3 ms·

The Fed has been reducung the money supply since June 2022. i don't think we can blame the issues of 2024 on the actions in 2021.

lifeisstillgood 3y ago
Yes, but not through tax which is the point. Quantative tightening just takes money from the fed/bank loop. It is real yes but it’s like thinking interest rates are a lever in the economy anymore. Anyway the QT on M4 has only dropped M4 by a trillion which basically means 9T still out there on top of everything else (#) ie they tried to suck it back out of banks but banks don’t have the wealth - the banks customers do. In short, ultra wealth taxes will stop the ultra wealthy drawing more value out of the economy like a gravity well, and start a flow of wealth through the economy. Imagine all the blood in your body accumulating in your ankle. Your ankle feels it’s rich in blood but you need transfusion after transfusion to keep everything else going.
- ForHackernews 3y ago
  > it’s like thinking interest rates are a lever in the economy anymore. Interest rates are absolutely a lever in the economy. It's not a coincidence that the instant the free-money ZIRP spigot was shut off, suddenly investors cared about profitability again and fat bloated tech firms started having layoffs for the first time in decades.
  - lifeisstillgood 3y ago
    If all the hydraulic fluid is draining out of the brake system, pulling on the handbrake (going from a decade of zirp to 7% in a week) is going to have an effect but that does not mean I think you can tap on the brake pedal and get the fine control you think you can. I agree Most tech companies have been spewing capital out the door and funding the lucky RSU / optioned employees for a decade. I guess the weird hiring practises and so on have been hiding that reality. I think shareholders are waking up to it, but zirp is only a small part of the story
croon 3y ago
Nitpick, The CARES Act [0] was early 2020. https://en.wikipedia.org/wiki/CARES_Act https://en.wikipedia.org/wiki/CARES_Act
wakawaka28 3y ago
You're wrong. Look at this graph: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL or https://fred.stlouisfed.org/graph/?g=1iSvr https://fred.stlouisfed.org/graph/?g=1iSvr M2 isn't shrinking much, and it certainly increased throughout 2021. I would point you to M3 as well but that series was discontinued.
- bryanlarsen 3y ago
  Dropping a $trillion isn't shrinking much? And remember that the economy has been growing the whole time. If the economy grows while the money supply stays constant then it is effectively a shrink of the money supply since a constant amount has to spread across more activity.
  - wakawaka28 3y ago
    The economy has not been growing the whole time. It effectively collapsed during the pandemic, went offline, and restarted at lower capacity afterward. GDP also counts government spending, which is misleading as the government is not producing anything it purchases. As for the 1 trillion drop, if you look at the preceding 5 trillion dollar increase you'll see that 1 trillion is very conservative.
    - bryanlarsen 3y ago
      The economy grows about $1T per year, and therefore so should the money supply. We're up net $4T over 4 years. That's about right.
      - wakawaka28 3y ago
        It only took a $12 trillion increase in government debt since 2020 to produce that "growth" lol

lifeisstillgood 3y ago

Yes, but not through tax which is the point. Quantative tightening just takes money from the fed/bank loop. It is real yes but it’s like thinking interest rates are a lever in the economy anymore. Anyway the QT on M4 has only dropped M4 by a trillion which basically means 9T still out there on top of everything else (#) ie they tried to suck it back out of banks but banks don’t have the wealth - the banks customers do. In short, ultra wealth taxes will stop the ultra wealthy drawing more value out of the economy like a gravity well, and start a flow of wealth through the economy. Imagine all the blood in your body accumulating in your ankle. Your ankle feels it’s rich in blood but you need transfusion after transfusion to keep everything else going.

ForHackernews 3y ago
> it’s like thinking interest rates are a lever in the economy anymore. Interest rates are absolutely a lever in the economy. It's not a coincidence that the instant the free-money ZIRP spigot was shut off, suddenly investors cared about profitability again and fat bloated tech firms started having layoffs for the first time in decades.
- lifeisstillgood 3y ago
  If all the hydraulic fluid is draining out of the brake system, pulling on the handbrake (going from a decade of zirp to 7% in a week) is going to have an effect but that does not mean I think you can tap on the brake pedal and get the fine control you think you can. I agree Most tech companies have been spewing capital out the door and funding the lucky RSU / optioned employees for a decade. I guess the weird hiring practises and so on have been hiding that reality. I think shareholders are waking up to it, but zirp is only a small part of the story

croon 3y ago

Nitpick, The CARES Act [0] was early 2020. https://en.wikipedia.org/wiki/CARES_Act https://en.wikipedia.org/wiki/CARES_Act

wakawaka28 3y ago

You're wrong. Look at this graph: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL or https://fred.stlouisfed.org/graph/?g=1iSvr https://fred.stlouisfed.org/graph/?g=1iSvr M2 isn't shrinking much, and it certainly increased throughout 2021. I would point you to M3 as well but that series was discontinued.

bryanlarsen 3y ago
Dropping a $trillion isn't shrinking much? And remember that the economy has been growing the whole time. If the economy grows while the money supply stays constant then it is effectively a shrink of the money supply since a constant amount has to spread across more activity.
- wakawaka28 3y ago
  The economy has not been growing the whole time. It effectively collapsed during the pandemic, went offline, and restarted at lower capacity afterward. GDP also counts government spending, which is misleading as the government is not producing anything it purchases. As for the 1 trillion drop, if you look at the preceding 5 trillion dollar increase you'll see that 1 trillion is very conservative.
  - bryanlarsen 3y ago
    The economy grows about $1T per year, and therefore so should the money supply. We're up net $4T over 4 years. That's about right.
    - wakawaka28 3y ago
      It only took a $12 trillion increase in government debt since 2020 to produce that "growth" lol