4 ms·

>It's (inflation) been the number 1 priority for central banks since the early 90s. I might believe this if M2 hadn't increased 4x since 2000 https://fred.stlo

>It's (inflation) been the number 1 priority for central banks since the early 90s. I might believe this if M2 hadn't increased 4x since 2000 https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

sofixa 4y ago
What has that have to do with inflation in the UK?
- jlmorton 4y ago
  So you're saying just because this is an entirely different economy, country, currency, money supply growth rate, central bank and interest rate regimen, that this means the elites aren't conspiring to do the thing they hate more than anything else, the thing that causes them to intentionally decrease jobs and employment to prevent?
- ptero 4y ago
  Most developed countries have a similar picture. This is a UK-specific chart. https://tradingeconomics.com/united-kingdom/money-supply-m2 https://tradingeconomics.com/united-kingdom/money-supply-m2
  - mjfisher 4y ago
    That chart shows a net increase in M2 of about 5% for the UK, rather than multiples - the Y axis doesn't start at zero, which might be misleading at first glance.
    - ptero 4y ago
      I may be missing something, but the page I posted has very similar numbers to those referenced for the StLouis Fed. You have to click on "25 years" to have a comparison with year 2000. The post you replied to referenced the St. Louis Fed chart saying 4x M2 growth from 2000 to now. The page I referenced shows the same 4x M2 growth for the UK: from 750k at 2000 to 3000k at 2023 (values in GBP Millions). Virtually identical.
comte7092 4y ago
The money supply gets brought up in every single discussion around inflation on this forum, and it’s obviously relevant. However inflation!= growth in the money supply. A lot of the reasoning behind that growth was because inflation was persistently below the 2% target for the entire period up until 2021. That’s two decades of stubbornly low inflation, despite the feds best efforts in juicing the money supply. It’s maddening how common it is for this forum to treat the issue as so simplistic and formulaic as though policymakers are somehow dunces compared to software engineers.
- gunshai 4y ago
  What is consistently lost in the M2 supply talking point is the demand aspect of currency. One of the reasons why the M2 supply increasing wouldn't directly correlate to inflation has to do with global demand to hold the asset in reserve. So the argument I don't think is bad, just misguided in the sense that once the global demand for currency reserve is saturated the party is over for increase in supply with out a very direct affect on inflation.
  - comte7092 4y ago
    It is absolutely relevant, and I’d be fine with the discussion of if included your level of nuance. However it usually is a more simplistic conversation that glosses over the challenges of actually making policy at the fed.
- kebman 4y ago
  It's called the Cantillon Effect. And there usually is a delay from implementation to experienced effect. After 2020 the money printing was excessive, and it almost immediately lead to unprecedented growth in the stock market. Now, however, the delayed effect of that party is leading to unprecedented growth in food and energy prices, which affects the lives of everyone.
  - comte7092 4y ago
    Correct, however parent comment wasn’t referring solely to 2020, they explicitly went back to 2000. Hence why I spoke to the whole period in my comment.

sofixa 4y ago

What has that have to do with inflation in the UK?

jlmorton 4y ago
So you're saying just because this is an entirely different economy, country, currency, money supply growth rate, central bank and interest rate regimen, that this means the elites aren't conspiring to do the thing they hate more than anything else, the thing that causes them to intentionally decrease jobs and employment to prevent?
ptero 4y ago
Most developed countries have a similar picture. This is a UK-specific chart. https://tradingeconomics.com/united-kingdom/money-supply-m2 https://tradingeconomics.com/united-kingdom/money-supply-m2
- mjfisher 4y ago
  That chart shows a net increase in M2 of about 5% for the UK, rather than multiples - the Y axis doesn't start at zero, which might be misleading at first glance.
  - ptero 4y ago
    I may be missing something, but the page I posted has very similar numbers to those referenced for the StLouis Fed. You have to click on "25 years" to have a comparison with year 2000. The post you replied to referenced the St. Louis Fed chart saying 4x M2 growth from 2000 to now. The page I referenced shows the same 4x M2 growth for the UK: from 750k at 2000 to 3000k at 2023 (values in GBP Millions). Virtually identical.

comte7092 4y ago

The money supply gets brought up in every single discussion around inflation on this forum, and it’s obviously relevant. However inflation!= growth in the money supply. A lot of the reasoning behind that growth was because inflation was persistently below the 2% target for the entire period up until 2021. That’s two decades of stubbornly low inflation, despite the feds best efforts in juicing the money supply. It’s maddening how common it is for this forum to treat the issue as so simplistic and formulaic as though policymakers are somehow dunces compared to software engineers.

gunshai 4y ago
What is consistently lost in the M2 supply talking point is the demand aspect of currency. One of the reasons why the M2 supply increasing wouldn't directly correlate to inflation has to do with global demand to hold the asset in reserve. So the argument I don't think is bad, just misguided in the sense that once the global demand for currency reserve is saturated the party is over for increase in supply with out a very direct affect on inflation.
- comte7092 4y ago
  It is absolutely relevant, and I’d be fine with the discussion of if included your level of nuance. However it usually is a more simplistic conversation that glosses over the challenges of actually making policy at the fed.
kebman 4y ago
It's called the Cantillon Effect. And there usually is a delay from implementation to experienced effect. After 2020 the money printing was excessive, and it almost immediately lead to unprecedented growth in the stock market. Now, however, the delayed effect of that party is leading to unprecedented growth in food and energy prices, which affects the lives of everyone.
- comte7092 4y ago
  Correct, however parent comment wasn’t referring solely to 2020, they explicitly went back to 2000. Hence why I spoke to the whole period in my comment.