6 ms·

Inflation is just the increase in cost of goods. QE can cause inflation, but QE != inflation. It’s called food inflation because people know inflation is abou

by jpcfl 3y ago

Inflation is just the increase in cost of goods. QE can cause inflation, but QE != inflation. It’s called food inflation because people know inflation is about cost, so you don’t need to specify inflation of food costs. You can just say food inflation.

throw0101a 3y ago
> QE can cause inflation, but QE != inflation. A reasonable case can be made that QE may actually be deflationary to a certain extent. See Cullen Roche in 2010: * https://www.pragcap.com/quantitative-easing-the-greatest-monetary-non-event/ https://www.pragcap.com/quantitative-easing-the-greatest-mon... * https://www.pragcap.com/wait-qe-might-be-deflationary/ https://www.pragcap.com/wait-qe-might-be-deflationary/
- phpisthebest 3y ago
  Depends on where you are looking for inflation, if you look at say S&P 500 performance during QE you will see most of the money supply creation directly lead to stock price inflation and largely lead to a huge bubble in the stock market (that is largely still there) where basic fundamentals of a company did not matter to the stock prices. You see the rise of alot of highly unprofitable companies which under normal conditions would mean lowering of their stock value but instead their stocks were still going up. QE and other fed programs of the time where designed to ensure stock market inflation, and to prevent the collapse of Big Finance. That is where most of that money supply went, not to mainstreet which is where you would see CPI increases Come to COVID and the money supply creation was done in direct transfers to Mainstreet, and almost immediately we see CPI go nuts...
  - throw0101a 3y ago
    Pre-1932 US had a fixed money supply under the gold standard, and there still existed stock market bubbles: * https://en.wikipedia.org/wiki/Panic_of_1873 https://en.wikipedia.org/wiki/Panic_of_1873 * https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 Japan has had a constantly growing money supply for decades and its stock market has gone up, down, and sideways in the same time period: * https://fred.stlouisfed.org/graph/?g=17sx4 https://fred.stlouisfed.org/graph/?g=17sx4
    - phpisthebest 3y ago
      Absolutely none of that refutes my position
      - throw0101a 3y ago
        > […] most of the money supply creation directly lead to stock price inflation and largely lead to a huge bubble in the stock market (that is largely still there) where basic fundamentals of a company did not matter to the stock prices. You claim that the bubble was caused by the money supply (e.g. QE†), but bubbles have existed even with fixed money supply, so what evidence can you provide actually showing the causal link? We now have monetary headwinds (e.g., rising rates) and while there was a correction / bear market (≥20% drop in 2022), the headwinds have continue while the market has recovered. † Which, BTW, is is not really adding new assets, but is rather an asset swap: * https://www.pragcap.com/the-exploding-u-s-money-supply-myth/ https://www.pragcap.com/the-exploding-u-s-money-supply-myth/

by jpcfl 3y ago

throw0101a 3y ago

> QE can cause inflation, but QE != inflation. A reasonable case can be made that QE may actually be deflationary to a certain extent. See Cullen Roche in 2010: * https://www.pragcap.com/quantitative-easing-the-greatest-monetary-non-event/ https://www.pragcap.com/quantitative-easing-the-greatest-mon... * https://www.pragcap.com/wait-qe-might-be-deflationary/ https://www.pragcap.com/wait-qe-might-be-deflationary/

phpisthebest 3y ago
Depends on where you are looking for inflation, if you look at say S&P 500 performance during QE you will see most of the money supply creation directly lead to stock price inflation and largely lead to a huge bubble in the stock market (that is largely still there) where basic fundamentals of a company did not matter to the stock prices. You see the rise of alot of highly unprofitable companies which under normal conditions would mean lowering of their stock value but instead their stocks were still going up. QE and other fed programs of the time where designed to ensure stock market inflation, and to prevent the collapse of Big Finance. That is where most of that money supply went, not to mainstreet which is where you would see CPI increases Come to COVID and the money supply creation was done in direct transfers to Mainstreet, and almost immediately we see CPI go nuts...
- throw0101a 3y ago
  Pre-1932 US had a fixed money supply under the gold standard, and there still existed stock market bubbles: * https://en.wikipedia.org/wiki/Panic_of_1873 https://en.wikipedia.org/wiki/Panic_of_1873 * https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 Japan has had a constantly growing money supply for decades and its stock market has gone up, down, and sideways in the same time period: * https://fred.stlouisfed.org/graph/?g=17sx4 https://fred.stlouisfed.org/graph/?g=17sx4
  - phpisthebest 3y ago
    Absolutely none of that refutes my position
    - throw0101a 3y ago
      > […] most of the money supply creation directly lead to stock price inflation and largely lead to a huge bubble in the stock market (that is largely still there) where basic fundamentals of a company did not matter to the stock prices. You claim that the bubble was caused by the money supply (e.g. QE†), but bubbles have existed even with fixed money supply, so what evidence can you provide actually showing the causal link? We now have monetary headwinds (e.g., rising rates) and while there was a correction / bear market (≥20% drop in 2022), the headwinds have continue while the market has recovered. † Which, BTW, is is not really adding new assets, but is rather an asset swap: * https://www.pragcap.com/the-exploding-u-s-money-supply-myth/ https://www.pragcap.com/the-exploding-u-s-money-supply-myth/