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Ummm, have you been reading the news this past year? Maybe any other time in the last 20 years the US could print money without worry, but the federal reserve i

Ummm, have you been reading the news this past year? Maybe any other time in the last 20 years the US could print money without worry, but the federal reserve is currently trying their best to reduce the money supply to fight run away inflation. America's option to print it's way out of economic crisis will not be available again until inflation is under control

mercy_dude 4y ago
That was exactly my point though. The way you “fight inflation” is you raise the rates and that means all currencies pegged to yours must raise their rates at the same pace no matter what their economic conditions are like or they get destroyed in FX market. Look at right now EUR, GBP or YEN. The way Fed fights inflation is nothing but rest of the world (mostly developing world) pegged to your dollar monopoly bailing you out. And that inevitably requires hard commodity asset repricing.
- refurb 4y ago
  Europe is having massive inflation to (also did quantitative easing), so of course if the US tightens rates the EU would have to tighten as well to maintain exchange rate parity? It has nothing to do with US dollar dominance, this interrelationship also happens with non-dominant currencies as well.
  - mercy_dude 4y ago
    Agree Europe is a different story altogether- their currency free fall against Dollar is more to do with the mixed signal ECB is sending by still having to buy Italian and Greek bonds that find no other buyers AND at the same time trying to do a rate hike. And that is at the backdrop of a cold nuclear (potentially) winter. > It has nothing to do with US Dollar dominance Say that to Sri Lanka, Bangladesh, Pakistan, Iran, Argentina or literally any other developing currencies out there.
- pishpash 4y ago
  It's very simple, the US did the most easing due to the "exorbitant privilege" and so has the strongest economy coming out of the pandemic and so it can afford to raise rates the most and so it exports its inflation to other countries via the FX market.
tsimionescu 4y ago
The Fed is trying that for now, but even they know it's not going to work. Inflation today is mostly caused by goods supply issues (supply chain, Europe's energy crisis because of tensions with Russia, lingering impact from Covid on manufacturing), not monetary policy.
- WalterBright 4y ago
  Inflation is a monetary phenomenon. -- Friedman
  - tsimionescu 4y ago
    Then we're not experiencing inflation, just an increase in the price of the vast majority of consumer goods based on non-monetary reasons.
    - WalterBright 4y ago
      The way you can tell it's not inflation is if there is corresponding deflation when those non-monetary reasons disappear.
      - kangaroozach 4y ago
        The way you can tell it IS inflation is to chart the M1 money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- water554 4y ago
  Citation needed. It’s the covid era monetary and fiscal policy that screwed us.
  - tsimionescu 4y ago
    Is it just a coincidence then that the rest of the world is experiencing the same (or worse) inflation? And do you think the shortages of things like computer chips, and the increase in price of natural gas because of Europe's new imports have no effect on prices in the US?

mercy_dude 4y ago

That was exactly my point though. The way you “fight inflation” is you raise the rates and that means all currencies pegged to yours must raise their rates at the same pace no matter what their economic conditions are like or they get destroyed in FX market. Look at right now EUR, GBP or YEN. The way Fed fights inflation is nothing but rest of the world (mostly developing world) pegged to your dollar monopoly bailing you out. And that inevitably requires hard commodity asset repricing.

refurb 4y ago
Europe is having massive inflation to (also did quantitative easing), so of course if the US tightens rates the EU would have to tighten as well to maintain exchange rate parity? It has nothing to do with US dollar dominance, this interrelationship also happens with non-dominant currencies as well.
- mercy_dude 4y ago
  Agree Europe is a different story altogether- their currency free fall against Dollar is more to do with the mixed signal ECB is sending by still having to buy Italian and Greek bonds that find no other buyers AND at the same time trying to do a rate hike. And that is at the backdrop of a cold nuclear (potentially) winter. > It has nothing to do with US Dollar dominance Say that to Sri Lanka, Bangladesh, Pakistan, Iran, Argentina or literally any other developing currencies out there.
pishpash 4y ago
It's very simple, the US did the most easing due to the "exorbitant privilege" and so has the strongest economy coming out of the pandemic and so it can afford to raise rates the most and so it exports its inflation to other countries via the FX market.

tsimionescu 4y ago

The Fed is trying that for now, but even they know it's not going to work. Inflation today is mostly caused by goods supply issues (supply chain, Europe's energy crisis because of tensions with Russia, lingering impact from Covid on manufacturing), not monetary policy.

WalterBright 4y ago
Inflation is a monetary phenomenon. -- Friedman
- tsimionescu 4y ago
  Then we're not experiencing inflation, just an increase in the price of the vast majority of consumer goods based on non-monetary reasons.
  - WalterBright 4y ago
    The way you can tell it's not inflation is if there is corresponding deflation when those non-monetary reasons disappear.
    - kangaroozach 4y ago
      The way you can tell it IS inflation is to chart the M1 money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
water554 4y ago
Citation needed. It’s the covid era monetary and fiscal policy that screwed us.
- tsimionescu 4y ago
  Is it just a coincidence then that the rest of the world is experiencing the same (or worse) inflation? And do you think the shortages of things like computer chips, and the increase in price of natural gas because of Europe's new imports have no effect on prices in the US?