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by tsunamifury 1352 days ago
This isn’t 1980, raising interest rates doesn’t fix supply chain issues. This isn’t inflation it’s a real supply shortage. By the fed doesn’t seem to know how to help with that so, let’s just tank everything. Killing demand to get workers back to lower wages and unemployment up seems to be that real goal.
2 comments
Matticus_Rex 1352 days ago
There is a supply shortage in some areas... and there is price inflation as well. That's actually what you'd expect with a supply shortage that isn't very evenly distributed anyway, but when you add dramatic expansion of the money supply in a period of very low interest rates on top of that, you'd certainly expect to see dramatic price inflation to match, as we have. The idea that a supply shortage is causing all of this seems insane.
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mywittyname 1352 days ago
The "expansion in the money supply" has been going on for 15 years. The supply issues started 2.5 years ago. The inflation started about 2 years ago. So only one of those factors is correlated with serious inflation.

The explicit goal of expanding the money supply in 2009 was to drive inflation in order to combat deflation. It didn't work. We ended up with a decade+ long period of low/no inflation.

Even today, the USD is growing stronger relative to other currencies. So in spite of this continued money supply expansion, Americans are experiencing inflation the least of anyone in the developed world.

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zeroonetwothree 1352 days ago
Money supply has roughly doubled since 2020. So you are not correct.

https://fred.stlouisfed.org/series/M2SL

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tsunamifury 1352 days ago
Be a little more humble correcting people when you completely are wrong. M1 -> m2 conversion.

https://fred.stlouisfed.org/series/WM2NS

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mywittyname 1352 days ago
That big spike is literally just a change in the definition of M1/M2 money supply. Specifically, in May 2020, the Fed began including certain liquid investment accounts. So you can't compare pre-May 2020 figures with post-May 2020 figures because they are measuring different things and they aren't going to go back and retroactively fix the figures.
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Matticus_Rex 1351 days ago
While he's wrong to say it "doubled," it has risen ~40% since 2020, and the graph he linked is M2 -- the spike in that graph is not due to definition change -- that's actual money supply expansion. You're thinking of the change to the definition of M1, which did cause a really huge spike that was misleading if you didn't understand the change. The converted figures that do adjust the definition in both periods do show this particular spike (as do graphs using only the pre-May 2020 definition).
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Matticus_Rex 1351 days ago
The money supply has expanded as much since the monetary policy shifts of 2020 as it did between 2011 and those shifts, and inflation is a lagging indicator. You can't use "oh, we've expanded the money supply before and it hasn't caused inflation" to dismiss the idea that expanding the money supply at several times the speed is going to have a much more dramatic inflationary effect.
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baggy_trough 1352 days ago
It's both.
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