central banking failure. Take a look around the world, for decades the only thing the central banks have been doing is printing money. If that is ever going to work, put swines in their seat would do their jobs perfectly. To me printing money should only be used as emergency measure just like administering of adrenaline in emergency room and must be reviewed afterwards. Unfortunately such instrument has been abused for a prolonged period as central banks saw no inflations. Of course there was no inflations in central banks' eyes. The first thing was that the definition of CPI was biased and not considering assets. Secondly in a global economy, inflation can happen elsewhere. So in the past decades, China actually absorbed lot of the actual inflations. And lastly and most importantly, the printed money went into the wrong hands. The extra printed money goes to the banks first, then goes to the rich in the form of loans. There is so much money in the market and it would be nice and easy to make money by bumping the assets prices up. So why would anyone put money into anywhere but virtual economies? That's pretty much what happened in recently decades, properties, shares etc. skyrockets but what really make their value changed so much? Nothing but too much money. For the poor, obviously they can hardly get any loans, so they only get their normal pay which would be diluted over time. Crisis happens mostly because the poor doesn't have enough money to spend. Printing money obviously cannot resolve the problem, but it do be able to maintain the momentum a little bit longer by making it worse. The burst got delayed but eventually will come back harder, sooner or later.

cozos 4y ago
What does it mean when inflation happens elsewhere? Isn't that kind of a good thing (if not hostile) - because we can buy stuff from "elsewhere" for cheaper?
- formerkrogemp 4y ago
  This happened during the Asian financial crisis of the late 1980s, late 90s, and early to mid 2000s, depending on the country. Some people speculate that the currencies were manipulated to crash so that people could swoop in and buy assets for cheap in Asian countries. Samsung to this day has large foreign investor ownership for example.

chii 4y ago

> really useful ventures like large infrastructure projects give me an example of large infrastructure projects like this. The only examples i can think of are things which gov't fund via tax payer money, and don't expect to be able to reap private profit off; things like roads, rail, electrification of the grid etc.

Matl 4y ago
Why would i.e. fiber infrastructure not be among these?