5 ms·

That's a childish view of how money works and what causes inflation.

xyzzyz 4y ago
I agree, it is childish thing to tell the truth, when lying and obfuscating is more conducive to gain and preserve power.
abhinai 4y ago
What is the adult view?
- tshaddox 4y ago
  Probably that it’s more complicated than that.
  - abhinai 4y ago
    Is it really? If we agree that there was a huge increase in money supply and that supply of goods stayed the same or decreased then it follows logically that more money would be needed to acquire same quantity of goods. Seems fairly simple!
    - voisin 4y ago
      Children would tell it like it is, or rather like you just have. Adults would pretend it is much more complicated and cannot possibly be their fault.
      - inawarminister 4y ago
        The Emperors have no clothes.
adamsb6 4y ago
Look at this graph: https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS See the discontinuity? That's not an artifact of changes to how money supply is measured. It's a real, unprecedented increase in the money supply. If not inflation, what impact would such an increase have? Is increasing money supply the world's first free lunch? If so, why not accelerate it's growth even more?
somenameforme 4y ago
Take a look at a graph of the US monetary supply [1]. Many factors can contribute to inflation, but monetary supply is generally the dominant driver. And since February 2020, the US monetary supply has increased by about 40%. You can also see a table of inflation levels here [2]. The causes today being blamed for the inflation happened long after the inflation. It's just gas lighting, pun intended. [1] - https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS [2] - https://www.multpl.com/inflation/table/by-month https://www.multpl.com/inflation/table/by-month
Mikeb85 4y ago
Another comment in the same thread is a link to a Bridgewater associate saying the same thing. It's economic orthodoxy. Either you can believe that every reputable mainstream economist is wrong or admit politicians have a vested interest in not admitting fault.
divbzero 4y ago
I would call it a simplified rather than a childish view. “Increased money supply causes inflation” is an accurate macro view of how money works, with macro meaning it’s a high-level model. The micro view is of course more complex. If you drill down on how extra dollars created by the fractional reserve banking system flow through our economy, you’ll see the money sometimes sits idle in bank reserves without causing immediate inflation, while other times it might flow into investments and pump up the stock market, and then spill over into well-funded startups that bid up engineer salaries and their local real estate market, and so on… The inflation can be uneven and proceed with delays, but the increased money supply does create an overall tidal pressure lifting prices up.
- neilwilson 4y ago
  "“Increased money supply causes inflation” is an accurate macro view of how money works" It isn't though is it. How does $100 in a drawer cause inflation? That is the correct analogy or you wouldn't see the $100 on the balance sheet. It has to be saved to show up. Otherwise it would pass by loan repayment and taxation points and disappear as balance sheets contract. Inflation is always, everywhere, a lack of supply capacity. Excess capacity to supply is what keeps prices down via market competition. "You’ll see the money sometimes sits idle in bank reserves without causing immediate inflation" Bank reserves are assets of banks that sit in Central bank accounts. You or I can't hold them because we can't have central bank accounts. They can only ever be passed to other banks. Your view of banking is completely wrong. Try this explanation from the Bank of England. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
  - hndamien 4y ago
    It doesn't stay in the drawer though. The total supply is a constraint on all actors as they compete for resource allocation. By increasing the supply and relaxing the constraint, some participants can out compete (raise the price) of scarce resources. This is only possible to go to the levels in all areas simultaneously due to the increased supply. No increased supply to match the increased wealth from treade, you get deflation, which is desirable for savers.

I agree, it is childish thing to tell the truth, when lying and obfuscating is more conducive to gain and preserve power.

abhinai 4y ago

What is the adult view?

tshaddox 4y ago
Probably that it’s more complicated than that.
- abhinai 4y ago
  Is it really? If we agree that there was a huge increase in money supply and that supply of goods stayed the same or decreased then it follows logically that more money would be needed to acquire same quantity of goods. Seems fairly simple!
  - voisin 4y ago
    Children would tell it like it is, or rather like you just have. Adults would pretend it is much more complicated and cannot possibly be their fault.
    - inawarminister 4y ago
      The Emperors have no clothes.

adamsb6 4y ago

Look at this graph: https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS See the discontinuity? That's not an artifact of changes to how money supply is measured. It's a real, unprecedented increase in the money supply. If not inflation, what impact would such an increase have? Is increasing money supply the world's first free lunch? If so, why not accelerate it's growth even more?

somenameforme 4y ago

Take a look at a graph of the US monetary supply [1]. Many factors can contribute to inflation, but monetary supply is generally the dominant driver. And since February 2020, the US monetary supply has increased by about 40%. You can also see a table of inflation levels here [2]. The causes today being blamed for the inflation happened long after the inflation. It's just gas lighting, pun intended. [1] - https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS [2] - https://www.multpl.com/inflation/table/by-month https://www.multpl.com/inflation/table/by-month

Mikeb85 4y ago

Another comment in the same thread is a link to a Bridgewater associate saying the same thing. It's economic orthodoxy. Either you can believe that every reputable mainstream economist is wrong or admit politicians have a vested interest in not admitting fault.

divbzero 4y ago

I would call it a simplified rather than a childish view. “Increased money supply causes inflation” is an accurate macro view of how money works, with macro meaning it’s a high-level model. The micro view is of course more complex. If you drill down on how extra dollars created by the fractional reserve banking system flow through our economy, you’ll see the money sometimes sits idle in bank reserves without causing immediate inflation, while other times it might flow into investments and pump up the stock market, and then spill over into well-funded startups that bid up engineer salaries and their local real estate market, and so on… The inflation can be uneven and proceed with delays, but the increased money supply does create an overall tidal pressure lifting prices up.

neilwilson 4y ago
"“Increased money supply causes inflation” is an accurate macro view of how money works" It isn't though is it. How does $100 in a drawer cause inflation? That is the correct analogy or you wouldn't see the $100 on the balance sheet. It has to be saved to show up. Otherwise it would pass by loan repayment and taxation points and disappear as balance sheets contract. Inflation is always, everywhere, a lack of supply capacity. Excess capacity to supply is what keeps prices down via market competition. "You’ll see the money sometimes sits idle in bank reserves without causing immediate inflation" Bank reserves are assets of banks that sit in Central bank accounts. You or I can't hold them because we can't have central bank accounts. They can only ever be passed to other banks. Your view of banking is completely wrong. Try this explanation from the Bank of England. https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
- hndamien 4y ago
  It doesn't stay in the drawer though. The total supply is a constraint on all actors as they compete for resource allocation. By increasing the supply and relaxing the constraint, some participants can out compete (raise the price) of scarce resources. This is only possible to go to the levels in all areas simultaneously due to the increased supply. No increased supply to match the increased wealth from treade, you get deflation, which is desirable for savers.