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You cannot discuss thee money supply without discussing the money velocity. The money velocity has tanked: http://research.stlouisfed.org/fred2/series/M1V http

You cannot discuss thee money supply without discussing the money velocity. The money velocity has tanked: http://research.stlouisfed.org/fred2/series/M1V http://research.stlouisfed.org/fred2/series/M1V http://research.stlouisfed.org/fred2/series/M2V http://research.stlouisfed.org/fred2/series/M2V

marvin 14y ago
Hey, this is off topic, but I am no economist and I am curious. I've heard your argument before, and it seems really obvious that this must be the reason we don't have a lot of inflation. But what is stopping all the money that has been printed from at one point entering the economy and causing inflation? From the previous chart, I read that the amount of money in the US economy has more than quadrupled. Is this a correct interpretation?
- bitcartel 14y ago
  Most of the money is passed between central banks and technically insolvent[1] banks, helping them repair their balance sheet and dispose of toxic assets. http://dailybail.com/home/chart-of-the-day-feds-balance-sheet-hits-new-record-3-trilli.html http://dailybail.com/home/chart-of-the-day-feds-balance-shee... Some of the money seeps into the economy and may be inflating stocks and other assets. For example, banks are given loans at zero interest[2] and they can use that money for whatever, e.g. proprietary trading, bonds/treasuries, etc. Perhaps some of that money finds its way into investment funds and eventually tech start-ups? [1] http://www.ritholtz.com/blog/2012/02/fasb-sells-out-unsurprising-results-follow/ http://www.ritholtz.com/blog/2012/02/fasb-sells-out-unsurpri... [2] http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3 http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e7... http://www.bloomberg.com/news/2011-12-23/fed-s-once-secret-data-compiled-by-bloomberg-released-to-public.html http://www.bloomberg.com/news/2011-12-23/fed-s-once-secret-d...
  - marvin 14y ago
    Will this money be removed from the economy at some point? How?

marvin 14y ago

Hey, this is off topic, but I am no economist and I am curious. I've heard your argument before, and it seems really obvious that this must be the reason we don't have a lot of inflation. But what is stopping all the money that has been printed from at one point entering the economy and causing inflation? From the previous chart, I read that the amount of money in the US economy has more than quadrupled. Is this a correct interpretation?

bitcartel 14y ago
Most of the money is passed between central banks and technically insolvent[1] banks, helping them repair their balance sheet and dispose of toxic assets. http://dailybail.com/home/chart-of-the-day-feds-balance-sheet-hits-new-record-3-trilli.html http://dailybail.com/home/chart-of-the-day-feds-balance-shee... Some of the money seeps into the economy and may be inflating stocks and other assets. For example, banks are given loans at zero interest[2] and they can use that money for whatever, e.g. proprietary trading, bonds/treasuries, etc. Perhaps some of that money finds its way into investment funds and eventually tech start-ups? [1] http://www.ritholtz.com/blog/2012/02/fasb-sells-out-unsurprising-results-follow/ http://www.ritholtz.com/blog/2012/02/fasb-sells-out-unsurpri... [2] http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3 http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e7... http://www.bloomberg.com/news/2011-12-23/fed-s-once-secret-data-compiled-by-bloomberg-released-to-public.html http://www.bloomberg.com/news/2011-12-23/fed-s-once-secret-d...
- marvin 14y ago
  Will this money be removed from the economy at some point? How?