[Retric]

Terms like loose are relative so it’s often associated with unhealthy extremes. But in a growing economy you need to increase the money supply to avoid long term deflation. Further, the economy naturally expands and contracts over time so timing things correctly and a loose money supply doesn’t necessarily mean short or long term inflation.

Of course everyone is operating with in perfect information so it’s impossible to achieve a completely stable currency.

[lowkey]

Per my sister comment, the Fed printed 80% of all the dollars that ever existed in 2021 and 2022. Did the economy expand 4x?

[Retric]

Think through your argument.

We didn’t get 300% inflation. So clearly the value of all dollars isn’t simply a direct percentage of the size of the US economy or all wealth in the US etc.

[lowkey]

The relationship between money printing and inflation is neither linear nor instantaneous, but the connection is very real.

Are you arguing that printing 80% of all the dollars ever created in a short two-year time span had no effect on inflation?

[Retric]

I’m saying not printing money would have been disastrous, and much money to print wasn’t obvious.

A few years of moderate inflation was an almost perfect outcome compared to the other possibilities.

[lowkey]

I think we have very different definitions of moderate inflation.

Note: I don't consider CPI a good measure of inflation experienced by the average consumer. Unfortunately the measure is heavily politicized and thus highly distorted from real-world experience.

Nonetheless, using CPI as a benchmark:

- Average CPI exploded 382% between 2020 and 2021 (from 1.23% to 4.7%)

- Grew another 170% from 2021 to 2022 or 650% increase from 2020 to 2022 (2022 CPI was 8.0%)

- It subsided somewhat in 2023 and 2024 (to 4% then 3%) but remains significantly higher than historical norms.

Notably, CPI is now expected to remain at or above 3% for the foreseeable future, which is a sustained 50% increase over the previous target of 2%

The Fed is now working to normalize this new normal as there is basically no chance of us ever returning to the prior target of 2% CPI anytime soon.

Also note that the largest spikes in inflation align closely with the Feds massive money printing in 2021 and 2022.

source: https://www.investopedia.com/inflation-rate-by-year-7253832

[Retric]

1.23% is below the FED’s target, they would want it to rise to maintain healthy economic growth. 4.7% is also slightly outside the desired range but they don’t consider it a major issue during an economic crisis.

In terms of an authoritative source the World Bank says moderate inflation is 15-30%. https://documents.worldbank.org/en/publication/documents-rep...