I think this is the conventional wisdom, but has become controversial recently. In recent years, money-printing has increased, but the money just gets hoarded by banks. It never reaches the real economy. People used to think it increased monetary supply, but in fact monetary supply fluctuates based on decisions made by banks, with mysterious causes/motivations, independently of the amount of government bonds created.
It’s all very confusing. I’m confused, but so is everybody else. Except somewhere deep in the banking system are some people who understand it and are manipulating it.
That is true. But think after all these years of money printing, that money is finally spreading around so much that its affecting the prices of everyday products. For example, the helicopter money in the United States contributed to that.
There are also other reasons for inflation. Recently there are supply chain issues, meaning there are less goods, which also means prices go up. And energy prices are rising, which affects the prices of many other products.
We are printing large amounts of money since 2008 with more of less zero impact on CPI. I’m fairly certain that the recent CPI increases can be fully attributed to supply chain issues. If so, then it will likely drop back to previous CPI rates, once the supply chains are up and running again.
I don’t think the “helicopter” money ever inflated anything else other than real estate and stocks.
My understanding is that the large amounts of money that were created ended up inflating the prices for real estate and stocks. This would mean that large parts of the population would never have seen any of this money. However would be good to see if there are studies supporting this.
Money “hoarded” in banks obviously means more money is available for borrowing for things like home loans and other capital investments. This should reflect in inflation if real estate and stocks are included in basket of goods used to gauge inflation.
Confusion is created, per my limited understanding, by omitting variations in prices of things like education and real estate from standard calculations of inflation. Many governments are still issuing separate data for real estate, but layman doesn’t care for that.
If there is more money but the same amount of goods, prices will go up as buyers are willing to spend more.
I think this is the conventional wisdom, but has become controversial recently. In recent years, money-printing has increased, but the money just gets hoarded by banks. It never reaches the real economy. People used to think it increased monetary supply, but in fact monetary supply fluctuates based on decisions made by banks, with mysterious causes/motivations, independently of the amount of government bonds created.
It’s all very confusing. I’m confused, but so is everybody else. Except somewhere deep in the banking system are some people who understand it and are manipulating it.
That is true. But think after all these years of money printing, that money is finally spreading around so much that its affecting the prices of everyday products. For example, the helicopter money in the United States contributed to that.
There are also other reasons for inflation. Recently there are supply chain issues, meaning there are less goods, which also means prices go up. And energy prices are rising, which affects the prices of many other products.
We are printing large amounts of money since 2008 with more of less zero impact on CPI. I’m fairly certain that the recent CPI increases can be fully attributed to supply chain issues. If so, then it will likely drop back to previous CPI rates, once the supply chains are up and running again.
I don’t think the “helicopter” money ever inflated anything else other than real estate and stocks.
My understanding is that the large amounts of money that were created ended up inflating the prices for real estate and stocks. This would mean that large parts of the population would never have seen any of this money. However would be good to see if there are studies supporting this.
Money “hoarded” in banks obviously means more money is available for borrowing for things like home loans and other capital investments. This should reflect in inflation if real estate and stocks are included in basket of goods used to gauge inflation.
Confusion is created, per my limited understanding, by omitting variations in prices of things like education and real estate from standard calculations of inflation. Many governments are still issuing separate data for real estate, but layman doesn’t care for that.