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(CNBC)   The US money supply, which has never risen more than 15% in a quarter, rose 23% in Q2 of 2020. This is sparking fears of inflation among experts since, you know, that is literally the textbook definition of "how you cause inflation"   (cnbc.com) divider line
    More: Scary, Inflation, Money supply, U.S. money supply, signs of inflation, Monetary policy, Federal Reserve, bond market inflation expectations, value of money  
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552 clicks; posted to Business » on 10 Aug 2020 at 11:20 AM (6 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



38 Comments     (+0 »)
 
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2020-08-10 10:17:26 AM  
We do not want the 70s and 80s back.
 
2020-08-10 10:33:30 AM  
The money supply pump is going straight into financial assets. The inflation is in stocks and bonds.

The pump is not going into Main Street to drive up activity, consumption.

It's like we hived off part of the economy, financial assets, and those who own a LOT of those are seeing greater wealth and can take that and spend some of it in the rest of the economy. There being so few of these people though, the effect us negigible overall.

The pump isn't inflating anything else and not triggering meaningful increase in economic activity.

It's protecting the 1% and the financial institutions but nothing else. It could destroy everything evebtually though so...win?!
 
2020-08-10 11:28:48 AM  
Honestly, no one saw that black swan coming.
 
2020-08-10 11:33:21 AM  
Oh yeah, then why does every retail outlet I go to have prominent signs noting a cash and coin shortage?  Chessmate, liberinos.
 
2020-08-10 11:40:20 AM  

wejash: The money supply pump is going straight into financial assets. The inflation is in stocks and bonds.

The pump is not going into Main Street to drive up activity, consumption.

It's like we hived off part of the economy, financial assets, and those who own a LOT of those are seeing greater wealth and can take that and spend some of it in the rest of the economy. There being so few of these people though, the effect us negigible overall.

The pump isn't inflating anything else and not triggering meaningful increase in economic activity.

It's protecting the 1% and the financial institutions but nothing else. It could destroy everything evebtually though so...win?!


I predict huge inflation in art works when Christie's reopens for live auctions.
 
2020-08-10 11:44:41 AM  
brrrr
 
2020-08-10 11:46:56 AM  
I blame whoever is in charge of the House and Senate
 
2020-08-10 11:47:06 AM  
Conversely, beyond the massive unemployment numbers, a lot of us who have been clocking in every day are seeing 'temporary' wage cuts, 10% here, which is textbook-definition deflation we haven't seen since 1873 (largely because organized labor, FDR, and the NRA kept at least that at bay in the 1930s).
 
2020-08-10 11:52:50 AM  

wejash: The money supply pump is going straight into financial assets. The inflation is in stocks and bonds.

The pump is not going into Main Street to drive up activity, consumption.

It's like we hived off part of the economy, financial assets, and those who own a LOT of those are seeing greater wealth and can take that and spend some of it in the rest of the economy. There being so few of these people though, the effect us negigible overall.

The pump isn't inflating anything else and not triggering meaningful increase in economic activity.

It's protecting the 1% and the financial institutions but nothing else. It could destroy everything evebtually though so...win?!


I wouldn't quite say "nothing else".  Increased demand for financial assets - bonds in particular - definitely lowers interest rate, which affects main street in a positive (if indirect) way.

That doesn't mean it's the *best* way to go about unfarking the economy but, for the federal reserve, when the only tool you're legally allowed to use is a hammer then you just got to do your best at hammering away.
 
2020-08-10 11:58:59 AM  
I get why CNBC wrote this article, but geez it could have been put in better context. Inflation is literally the last thing for folks to worrry about right now. Thank goodness the money supply grew as much as it did, because otherwise we'd be in a deflationary nightmare. Contrary to the impression given by the article, bond markets are not signaling inflation risk. Quite the opposite. And 30-year fixed mortgages are at *record* lows, which would not be the case if the market believed inflation was a proximate risk.

Look back over financial news for the past 30 years. You can always find someone harping about the risk of inflation. But this is a pretty absurd time to worry about it.

We're on the precipice of an avalanche of evictions and foreclosures over the next year, perhaps dwarfing 2008-9. Eye on the ball, people.
 
2020-08-10 12:07:00 PM  
Deflation is coming- not inflation.
 
2020-08-10 12:07:32 PM  

wejash: The money supply pump is going straight into financial assets. The inflation is in stocks and bonds.

The pump is not going into Main Street to drive up activity, consumption.

It's like we hived off part of the economy, financial assets, and those who own a LOT of those are seeing greater wealth and can take that and spend some of it in the rest of the economy. There being so few of these people though, the effect us negigible overall.

The pump isn't inflating anything else and not triggering meaningful increase in economic activity.

It's protecting the 1% and the financial institutions but nothing else. It could destroy everything evebtually though so...win?!


I agree most did go into financial assets.

We did however just start UBI unofficially. With the additional monies per person thru unemployment. Yeah, R's are trying to take that back. But if Biden gets in, he will print to every US bank account for ....idk how long. 2008 went to banks, 2020 so far went to bondholders, but it is shifting to mainstreet where will will see trillions injected here shortly.
 
2020-08-10 12:19:14 PM  
As previously stated: Most of it is getting stashed in financial assets. It's not getting out into general circulation which is normally what drives inflation.
 
2020-08-10 12:26:13 PM  

AsparagusFTW: wejash: The money supply pump is going straight into financial assets. The inflation is in stocks and bonds.

The pump is not going into Main Street to drive up activity, consumption.

It's like we hived off part of the economy, financial assets, and those who own a LOT of those are seeing greater wealth and can take that and spend some of it in the rest of the economy. There being so few of these people though, the effect us negigible overall.

The pump isn't inflating anything else and not triggering meaningful increase in economic activity.

It's protecting the 1% and the financial institutions but nothing else. It could destroy everything evebtually though so...win?!

I agree most did go into financial assets.

We did however just start UBI unofficially. With the additional monies per person thru unemployment. Yeah, R's are trying to take that back. But if Biden gets in, he will print to every US bank account for ....idk how long. 2008 went to banks, 2020 so far went to bondholders, but it is shifting to mainstreet where will will see trillions injected here shortly.


Ha!

No monies will be given to Main Street.  They have no lobbyists.
 
2020-08-10 12:40:58 PM  
How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market
 
2020-08-10 12:45:41 PM  

Jacobin: How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market


My bet is inital deflation as demand craters. Remaining inventories of goods and services will be slashed to clear out. Once that clears, and the money keeps getting printed to adults, then youll see consumer goods get bid. Deflation, then inflation. Trump and Rs are slowplaying money to people, if Biden steps in, it is goin to be a rush job of mailed checks.
 
2020-08-10 12:51:11 PM  

Jacobin: How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market


I see this has been covered.

I'll grab the lights on the way out.
 
2020-08-10 1:08:07 PM  

Jacobin: How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market


Demand has nothing to do with inflation.  Inflation means having more printed money making the current money worth less.

The fed (and congress) is printing money out the wazoo.  Ergo, high inflation.

/When an economy is in a recession that's a good thing, because it's stimulating.  The problem was... we were doing that when the economy was good too.  That's bad.
 
2020-08-10 1:38:44 PM  

jake3988: Jacobin: How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market

Demand has nothing to do with inflation.  Inflation means having more printed money making the current money worth less.

The fed (and congress) is printing money out the wazoo.  Ergo, high inflation.

/When an economy is in a recession that's a good thing, because it's stimulating.  The problem was... we were doing that when the economy was good too.  That's bad.


Inflation is versus deflation is derived of the value of currency versus the value of goods.

https://www.thebalance.com/what-cause​s​-a-high-rate-of-inflation-357608

More currency suggests the value of each increment of currency is decreased. But, if demand for goods is down, prices for goods stay low, and the relative value of currency stays high no matter how much there is.

So, yeah. How do you get inflation with low consumer demand? Currency devaluation by flooding supply. 10% relative increase during a quarter of massive deflationary force sure to list demand is nothing.

If they start dumping 50-75% more then we'll start talking inflation due to currency devaluation.
 
2020-08-10 1:50:47 PM  

jake3988: Jacobin: How do you get inflation with low consumer demand?
The only thing that's inflated is the stock market

Demand has nothing to do with inflation.  Inflation means having more printed money making the current money worth less.

The fed (and congress) is printing money out the wazoo.  Ergo, high inflation.

/When an economy is in a recession that's a good thing, because it's stimulating.  The problem was... we were doing that when the economy was good too.  That's bad.


The treasury and federal reserve have nationalized federal debt and bank swap loan markets.  In other words, they are arbitrarily setting interest rates at near 0% and selling bonds to themselves to support those low interest rates.  Since they control the markets, interest rates won't go higher.  It's the opposite of the free market.
Krugman has posted many times on the zero interest rate trap that Japan has been in since the 1987 crash.  Weird things happen, like inflation is dead and deflation threatens people with mortgages or other debts like student loans (wages decrease, effectively increasing interest rates).  The other danger is that cuts to government spending cause large decreases in GDP.
By fixing interest rates at close to 0%, Trump & Co. can double the national debt if they want.  The danger is that we will be stuck in deflation for decades, and the money will be wasted on the top 0.1%.
 
2020-08-10 2:13:37 PM  
Moronas gotta morona.

The money that never hits the physical economy is NOT inflationary.
How many times must this be repeated?
The money isn't going to the working poors who will spend it, it's going directly to the zero- and one-percenters and they're hording it.
There's no danger of inflation.
 
2020-08-10 2:30:20 PM  
In fact, right now, I would be deficit spending the fark out things to get more of the economy to the little people out their on the unemployment line.  Even in normal times, inflation is a very minor worry, because the US dollar is the World's Reserve currency, increasing demand for it artificially.
 
2020-08-10 2:55:37 PM  
 
2020-08-10 2:56:48 PM  

jake3988: Demand has nothing to do with inflation.  Inflation means having more printed money making the current money worth less.


Phew, I'm glad it's so simple. So if we don't want deflation we just have to not shred dollar bills, right? Glad there's just the one thing affecting this, I'd hate for it to be complicated.
 
2020-08-10 3:20:04 PM  

edmo: We do not want the 70s and 80s back.


The 70s had great music. The 80s had great porn.
 
2020-08-10 4:04:35 PM  

Tyrone Slothrop: edmo: We do not want the 70s and 80s back.

The 70s had great music. The 80s had great porn.


Bush is back!
 
2020-08-10 5:17:51 PM  

mtheadedfool: I get why CNBC wrote this article, but geez it could have been put in better context. Inflation is literally the last thing for folks to worrry about right now. Thank goodness the money supply grew as much as it did, because otherwise we'd be in a deflationary nightmare. Contrary to the impression given by the article, bond markets are not signaling inflation risk. Quite the opposite. And 30-year fixed mortgages are at *record* lows, which would not be the case if the market believed inflation was a proximate risk.

Look back over financial news for the past 30 years. You can always find someone harping about the risk of inflation. But this is a pretty absurd time to worry about it.

We're on the precipice of an avalanche of evictions and foreclosures over the next year, perhaps dwarfing 2008-9. Eye on the ball, people.


The inept in charge are using every short-term financial trick they can to prop up an economy that isn't working.  They know that it will fall.  They know that any sort of responsible management would cause a recession, so they're doing what they're doing so that when Democrats are in charge everything will go to shiat...which will lead the gullible and stupid to believe that Democrats broke everything instead of seeing that Republicans broke everything.  All you really have to do is look at how many stupid people blamed Obama for the recession he inherited when he came into office.
 
2020-08-10 5:19:08 PM  
And the powers that be will make sure that the Canadian Dollar STAYS pegged at 70 cents.
 
2020-08-10 5:38:19 PM  
You missing the possibility that we may have to pay higher interest to sell the  bonds that finance our debt.
The US has been the flight to safety for 100 years. That may be coming to an end. We are not endless wealthy anymore. You can be sure Russia and China are looking to capitalize on our pathetic response to the COVID crisis. We are not going to print our way out of this. We are still on pain killers. The shiat hasn't even hit the fan yet.. IMHO
 
2020-08-10 6:25:13 PM  

sgarri7777: You missing the possibility that we may have to pay higher interest to sell the  bonds that finance our debt.
The US has been the flight to safety for 100 years. That may be coming to an end. We are not endless wealthy anymore. You can be sure Russia and China are looking to capitalize on our pathetic response to the COVID crisis. We are not going to print our way out of this. We are still on pain killers. The shiat hasn't even hit the fan yet.. IMHO


Russia's response was just as bad as ours, if not worse.

And the whole damned thing started in China in the first place.  I'm really surprised that the cries to take a pound of flesh out of them for it have been so muted.
 
2020-08-10 7:06:37 PM  
Soooo.... cash 4 gold?
 
2020-08-10 7:57:13 PM  
Do we never learn from history????

Do we really want a repeat of the insane OBAMA ERA inflation caused by QUANTITATIVE EASING????

EVERYONE warned about it before it happened, there were years and years of warnings, but did the Fed listen? Did Obama do ANYTHING???

NO, he did NOTHING. And the Fed kept doing quantitative easing even with loud voices everywhere explaining that it could ONLY lead to MASSIVE OUT-OF-CONTROL INFLATION.

And then what happened???

No inflation. Almost none at all.

Will we repeat this same mistake? Or have we learned our lesson yet??
 
2020-08-10 9:54:07 PM  

sgarri7777: You missing the possibility that we may have to pay higher interest to sell the  bonds that finance our debt.
The US has been the flight to safety for 100 years. That may be coming to an end. We are not endless wealthy anymore. You can be sure Russia and China are looking to capitalize on our pathetic response to the COVID crisis. We are not going to print our way out of this. We are still on pain killers. The shiat hasn't even hit the fan yet.. IMHO


As bad as we are, Russia and China are worse.

Texas' economy of $1.6 trillion is the same size as Russia's.  If the US consumers can no longer purchase Chinese goods, then the Chinese economy will crash ( and that would be hazardous to the political system ).
 
2020-08-11 6:41:11 AM  
The massive increase in the money supply is to try to stave off deflation.

The velocity of money has practically ground to a halt, and by juicing the economy has kept it from seizing up.

Hoard cash?  Hoard gold?  Hoard cans of Spam?

I dunno...
 
2020-08-11 7:10:17 AM  
I could use a supply of money.
 
2020-08-11 11:14:53 AM  
"The broad M2 measure includes cash, checking deposits, savings deposits and money market securities. "

I still don't understand. We stop spending money and its value goes down more quickly?
 
2020-08-11 11:46:40 AM  

HotIgneous Intruder: Moronas gotta morona.

The money that never hits the physical economy is NOT inflationary.
How many times must this be repeated?
The money isn't going to the working poors who will spend it, it's going directly to the zero- and one-percenters and they're hording it.
There's no danger of inflation.


I have you farkied as 300,000 dead Americans by April 15th.
 
2020-08-11 1:46:49 PM  
You don't really get inflation when 400 people own 85% of everything.  It's just increasing liquidity.
 
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