4 ms·

Print lotsa money, get lotsa inflation.

ForHackernews 4y ago
Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?
- bsaul 4y ago
  It took a bit of time to compensate the destruction of value that occurred in 2008.
- joycian 4y ago
  Balance of payments.
- Syonyk 4y ago
  > This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect? The argument I've heard, though am not well enough equipped to fully analyze, is that the created money was going into overseas accounts as various nations tried to accumulate the global reserve currency - dollars - to purchase oil and other products that were generally traded in dollars. As long as that remained the case, an awful lot of dollars could be printed, spent, and ended up squirreled away elsewhere not really having an impact (velocity of money and such). Now, though, that arrangement is ending - in no part due to the US abusing our financial system to control what everyone else can or can't do (see Visa's opinions about what industries they'll serve for an example, also SWIFT, global sanctions, etc). So other countries are making other arrangements that don't involve dollars - I'm pretty certain dollars aren't involved in the Russian oil sales to various other countries in their sphere anymore. And any reasonable country that isn't heavily tied to the US has to be figuring out how to move off dollars. So now those all come home to roost, and combined with the lack of things to buy, we see the nasty inflation we're getting. I'm not certain how well it holds up if you really dig into it, but there are certainly people answering your question if you actually go looking for how it's being answered.
- jrm4 4y ago
  I do find that they're pretty bad at the whole picture. I'm guessing it has much to do with remembering that "money" isn't at all valuable, "goods and services" are. So this is pretty far from a science; but if there's reasonable "optimism" or more precisely "good churn in economic activity," the effects of inflation will be dampened.
- merely-unlikely 4y ago
  If I could answer that definitively I'd be crowned Chief Economist but one explanation that is frequently posited is the US (and Western Europe to a lesser extent) has effectively exported inflation. US runs a trade deficit but that imbalance is made up for by being the global reserve currency. International transactions (especially oil) are denominated in dollars generating demand. And our trade partners like China invest in dollar denominated assets (ie US treasuries) making up for the trade imbalance. Since the USD is a safe haven currency it has held up extremely well relative to other currencies recently. The UK just ran into the limit of loose fiscal policy which imo is a commentary on the extent of their decline as a world economic super power and demand for/perceived safety of GBP.
- patricius 4y ago
  There was no lag. You just didn’t see dramatic price increases in consumer goods. But you saw substantial increases in the price of stocks and real estate for instance. Also in healthcare and education. Now new money is being spent on consumer goods while supply of goods and services have been severely restricted during the corona panic. Of course soaring energy prices is now also contributing.
- mixmastamyk 4y ago
  1) There has been inflation, but partly hidden from everyday folks. 2) They turned up the printing 10x.
- zhoujianfu 4y ago
  I agree.. I think the excess money goes to two things: speculative assets (i.e. supply constrained), and actual goods and services (not supply constrained... more demand results in more being created). The money printing of the last x years has arguably resulted in asset price bubbles (housing, stocks, real estate), but didn't cause "inflation" because if e.g. people buy more nintendo switches, nintendo just makes more nintendo switches at the same price. What happened recently was supply chains / workforces got disrupted by covid (and possibly protectionist trade policies)... and then covid "ended" and demand rebounded to 2019 levels, but supply takes longer to ramp back up. That, coupled with Russia's attack on Ukraine and the decrease in the supply of energy, caused a spike in actual goods/services prices. Raising interest rates serves to pop the asset bubbles (and already has), but I think only time will solve the supply chain / energy restriction-caused "actual" inflation.
- missedthecue 4y ago
  I think a lot of people just assumed that QE 2009-2022 was adding to the money supply, but any impact it had just pales in comparison to covid relief funds, which were $6 trillion in less than two years. Look at this graph of the money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
mc32 4y ago
Apparently the history of Weimar, Zimbabwe and Turkey don't provide proof enough that high inflation is bad.
- seydor 4y ago
  theres a difference between high inflation and hyperinflation. which developed country had hyperinflation? (even turkey doesnt have it)
  - whoooooo123 4y ago
    I think that Weimar Germany was "developed" by the standards of the 1920s.
m0llusk 4y ago
In 2008 lots of money was printed in response to the crisis and there was minimal inflation and the excess was reeled in as the economy came back. Over simplification is a distraction.

Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

bsaul 4y ago
It took a bit of time to compensate the destruction of value that occurred in 2008.
joycian 4y ago
Balance of payments.
Syonyk 4y ago
> This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect? The argument I've heard, though am not well enough equipped to fully analyze, is that the created money was going into overseas accounts as various nations tried to accumulate the global reserve currency - dollars - to purchase oil and other products that were generally traded in dollars. As long as that remained the case, an awful lot of dollars could be printed, spent, and ended up squirreled away elsewhere not really having an impact (velocity of money and such). Now, though, that arrangement is ending - in no part due to the US abusing our financial system to control what everyone else can or can't do (see Visa's opinions about what industries they'll serve for an example, also SWIFT, global sanctions, etc). So other countries are making other arrangements that don't involve dollars - I'm pretty certain dollars aren't involved in the Russian oil sales to various other countries in their sphere anymore. And any reasonable country that isn't heavily tied to the US has to be figuring out how to move off dollars. So now those all come home to roost, and combined with the lack of things to buy, we see the nasty inflation we're getting. I'm not certain how well it holds up if you really dig into it, but there are certainly people answering your question if you actually go looking for how it's being answered.
jrm4 4y ago
I do find that they're pretty bad at the whole picture. I'm guessing it has much to do with remembering that "money" isn't at all valuable, "goods and services" are. So this is pretty far from a science; but if there's reasonable "optimism" or more precisely "good churn in economic activity," the effects of inflation will be dampened.
merely-unlikely 4y ago
If I could answer that definitively I'd be crowned Chief Economist but one explanation that is frequently posited is the US (and Western Europe to a lesser extent) has effectively exported inflation. US runs a trade deficit but that imbalance is made up for by being the global reserve currency. International transactions (especially oil) are denominated in dollars generating demand. And our trade partners like China invest in dollar denominated assets (ie US treasuries) making up for the trade imbalance. Since the USD is a safe haven currency it has held up extremely well relative to other currencies recently. The UK just ran into the limit of loose fiscal policy which imo is a commentary on the extent of their decline as a world economic super power and demand for/perceived safety of GBP.
patricius 4y ago
There was no lag. You just didn’t see dramatic price increases in consumer goods. But you saw substantial increases in the price of stocks and real estate for instance. Also in healthcare and education. Now new money is being spent on consumer goods while supply of goods and services have been severely restricted during the corona panic. Of course soaring energy prices is now also contributing.
mixmastamyk 4y ago
1) There has been inflation, but partly hidden from everyday folks. 2) They turned up the printing 10x.
zhoujianfu 4y ago
I agree.. I think the excess money goes to two things: speculative assets (i.e. supply constrained), and actual goods and services (not supply constrained... more demand results in more being created). The money printing of the last x years has arguably resulted in asset price bubbles (housing, stocks, real estate), but didn't cause "inflation" because if e.g. people buy more nintendo switches, nintendo just makes more nintendo switches at the same price. What happened recently was supply chains / workforces got disrupted by covid (and possibly protectionist trade policies)... and then covid "ended" and demand rebounded to 2019 levels, but supply takes longer to ramp back up. That, coupled with Russia's attack on Ukraine and the decrease in the supply of energy, caused a spike in actual goods/services prices. Raising interest rates serves to pop the asset bubbles (and already has), but I think only time will solve the supply chain / energy restriction-caused "actual" inflation.
missedthecue 4y ago
I think a lot of people just assumed that QE 2009-2022 was adding to the money supply, but any impact it had just pales in comparison to covid relief funds, which were $6 trillion in less than two years. Look at this graph of the money supply. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL

mc32 4y ago

Apparently the history of Weimar, Zimbabwe and Turkey don't provide proof enough that high inflation is bad.

seydor 4y ago
theres a difference between high inflation and hyperinflation. which developed country had hyperinflation? (even turkey doesnt have it)
- whoooooo123 4y ago
  I think that Weimar Germany was "developed" by the standards of the 1920s.

m0llusk 4y ago

In 2008 lots of money was printed in response to the crisis and there was minimal inflation and the excess was reeled in as the economy came back. Over simplification is a distraction.