3 ms·

Nope. That’s well known bunk from alt-economics. Convenient to Austrians and Libertarians who get to blame the government (again), but wrong. Money supply is

by Nursie 4y ago

Nope. That’s well known bunk from alt-economics. Convenient to Austrians and Libertarians who get to blame the government (again), but wrong. Money supply is only one factor in a complex system.

brutusborn 4y ago
Maybe it’s not the only factor but surely it’s the major factor right now? Sure, we had a supply shock, but then we printed the most currency in history and got soaring inflation.
- notahacker 4y ago
  We also "printed the most currency in history" in years we didn't get soaring inflation...
  - brutusborn 4y ago
    Which years were those? I couldn’t find an equivalent graph for Aus, but this graph suggests there is some fairly strong correlation. https://www.longtermtrends.net/m2-money-supply-vs-inflation/ https://www.longtermtrends.net/m2-money-supply-vs-inflation/
    - notahacker 4y ago
      That's a graph of growth, so every year it's above zero there's "the most money in history"! That graph is actually a neat indication that the correlation isn't particularly strong for two variables with an established causal relationship, and that inflation (high by recent standards; normal for most of the 20th century) actually kicked in properly as the money supply started to fall, at the time we were subjected to a supply shock. Australia's money supply curve represents a much smoother upward trend compared with the US, but their recent inflation spike mirrors that of the US
- Nursie 4y ago
  Nope, doesn’t seem that way, the world is reeling from a variety of economic shocks right now, from covid to the Ukraine war and resource-prices fallout. “Printed the most money in history” is also one of those talking points that hides a massively complicated truth and doesn’t mean what people think it means. Soundbite economics (really soundbite anything) should be considered harmful.
  - brutusborn 4y ago
    What does it actually mean?
refurb 4y ago
Calling expansion of the monetary supply and the resulting inflation "bunk" is hilarious. There are so many examples of inflation driven by monetary policy (Germany in the 1930's, Argentina, Venezuela, Vietnam) that denying the impact of money supply is just burying your head in the sand.
- bmer 4y ago
  As far as I can see, the post in question isn't saying <expansion of monetary supply -> inflation> is bunk, they're saying <wage-price spiral -> inflation is bunk> bunk?
- Nursie 4y ago
  Who’s denying the impact? The post I replied to said it was the only reason, which is a load of bull. I explicitly said it’s a factor in a complex system.
  - refurb 4y ago
    The wage-price spiral is a mechanism for inflation. But the cause of inflation in the first place is the monetary expansion. You can't have a wage-price spiral without excess money to drive the higher prices and wages. It's the difference between the source of the fire (fuel + ignition source) versus the propagation of the fire (combination of oxygen + fuel).
    - Nursie 4y ago
      Yeah nah, there’s that alt economics we were talking about. There are multiple causes, money supply is only one of the factors at play. Using your fire example, there are three factors, miss any one of them, no fire. Choosing then to blame a single factor is … well it’s just wrong. And that’s if we grant your fire analogy as valid in the first place. Regardless of the above - conflating monetary supply inflation with general inflation is a favourite meme among the Austrians, they aren’t the same thing. Austrian economics (usually beloved of libertarians) is an idealogical, rather than descriptive, school of thought.

by Nursie 4y ago

Nope. That’s well known bunk from alt-economics. Convenient to Austrians and Libertarians who get to blame the government (again), but wrong. Money supply is only one factor in a complex system.

brutusborn 4y ago

Maybe it’s not the only factor but surely it’s the major factor right now? Sure, we had a supply shock, but then we printed the most currency in history and got soaring inflation.

notahacker 4y ago
We also "printed the most currency in history" in years we didn't get soaring inflation...
- brutusborn 4y ago
  Which years were those? I couldn’t find an equivalent graph for Aus, but this graph suggests there is some fairly strong correlation. https://www.longtermtrends.net/m2-money-supply-vs-inflation/ https://www.longtermtrends.net/m2-money-supply-vs-inflation/
  - notahacker 4y ago
    That's a graph of growth, so every year it's above zero there's "the most money in history"! That graph is actually a neat indication that the correlation isn't particularly strong for two variables with an established causal relationship, and that inflation (high by recent standards; normal for most of the 20th century) actually kicked in properly as the money supply started to fall, at the time we were subjected to a supply shock. Australia's money supply curve represents a much smoother upward trend compared with the US, but their recent inflation spike mirrors that of the US
Nursie 4y ago
Nope, doesn’t seem that way, the world is reeling from a variety of economic shocks right now, from covid to the Ukraine war and resource-prices fallout. “Printed the most money in history” is also one of those talking points that hides a massively complicated truth and doesn’t mean what people think it means. Soundbite economics (really soundbite anything) should be considered harmful.
- brutusborn 4y ago
  What does it actually mean?

refurb 4y ago

Calling expansion of the monetary supply and the resulting inflation "bunk" is hilarious. There are so many examples of inflation driven by monetary policy (Germany in the 1930's, Argentina, Venezuela, Vietnam) that denying the impact of money supply is just burying your head in the sand.

bmer 4y ago
As far as I can see, the post in question isn't saying <expansion of monetary supply -> inflation> is bunk, they're saying <wage-price spiral -> inflation is bunk> bunk?
Nursie 4y ago
Who’s denying the impact? The post I replied to said it was the only reason, which is a load of bull. I explicitly said it’s a factor in a complex system.
- refurb 4y ago
  The wage-price spiral is a mechanism for inflation. But the cause of inflation in the first place is the monetary expansion. You can't have a wage-price spiral without excess money to drive the higher prices and wages. It's the difference between the source of the fire (fuel + ignition source) versus the propagation of the fire (combination of oxygen + fuel).
  - Nursie 4y ago
    Yeah nah, there’s that alt economics we were talking about. There are multiple causes, money supply is only one of the factors at play. Using your fire example, there are three factors, miss any one of them, no fire. Choosing then to blame a single factor is … well it’s just wrong. And that’s if we grant your fire analogy as valid in the first place. Regardless of the above - conflating monetary supply inflation with general inflation is a favourite meme among the Austrians, they aren’t the same thing. Austrian economics (usually beloved of libertarians) is an idealogical, rather than descriptive, school of thought.