4 ms·

I don’t understand how to read those charts.

by drivebyhooting 4mo ago

smallmancontrov 4mo ago
Any time you see a price denominated in $, divide by that chart.
- stymaar 4mo ago
  The idea that inflation and the money supply are linked is one of the most dumb one in folk economics. Just look at these charts: they were declining when inflation was raging on in 2022-23 …
  - smallmancontrov 4mo ago
    Lagged processes are one of the most fundamental concepts in economics. If merely recognizing the possibility that one could be at play here is throwing you for a loop, you need the simplified monetary model more than most.
    - stymaar 4mo ago
      Where's the hell is the lag on these graphs though!? The money supply grows both before, and after the inflationary spike. (And the fact that it stops increasing when inflation is high is not surprising at all, by the way, high inflation make the central bank raise interest rates, which reduce credit, which is where money comes from).
      - smallmancontrov 4mo ago
        The lag is where you were complaining it was.
        stymaar 4mo ago
        Do you know what “lag” means?
  - ryan_j_naughton 4mo ago
    > "The idea that inflation and the money supply are linked is one of the most dumb one in folk economics" "folk economics" implies it is by untrained people. Milton Friedman's famous quote of "inflation is always and everywhere a monetary phenomenon" shows that he deeply believed the relationship between inflation and money supply, and one certainly cannot call Friedman a "folk economist" considering he won the Nobel prize in economics and was a professor at the University of Chicago. Note: I am not saying he is right or supporting his belief. I am merely stating that such a belief is not a "folk economics" belief. This belief is still very prevalent in the freshwater schools of economics. [1] As a personal anecdote, at Ronald Coase's 100th birthday party, I personally got Gary Becker and Richard Posner debating a very related topic (whether and by what degree the velocity of money of fluctuates and whether helicopter drops of cash would have been better during the early days of the money supply collapse in 2008/2009 than just giving money to the banks). In a room full of Nobel Prize winning economists in 2010, there was a very rigorous debate on the topic. [1] https://en.wikipedia.org/wiki/Saltwater_and_freshwater_economics https://en.wikipedia.org/wiki/Saltwater_and_freshwater_econo...
    - stymaar 4mo ago
      > "folk economics" implies it is by untrained people. The problem is mostly its appropriation by untrained people though. > Milton Friedman's famous quote of "inflation is always and everywhere a monetary phenomenon" shows that he deeply believed the relationship between inflation and money supply Creationists theoreticians believe in creationism too. The problem arise when their theory reach the mainstream… (Influential people inside the Swedish Central bank making a fake Nobel prize to promote these ideas didn't help of course…)

I don’t understand how to read those charts.

smallmancontrov 4mo ago

Any time you see a price denominated in $, divide by that chart.

stymaar 4mo ago
The idea that inflation and the money supply are linked is one of the most dumb one in folk economics. Just look at these charts: they were declining when inflation was raging on in 2022-23 …
- smallmancontrov 4mo ago
  Lagged processes are one of the most fundamental concepts in economics. If merely recognizing the possibility that one could be at play here is throwing you for a loop, you need the simplified monetary model more than most.
  - stymaar 4mo ago
    Where's the hell is the lag on these graphs though!? The money supply grows both before, and after the inflationary spike. (And the fact that it stops increasing when inflation is high is not surprising at all, by the way, high inflation make the central bank raise interest rates, which reduce credit, which is where money comes from).
    - smallmancontrov 4mo ago
      The lag is where you were complaining it was.
      - stymaar 4mo ago
        Do you know what “lag” means?
- ryan_j_naughton 4mo ago
  > "The idea that inflation and the money supply are linked is one of the most dumb one in folk economics" "folk economics" implies it is by untrained people. Milton Friedman's famous quote of "inflation is always and everywhere a monetary phenomenon" shows that he deeply believed the relationship between inflation and money supply, and one certainly cannot call Friedman a "folk economist" considering he won the Nobel prize in economics and was a professor at the University of Chicago. Note: I am not saying he is right or supporting his belief. I am merely stating that such a belief is not a "folk economics" belief. This belief is still very prevalent in the freshwater schools of economics. [1] As a personal anecdote, at Ronald Coase's 100th birthday party, I personally got Gary Becker and Richard Posner debating a very related topic (whether and by what degree the velocity of money of fluctuates and whether helicopter drops of cash would have been better during the early days of the money supply collapse in 2008/2009 than just giving money to the banks). In a room full of Nobel Prize winning economists in 2010, there was a very rigorous debate on the topic. [1] https://en.wikipedia.org/wiki/Saltwater_and_freshwater_economics https://en.wikipedia.org/wiki/Saltwater_and_freshwater_econo...
  - stymaar 4mo ago
    > "folk economics" implies it is by untrained people. The problem is mostly its appropriation by untrained people though. > Milton Friedman's famous quote of "inflation is always and everywhere a monetary phenomenon" shows that he deeply believed the relationship between inflation and money supply Creationists theoreticians believe in creationism too. The problem arise when their theory reach the mainstream… (Influential people inside the Swedish Central bank making a fake Nobel prize to promote these ideas didn't help of course…)