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The key phrase is of course "all else equal". A lot was going on in that decade that could (and is) argued to have been an opposing deflationary force. Worldwid
by shock-value 4y ago
The key phrase is of course "all else equal". A lot was going on in that decade that could (and is) argued to have been an opposing deflationary force. Worldwide demographics and productivity improvements, in particular. (On a separate note, much of that is or will be slowing/reversing in the coming years.)
To argue that an increase in money supply wouldn't lead to price inflation (again, all else equal) implies that the difference would just be hoarded indefinitely rather than used to buy anything, which seems unlikely just on the face of it.
- colinmhayes 4y agoSure, but all else wasn’t equal during covid, so I’m not sure that’s a fair addendum.
- shock-value 4y agoI'm just arguing against this general idea that "increase in money supply doesn't cause price inflation". Which doesn't even really make sense because prices are measured in units of money. But the further implication, that Fed policy has no impact on prices, is just wrong to me and reflects some kind of misunderstanding.