Posted on 01/27/2022 8:23:48 AM PST by Vermont Lt
If you are wondering when inflation will slow down, one of the first places to look is the overall money supply. There are several factors, but the easiest to understand are the M1 and M2 metrics. M1 is basically cash, and deposits.
Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
https://fred.stlouisfed.org/series/M1SL
Link to the M2 Report
https://fred.stlouisfed.org/series/WM2NS
Its pretty basic economics: The Money supply "chases" the goods and services in the economy. With the supply chain in bad shape, the amount of money just waiting to jump on a scare product is going to drive the prices upwards.
If you want to shock your friends...show them this. The creation of money since 2020 is staggering.
A log chart would be helpful to compare to earlier years.
I don’t get it. Just because they printed all this money, why are prices going up.
Now there’s a hockey-stick-for-real chart.
Scary.
The money is busy demanding.
click on edit, then go to format tab, then check box for log scale. Voila.
Well the Fed said they can’t understand it, so why should I be able to understand it. Them’s a whole lot smarter than I is.
“Inflation is caused by too much money chasing after too few goods.”
― Milton Friedman
Indeed. And it is a bad omen for the future.
To “expand” from 4 to 16 in the span of about one month — April to May 2020 — tells a story that the government AND the Fed are out of control. The parallel news item in that time was the pandemic declaration a few weeks earlier, complete with massively incorrect predictions and resultant lockdowns with their horrid socioeconomic effects.
Since then the few and politically connected have profited wildly and the many have been hit hard in the pocketbook. These effects will linger.
Time to abrogate the debt and abolish the Fed, a partly private corporation pays out regular dividends to holders of its debt instruments..-- It is the privatization of public debt to private wealth.
“Just because they printed all this money, why are prices going up.”
They printed a lot of money and prices are still going up.
Catherine Austin Fitts on the End Game - why we ceded power to the Central Banks...
(1 min video)
https://m.youtube.com/watch?v=k6IS7q5E1Fw
New seminal book by Christopher Leonard: “Lords of Easy Money”
He was a guest on Bannon Warroom today (2nd hr)
OK, your post went over my head. My bad.
All that money is out there. But products aren’t flowing. So the price for getting the products that ARE available will rise.
So inflation isn’t going away with incremental rate increases, he asked somewhat innocently?
How did a stimulus of a “few” trillion become so many trillions so quickly?
Was there more money printing going on than we ever imagined? Did this money come out of stocks of goods that were not replaced?
In short, because in 2Q2020 the Fed dropped the savings account cap of 6 monthly transfers to DDA accounts, M1 was redefined to include savings account.
Thus the massive ramp-up is the result of a ledger entry, not fundamentals. No need to jump.
The monthly YoY % change in M2 averaged 6.8% from 1960-2019, with a few stretches of 10-15% growth in the 70s and early 1980s. The avg from 2020-2021 of 17.9% reflects the 20%+ growth through March 2021 tapering to about 13% more recently.
Keep in mind, M2 creation isn't just the Fed but the result of commercial lending - Dr loans, Cr DDA accounts.
A lot of this money seems to be sitting on the sidelines.
And if $2 Trillion more would go out in BBB, it will bring down inflation.
Not sure how that works.
A lot of it sitting there because there is nowhere for it to go. I mean with bad supply chains that stuff you want to buy isn’t available. So it sits there.
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