4 ms·

So your argument is there is just a really long lag? Because money is relatively tight again and we are still seeing inflation. OR are there other factors pot

• refurb 4y ago
  Of course other factors are at play. Money supply is the kindling, but other factors can be be the spark that starts the fire. In 2008 the massive expansion of the money supply did little to spur inflation because: a) banks were skittish and increased their reserves significantly which tied up extra money and b) consumers worked to pay down debt and increase savings. I don’t deny that supply shocks can trigger inflation, but without excess money supply the effect is limited.
  • RC_ITR 4y ago
    > I don’t deny that supply shocks can trigger inflation, but without excess money supply the effect is limited. Since 1970, only supply shocks have caused inflation so idk why you’re so confident that it wasn’t the case this time. Volker doing what he did while oil prices tanked really fucked with the economic understanding of a whole generation of people. Like, you’re literally saying “hey, the occurrence of X in 2008 doesn't count, and when we did X again in 2020 with Y that’s when X really mattered, but yeah Y is marginal. Also ignore that when Y happened without X in the 70s it happened too.”