[dageshi]

It caused asset inflation for 10 years.

Housing, the stock market, crypto.

Supply of goods and services could mostly keep up with any increased demand so you didn't see inflation so obviously there.

[throwaway2037]

It is interesting that you include "stock market" in your list. Can you pick a period where the stock market went up (or down) for an extended period that was not "asset inflation (or deflation)"? To be clear, yes, financing rates will always impact financial assets (stocks, bonds, traded commodities) in the short term, but not over a ten year period. You need real earnings growth in the underlying stocks to see sustained stock market growth.

Crypto is gambling to me, so let's ignore that for my post.

Housing is mostly about debt financing (the same is true for commercial real estate). It is always true that financing rates have a large impact on valuations. People mostly buy homes on the monthly payment (cars too). If rates rise, they monthly payments rise. Most people will elect to buy a cheaper home, or wait for prices to fall.

[jml78]

The issue I don’t see talked about is the removal of the reserve requirements for banks during Covid. They did that for liquidity reasons.

However that allows bank A to loan 100% of their money to bank B and 100% to bank C.

This is extremely problematic. And now with bank failures they are too scared to put it back in place.

Just this concept alone creates huge inflation.

[rocqua]

Banks still have a required capital ratio. Covid slackened that a little bit, but banks very much still have reserve requirements.