11 ms·

Printing $4T+ into asset markets didn't cause inflation, but printing $0.4T+ into peasant hands did? Uh-huh.

988747 4y ago
Putting money into asset markets causes "asset inflation" (see Nasdaq skyrocketing, until recently), putting it into "peasant hands" causes "peasant goods" inflation (hence the food or gas prices rising).
- AlexandrB 4y ago
  At least part of this doesn't make sense. Why would giving people more money cause food price inflation? Were they not eating before? Did the demand for food skyrocket because people had money? Unless you're suggesting that food prices rose because food producers saw they were leaving money on the table, but this seems like a problem that could be solved with antitrust since collusion would be required to "artificially" raise prices in concert.
  - creato 4y ago
    People change their food choices when they have more money, yes.
  - robertlagrant 4y ago
    FMCG businesses try extremely hard to keep their costs low because their margins are razor thin, because competition means they must. If people feel comfortable paying even slightly more for goods, then the massive efforts to keep prices down can relax ever so slightly, and they can make more money in other areas (e.g. putting the money into decor or other nonessential feelgood factors that consumers will prioritise over prices).
- dgb23 4y ago
  "Peasant goods" rise in price because the owners demand it after seeing an opportunity to do so. They could just keep stable. What is happening since half a century is that wealth gets shoveled to the top, with the above mechanism plus many others, while "peasants" can't afford their own place and education for themselves and their children anymore. They get cut off from sustainable spending and get turned back into pre-war wage slaves. What will happen is either owners getting to their senses and stop extracting so much god damn stuff for themselves for no reason, or workers rising up. Hiding behind political BS and pseudo science is a short term strategy that always ends in tears.
  - AstralStorm 4y ago
    Also it's probably educational that the "peasant good" that exploded is actually fuel, which has far reaching consequences, and zero rationale for getting more expensive. What that did was vacuum a lot of money off the market, additionally causing compensatory raised prices because there's an excuse. The market never works on supply and demand, not even money, it works on increasing prices every other excuse to the maximum level unless it's forced not to.
JumpCrisscross 4y ago
> Printing $4T+ into asset markets didn't cause inflation, but printing $0.4T+ into peasant hands did? Fiscal policy is far more powerful, monetarily speaking, than monetary policy. It's not 10x more powerful. But a dollar the Treasury creates is minted. A dollar the Fed creates is lent against an asset. It's a small difference with massive multiplier implications. (It's why, in a crisis, fiscal responses are so pleadingly called for by economists and central bankers.)
- jjoonathan 4y ago
  Yeah, if you print money and give it to rich people they are less likely to spend it in the real economy. It still increases the purchasing power of rich people. It still pumps assets, favoring asset holders at the expense of asset purchasers. It's still weaponized class warfare. If you want to call this something other than money printing -- "lending," for instance -- I'm going to ask you to put money where your mouth is and bet that the Fed actually reduces its balance sheet to zero in some time frame. I have a sneaking suspicion that you will not be keen on taking this bet.
politician 4y ago
A financial instrument does not require as many physical raw materials to produce as fuels, food, computers, or homes. Indeed, they often don't require anything but bits. It seems obvious that the $4T deployed into the imaginary playground of the asset markets wouldn't cause near as much inflation as $0.4T+ in the hands of peasants with their needs for tangible goods. If traders attempted to move $4T en masse into purchases at retail, the system would have crashed immediately.

Putting money into asset markets causes "asset inflation" (see Nasdaq skyrocketing, until recently), putting it into "peasant hands" causes "peasant goods" inflation (hence the food or gas prices rising).

AlexandrB 4y ago
At least part of this doesn't make sense. Why would giving people more money cause food price inflation? Were they not eating before? Did the demand for food skyrocket because people had money? Unless you're suggesting that food prices rose because food producers saw they were leaving money on the table, but this seems like a problem that could be solved with antitrust since collusion would be required to "artificially" raise prices in concert.
- creato 4y ago
  People change their food choices when they have more money, yes.
- robertlagrant 4y ago
  FMCG businesses try extremely hard to keep their costs low because their margins are razor thin, because competition means they must. If people feel comfortable paying even slightly more for goods, then the massive efforts to keep prices down can relax ever so slightly, and they can make more money in other areas (e.g. putting the money into decor or other nonessential feelgood factors that consumers will prioritise over prices).
dgb23 4y ago
"Peasant goods" rise in price because the owners demand it after seeing an opportunity to do so. They could just keep stable. What is happening since half a century is that wealth gets shoveled to the top, with the above mechanism plus many others, while "peasants" can't afford their own place and education for themselves and their children anymore. They get cut off from sustainable spending and get turned back into pre-war wage slaves. What will happen is either owners getting to their senses and stop extracting so much god damn stuff for themselves for no reason, or workers rising up. Hiding behind political BS and pseudo science is a short term strategy that always ends in tears.
- AstralStorm 4y ago
  Also it's probably educational that the "peasant good" that exploded is actually fuel, which has far reaching consequences, and zero rationale for getting more expensive. What that did was vacuum a lot of money off the market, additionally causing compensatory raised prices because there's an excuse. The market never works on supply and demand, not even money, it works on increasing prices every other excuse to the maximum level unless it's forced not to.

JumpCrisscross 4y ago

> Printing $4T+ into asset markets didn't cause inflation, but printing $0.4T+ into peasant hands did? Fiscal policy is far more powerful, monetarily speaking, than monetary policy. It's not 10x more powerful. But a dollar the Treasury creates is minted. A dollar the Fed creates is lent against an asset. It's a small difference with massive multiplier implications. (It's why, in a crisis, fiscal responses are so pleadingly called for by economists and central bankers.)

jjoonathan 4y ago
Yeah, if you print money and give it to rich people they are less likely to spend it in the real economy. It still increases the purchasing power of rich people. It still pumps assets, favoring asset holders at the expense of asset purchasers. It's still weaponized class warfare. If you want to call this something other than money printing -- "lending," for instance -- I'm going to ask you to put money where your mouth is and bet that the Fed actually reduces its balance sheet to zero in some time frame. I have a sneaking suspicion that you will not be keen on taking this bet.

politician 4y ago

A financial instrument does not require as many physical raw materials to produce as fuels, food, computers, or homes. Indeed, they often don't require anything but bits. It seems obvious that the $4T deployed into the imaginary playground of the asset markets wouldn't cause near as much inflation as $0.4T+ in the hands of peasants with their needs for tangible goods. If traders attempted to move $4T en masse into purchases at retail, the system would have crashed immediately.