Posted on 03/19/2021 2:27:23 PM PDT by fruser1
As long as banks can make loans, the Fed’s initial increase can finally increase the money supply many times over.
The large final increase in the money supply should be inflationary. That wasn’t the case 10 years ago. From 2010 to 2018, the Dodd-Frank bill placed severe restrictions on bank lending, which reduced the multiplying effect. That could be the reason there was no inflationary impact.
But parts of Dodd Frank were repealed in 2018, so now there should be a greater multiplying effect, likely contributing to inflation.
Rising energy prices, a rapid growth in the money supply, huge government budget deficits and a potential capital shortage all point to a future inflation problem.
Those who support MMT have reached conclusions that are simply not accurate. Continuing to print money and continuing to deficit-spend do have consequences. The first consequence is rapidly rising prices. I am afraid that is coming.
(Excerpt) Read more at newsmax.com ...
Bttt
It’s obvious the paper itself has no inherent value. You can’t walk around with tons of silver or gold. The cavemen had this argument already when they started using clamshells as coins. Get over it and go make money faster than it inflates. I’ve been living with inflation for over 50 years of work and “revinventment”, what I call retirement. It’s worked out fine, and those worthless dollars have paid for everything with no problem. I’ve converted them into houses, land, art, equipment, services, anything and everything I want.
The FED isn’t going away, might as well take what it gives, which is plenty. Inflation was around 14% when I started out. I didn’t even think about it, just went out and made my way. There wasn’t any other choice and there still isn’t. Now inflation is 2%, who cares. 2 or 20, it’s just the number to beat. The currency collapse fear-porn story has been around since before my first job. I’m lucky I’ve always ignored it.
“Blame it on Trump”
Face it, he deserves some of the blame. He fell for the months-long coronascam economic destruction that will lead to massive inflation, free healthcare, UBI and government control.
He should’ve dropped Fauci and Brix and money for fake testing and the fake vax-a-thon at Easter 2020.
Interesting you say that. Money is really just a claim against the goods and services that an economy produces. If the money is sent overseas where it can’t (easily) be used to claim against the economy that “generated it”, can it cause inflation in the economy that originated it?
>>It’s almost like they WANT to bankrupt the country.<<
Cloward/Piven.
A side note, flooding our country with illegals also puts a huge strain on our infrastructure. Biden and his merry band of leftist promise to ram through a huge infrastructure spending package.
Higher fuel prices, tax increases, enormous cost of open borders, ramping corporate outsourcing once again, the smell of war in the air...this will be an interesting four years.
You won’t be able to keep ignoring it if they have their way. You’ll need a vaccine passport to work, then they’ll transition to a mark of some kind, maybe a chip. If you’re ok with all that, well, then you have bigger problems.
It’s not a matter of if, it’s only a matter of when.
Don’t forget gold. 😉
“I see street walkers .... Oh wait... Never mind...”
Oddly those ladies are the absolute best measure of inflation. Their services are totally uncontrolled by government monetary policy. If their price is up, inflation is up. If their price crashes it is a depression. Their price also reflects local economics perfectly. Their services are much more valued in Las Vegas, Austin, the East Side of New York and exceptionally so in Mayfair in London in the most expensive and private clubs. Just like stocks, they have inherent value which changes with time.
I do not say this in humor but it is funny.
I would think so. But the effect (if my speculation has any validity) would be diluted.
That, my friend, is the job of the boys and girls at the Bureau of Labor Statistics. The job is arcane and difficult, as you have just noted. BUT, consider carefully who signs their paychecks. They all know which side their bread is buttered on, and they know that low inflation is politically more acceptable than high.
Every single time there is a choice to be made, they know how the calculation will come out and they choose the low inflation assumption rather than the high inflation one.
If you want your blood pressure to raise beyond control, Google "Shadow Government Statistics" and take a look at a better estimate of real inflation.
You're pointing out that commodities mostly tend to rise together, along with real estate and (in normal worlds) interest rates.
WHEN that happens we're in an inflationary cycle. What may curtail it, as you allude to, is inactivity in the economy. In Carter's time however, economic inactivity and inflation coincided - i.e. stagflation.
I'm betting that's where this is going, but the economy is so global and volatile now it's hard for anyone to get a handle on.
Yes and stagflation is caused by monetary policy as opposed to inflation that is caused by capacity restraints.
I’m still trying to make practical sense of it all. The amount of money on the sidelines in M1 and M2 plus the current stimulus is a lot of money that could flow into the market and drive prices higher.
But if market psychology turns negative it can make all of that money just cease to exist quickly.
What to do? What every I do, I will probably try to hedge some.
Price of gasoline is up 70 cents since election. That will raise the price if everything and reduce people’s spending power
bmp
With your car example... which group has suffered the most car inflation as per the food example below...
https://www.weforum.org/agenda/2016/12/this-map-shows-how-much-each-country-spends-on-food/
from link:
Over the past 25 years, the poorest 20% of households in the US spent between 28.8% and 42.6% on food, compared with 6.5% to 9.2% spent by the wealthiest 20% of households.
Not sure if you saw the post, but Ellendra suggested buying simple gold wedding bands for ease of portability and easier bartering.
I thought that was a really smart idea. :)
A good idea.
It does get interesting. A significant fraction (I will not even guess on the percentages) of the stimulus checks will either go to pay back rent or credit card debts, which due to the wonders of fractional reserve banking, will reduce the money supply. Another noticeable chunk of those stimulus checks will not be spent for months spending time in checking accounts that earn little to no interest.
Invest in industrial robot makers...
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