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>Money supply and central bank assets are causally related; it doesn't make sense to link them. Literally causally linked unless the bank ratio goes to 0 for s

>Money supply and central bank assets are causally related; it doesn't make sense to link them. Literally causally linked unless the bank ratio goes to 0 for some reason OR they start mislabeling liabilities as assets. https://tradingeconomics.com/united-states/money-supply-m2 https://tradingeconomics.com/united-states/money-supply-m2 You'll notice a vertical line in M2 during covid; with complete corresponding increase in the balance sheet. These are completely linked and its bizarre to see someone saying it doesnt make sense to link them. The good news, in an attempt to clean up inflation, they have reversed course on their money/deficit printing. >Debts, yes, though the most common measure is GDP. Here, again, the number is high [1], but that has nothing to do with anyone being bankrupt. And there is vigorous debate around where the optimal level is. (When the CB's balance sheet is small, it loses monetary policy tools.) I highly recommend various open courseware classes on this. Perhaps your confusion is the word bankrupt? Which isn't applicable to countries as I said. >?Sorry, point me to the authoritative source on the optimal size of a central bank's balance sheet? I'll just use your first link. 1960 to 2007 is the optimal size; or at least in the right area. It's obviously not some PERFECTION or something. It's obvious to me and all other graph readers. It was just fine for 47 years or more. Then a financial system crisis broke them. If you dont wish to call this bankrupt, afterall that's a word for individuals. Thanks for providing a source to prove me right.

JumpCrisscross 3y ago
> are completely linked and its bizarre to see someone saying it doesnt make sense to link them I said they’re causally related; citing a ratio between them is a teaching exercise. It’s like citing the ratio of air speed to ground speed on a plane; outside edge cases and ground school it’s not a pertinent metric. > recommend various open courseware classes on this Genuinely curious for who’s spouting this, because it runs contrary to prevailing economics. (Ideally someone not pitching crypto or gold at the end.) > 1960 to 2007 is the optimal size; or at least in the right area War-time economics? During which we suffered a quasi-banking crisis (e.g. S&L), international financial crises (e.g. the Asian financial crisis), and a hyperinflationary decade (the 70s) bookended by the Nixon shock and early 80s Volcker recession? That is your gold standard for American central banking? If it hadn’t been for trade liberalisation and the fall of the Soviet Union (and possibly the short-term fiscal stimulus effects of the Iraq War), none of which are monetary effects, you’re describing an era of economic doldrums. > It's obvious to me and all other graph readers. It was just fine for 47 years or more You’re speaking like a technical analyst of stock charts. Line sort of flat and then not flat bad isn’t an economic thesis. You’re not going to be convinced. But anyone reading this thread should be able to see this reasoning is inchoate.

JumpCrisscross 3y ago

> are completely linked and its bizarre to see someone saying it doesnt make sense to link them I said they’re causally related; citing a ratio between them is a teaching exercise. It’s like citing the ratio of air speed to ground speed on a plane; outside edge cases and ground school it’s not a pertinent metric. > recommend various open courseware classes on this Genuinely curious for who’s spouting this, because it runs contrary to prevailing economics. (Ideally someone not pitching crypto or gold at the end.) > 1960 to 2007 is the optimal size; or at least in the right area War-time economics? During which we suffered a quasi-banking crisis (e.g. S&L), international financial crises (e.g. the Asian financial crisis), and a hyperinflationary decade (the 70s) bookended by the Nixon shock and early 80s Volcker recession? That is your gold standard for American central banking? If it hadn’t been for trade liberalisation and the fall of the Soviet Union (and possibly the short-term fiscal stimulus effects of the Iraq War), none of which are monetary effects, you’re describing an era of economic doldrums. > It's obvious to me and all other graph readers. It was just fine for 47 years or more You’re speaking like a technical analyst of stock charts. Line sort of flat and then not flat bad isn’t an economic thesis. You’re not going to be convinced. But anyone reading this thread should be able to see this reasoning is inchoate.