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Excessive money printing doesn't always cause inflation, but pretty much every instance of high inflation coincided with excessive money printing. The story ju

by bko 4y ago

Excessive money printing doesn't always cause inflation, but pretty much every instance of high inflation coincided with excessive money printing. The story just makes sense. Low interest rates means banks have more money to lend, everyone else gets more money (unfinanced stimulus payments) which means they have more money to spend on this driving prices up. Its hard to tease out. It's like lung cancer. Before it was directly associated with smoking, the evidence was overwhelming when you consider that nearly every case of lung cancer happened in people who were heavy smokers. Add a mechanism to how inhaling smoke into your lungs can increase the probability of cancer and you have pretty compelling evidence that smoking is the culprit. Others with a stake will try to confuse you (cigarette companies, central banks, etc), but its pretty obvious.

rnk 4y ago
Causality or correlation? Every central bank at times has to deal with inflation and deflation, increasing or reducing the money supply. Inflation today has a lot of different factors than inflation in various times in the past - huge increases in energy costs (Russian invasion leads to so much more, gas shortages in europe which drives everything else up they make), fertilizer made in good part from petroleum related things gets more exp, food gets more exp, Ukraine doesn't export as much food so there's a shortage of that. Add on covid supply squeeze. You get huge inflationary pressure WITHOUT ANY MONEY SUPPLY CHANGES. I'm kind of tired of people wasting everyone's time arguing about whether the us causes inflation because we aren't on a gold supply anymore, or crypto is the savior or source of our problems, on increases in the money supply. We were stimulating the economy in the us (and in europe too I guess). imho, the US fed will fail to knock down inflation much because they can't control these external factors, energy prices increased, supply decreased (in part bc Euro stopped buying Russian petro products), food shortage. These are outside their control. I keep reading articles the last few days saying we are close to a deflationary spiral on prices, going completely the other way. Who knows who is right. But I am right that there are these external factors causing inflation.
- zhoujianfu 4y ago
  Yeah, that’s what I don’t get… the inflation we’re seeing is clearly a result of the energy spike from Russia’s invasion plus the end of Covid (demand came surging back for things like air travel and diminished supply takes a while to catch up). It seems pretty clear low interest rates and printing money which has been going on since 2008 probably isn’t the cause.

by bko 4y ago

rnk 4y ago

Causality or correlation? Every central bank at times has to deal with inflation and deflation, increasing or reducing the money supply. Inflation today has a lot of different factors than inflation in various times in the past - huge increases in energy costs (Russian invasion leads to so much more, gas shortages in europe which drives everything else up they make), fertilizer made in good part from petroleum related things gets more exp, food gets more exp, Ukraine doesn't export as much food so there's a shortage of that. Add on covid supply squeeze. You get huge inflationary pressure WITHOUT ANY MONEY SUPPLY CHANGES. I'm kind of tired of people wasting everyone's time arguing about whether the us causes inflation because we aren't on a gold supply anymore, or crypto is the savior or source of our problems, on increases in the money supply. We were stimulating the economy in the us (and in europe too I guess). imho, the US fed will fail to knock down inflation much because they can't control these external factors, energy prices increased, supply decreased (in part bc Euro stopped buying Russian petro products), food shortage. These are outside their control. I keep reading articles the last few days saying we are close to a deflationary spiral on prices, going completely the other way. Who knows who is right. But I am right that there are these external factors causing inflation.

zhoujianfu 4y ago
Yeah, that’s what I don’t get… the inflation we’re seeing is clearly a result of the energy spike from Russia’s invasion plus the end of Covid (demand came surging back for things like air travel and diminished supply takes a while to catch up). It seems pretty clear low interest rates and printing money which has been going on since 2008 probably isn’t the cause.