money supply and inflation
6 responses | 0 likes
Started by bear - Feb. 25, 2021, 2:30 p.m.

https://www.gold-eagle.com/fed-chair-jerome-powell-says-money-printing-doesnt-lead-inflation

how can this guy be so dumb? (or he knows he is lying ,and feels he needs to lie to support the fed agenda). 

short term he is correct.  increasing money supply 10% this year does not lead to 10% inflation this year. but...

long term he could not be more wrong.

from 1950 to 1980, money supply went up about 1000%, and the price of oil went up about 1000%. 

from 1960 to 1990, money supply went up about 1000%, and the price of gold went up about 1000%.  

when we had a gold standard, the price of silver and copper did not change much in 100 years.

when we scrapped the gold standard and went to a fed managed fiat currency,  gold has gone from 20 bucks to 2000 bucks.  

this has No bearing on whether gold will go up or down this week.  

i expect gold to go down for the next 2 weeks.  

Comments
By wglassfo - Feb. 25, 2021, 4:36 p.m.
Like Reply

I am just your average person with limited knowledge

However, I remember the 1970 inflation you talk about

The banks were willing to lend money if you had a pulse

During the housing crisis the same thing happened, money could be had at the bank for a house purchase, as the thinking was that houses never go down. Also, some people were given mortgages that should not have even got in the front door, but the commission for selling mortgages was so much everybody was in the selling mortgage business. The securities were stated as AAA and bundled with a lot of bad risk mortgage, which meant the rating people had to know but still rated the bundled mortgage pkg as AAA

Then we did have inflation as the people on main St could borrow at will and spent the money.

Now if Powell can some how keep main st from accessing this money, inflation will increase but not as much as previous times. If you don't have access to money then inflation is restrained

But, even though much of the 1.9 trillion will not go to main st, you are correct that enough will find it's way to main st as M1 and M2. Supply numbers tell us there is a considerable amount of money on Main st.   Main st being the consumer, not the mom and pop operations, just to be clear on that

Another thing that Powell is hiding from most of us is the CPI numbers. I don't know where those numbers come from but you are correct. Gas, lumber, oil, commodities bonds are all screaming inflation

If you give the consumer money,  they will generally spend it although M1 numbers tell us considerable savings has happened. This may change if lock down rules change. 

What do you think of a F-150 truck listed at 80,000.00 Is that inflation, what about the price of a home that uses inflated lumber costs but sells.

IMHO inflation depends on who has access to money and who will spend the money

If you and everybody else buy and hold stks, then not much happens. But if enough of you sell your stks to buy a house then stks go down and houses go up. The house was bought by the  person on main st, the person who did not need a house and did not sell the stks when the trend was down will suffer greatly

Inflation can happen or it can be restrained, depending on who has access to the money supply

I am guessing that Powell is hoping the banks might be able to control the money supply, but it seems that enough of the money is reaching the consumer which usually results in inflation if the consumer bids for goods and services, that may be in short supply or inflated in price.

By metmike - Feb. 25, 2021, 10:26 p.m.
Like Reply

                big-time inflation coming            

                            5 responses |  

                Started by GunterK - Feb. 16, 2021, 1:05 p.m.            

https://www.marketforum.com/forum/topic/65718/

By metmike - Feb. 25, 2021, 10:29 p.m.
Like Reply

                  

                Dollar value???            

                            Started by wglassfo - Jan. 1, 2021, 12:56 p.m.            

https://www.marketforum.com/forum/topic/63599/

By metmike - Feb. 25, 2021, 10:30 p.m.
Like Reply

      Inflation here we come December 10, 2020            

https://www.marketforum.com/forum/topic/62544/

By Richard - Feb. 26, 2021, 9:26 a.m.
Like Reply

what I can not believe is just how blatant they are. The money supply would has come out on a weekly basis for so many decades and now they are only going to publish it once per month. Major manipulation going to happen. This is so blatant and NOBODY has said one word about it. Unreal. And yes the US is headed for Hyperinflation. Nothing you can do about it.

By wglassfo - Feb. 26, 2021, 10:34 a.m.
Like Reply

Hyperinflation is a two edged sword

If you borrow heavily to buy perhaps a second house as a rental, then  monetizing the dollar value makes it easy to pay the mortgage with dollars worth less. This can continue until the system fails or int rates exceed the rate of inflation. If the int rates become unbearable you will not be able to service the debt and lose what you gained plus every thing else

This happened in 1980 until inflation was brought under control.

If on the other hand, if inflation runs rampant until the system fails you should want to own hard assets. In other words not paper, but some thing you can , physically touch, A house, land etc. Also reduce debt as quickly as possible

It all depends on if and when the Fed raises int rates and how much

What Powell is saying todaay has no real meaning and is mostly a lie and he should know it

Biden's Green Deal is a problem. iI the left has the influence to continue this direction can only speed up the system failure, not just monetary but in most other things. We have seen the disaster in Texas and also CA due to Green activists. This can not continue with out things getting worse. The problem is Biden has signed onto the Green deal with out any clue as to consequences or the left is just too powerful

Then we have the chip shortage which just makes it all worse for the investor and producer of things people want to buy. Will the available supply increase in price. I mentioned a F-150 truck listing for 80,000. A diesel will cost more. Somebody and many somebodies will pay the price.

Houses in CA are by and large losing value as the people with nothing want to vote for free stuff. The people who are paying the bills, are selling their house and  are leaving the state due to tax and other policies that people want to leave behind

Perhaps Tim has some up close ideas of life in CA as the rest of us just read head lines and make assumptions