4 ms·

Yes, supposed to be a couple percent -- but you have a significant number of people who think that you can simply "QE" a lot money (40% of all existing etc) and

Yes, supposed to be a couple percent -- but you have a significant number of people who think that you can simply "QE" a lot money (40% of all existing etc) and not have significant inflation, and any price increases are purely the result of corporate greed (as if they weren't always trying to charge more, they were less greedy sometimes??), supply chains, whatever. Mainstream articles telling normal people this.

rmah 4y ago
They think that because that's what happened. The Fed pushed out $4T of QE and inflation barely budged for over a decade (after 2008/2009 recession). It took a global pandemic + a land war in Europe to bring on substantial inflation. I remember when the Fed started doin QE in 2009. I thought, "my god, pushing this much money into the economy will lead to high inflation!"... except, it didn't. Then they did QE2 and again, I thought, "for sure, THIS time inflation will spike up!" Except it didn't. Then QE3 in 2012... Call me slow, but it wasn't until that point that I started to seriously re-examine my mental model about how macroeconomics works. But at least I could admit to being wrong.
- mr_toad 4y ago
  The US economy grew from $14T in 2009 to $21T up to 2019. Printing money during an economic boom is not like printing money in a static or shrinking economy.
dragonwriter 4y ago
> but you have a significant number of people who think that you can simply "QE" a lot money (40% of all existing etc) and not have significant inflation, You can, if the underlying conditions would, with a neutral policy, produce a significant-enough deflation. We’ve pretty much demonstrated that. OTOH, if you have something like the COVID emergency and associated controls, that results in a rapid snap-back of the underlying conditions rather than the more common gradual adjustment, when you are geared to offset massive deflation, you get inflation until you adjust the monetary policy dials again.
Aunche 4y ago
Monetary policy isn't fiscal policy. QE is just a way of lowering interest and by itself does not significantly increase inflation. We've QE'd plenty of money since the recession without inflation. Japan QE'd even proportionally more money for much longer and has experienced even less inflation. QE makes lending cheaper, which enables businesses to produce more goods and services, so you don't have the effect of "more dollars chasing the same goods." Even when the government spends more money than it collects from taxes, it's still not necessarily inflationary so long as if it's a productive use of money (e.g. public transportation increases employment opportunities). The main difference from Covid relief was that lot of money was simply created with no good purpose at all, so it fell into the category of "more dollars chasing the same goods."

rmah 4y ago

They think that because that's what happened. The Fed pushed out $4T of QE and inflation barely budged for over a decade (after 2008/2009 recession). It took a global pandemic + a land war in Europe to bring on substantial inflation. I remember when the Fed started doin QE in 2009. I thought, "my god, pushing this much money into the economy will lead to high inflation!"... except, it didn't. Then they did QE2 and again, I thought, "for sure, THIS time inflation will spike up!" Except it didn't. Then QE3 in 2012... Call me slow, but it wasn't until that point that I started to seriously re-examine my mental model about how macroeconomics works. But at least I could admit to being wrong.

mr_toad 4y ago
The US economy grew from $14T in 2009 to $21T up to 2019. Printing money during an economic boom is not like printing money in a static or shrinking economy.

dragonwriter 4y ago

> but you have a significant number of people who think that you can simply "QE" a lot money (40% of all existing etc) and not have significant inflation, You can, if the underlying conditions would, with a neutral policy, produce a significant-enough deflation. We’ve pretty much demonstrated that. OTOH, if you have something like the COVID emergency and associated controls, that results in a rapid snap-back of the underlying conditions rather than the more common gradual adjustment, when you are geared to offset massive deflation, you get inflation until you adjust the monetary policy dials again.

Aunche 4y ago

Monetary policy isn't fiscal policy. QE is just a way of lowering interest and by itself does not significantly increase inflation. We've QE'd plenty of money since the recession without inflation. Japan QE'd even proportionally more money for much longer and has experienced even less inflation. QE makes lending cheaper, which enables businesses to produce more goods and services, so you don't have the effect of "more dollars chasing the same goods." Even when the government spends more money than it collects from taxes, it's still not necessarily inflationary so long as if it's a productive use of money (e.g. public transportation increases employment opportunities). The main difference from Covid relief was that lot of money was simply created with no good purpose at all, so it fell into the category of "more dollars chasing the same goods."