As central banks engage in another round of quantitative easing and money creation the old fears of the years after the financial crisis are peddled once more. Back in the day, people liked to show charts of the balance sheet of a central bank and then theorised that inflation would have to rise. Today, they are no longer showing central bank balance sheets but M4 money aggregates because, well, I guess, historically that has provided a better fit with inflation.
Ironically, this 30 year period exactly coincides with neoliberal deregulation, wrestling inflation to the ground, the creation of the gigantic wealth gap and the complete disenfranchisement of the working class in terms of any influence (good or bad) on public policy and their own income. Given this chart and your previous discussion of MMT is there perhaps a link between why MMT might actually hold true at least for the forseeable near mid-term future? Maybe it is a good time for fiat currency governments to start reinvesting in all the neglected infrastructure and social programs.
More out of curiosity, is it possible to show population growth and asset prices as well, or control for these factors? Although I am not close to an expert, I would simplistically think both of these factors are important?
The link is broken because of the rise of another inflation: asset inflation. Due to globalization the CPI hasn't risen since the late nineties. But when you look at the rising prices of assets (not only real estate, but also securities and private markets) there is definitely a correlation between the balance sheets of the central bank and asset inflation. It's not clearly positively correlated. Yields have also dropped because of globalization, demographic developments in the West and Japan and technological innovations. But there is a rise in asset inflation. When you look at social developments in Western societies, you see a division emerge between 70% haves and 30% havenots. I think that's the main social-economic problem for Western societies at the moment....
Something is not clear to me. If inflation does not follow from monetary expansion, then it's free? I mean it needs to have a cost, right? Otherwise we would've found the magical silver bullet to all human problems, just print money. Human hunger... print money. Not enough houses ... print money. So if inflation is not the cost of monetary expansion, then what is?
And furthermore, do you agree that in the extreme, inflation is a monetary phenomenon?
Was it true for Weimar Republic? Was it true for Zymbabue?
If it is true for these cases, then how can it not be true for more mundane examples?
Ironically, this 30 year period exactly coincides with neoliberal deregulation, wrestling inflation to the ground, the creation of the gigantic wealth gap and the complete disenfranchisement of the working class in terms of any influence (good or bad) on public policy and their own income. Given this chart and your previous discussion of MMT is there perhaps a link between why MMT might actually hold true at least for the forseeable near mid-term future? Maybe it is a good time for fiat currency governments to start reinvesting in all the neglected infrastructure and social programs.
More out of curiosity, is it possible to show population growth and asset prices as well, or control for these factors? Although I am not close to an expert, I would simplistically think both of these factors are important?
The link is broken because of the rise of another inflation: asset inflation. Due to globalization the CPI hasn't risen since the late nineties. But when you look at the rising prices of assets (not only real estate, but also securities and private markets) there is definitely a correlation between the balance sheets of the central bank and asset inflation. It's not clearly positively correlated. Yields have also dropped because of globalization, demographic developments in the West and Japan and technological innovations. But there is a rise in asset inflation. When you look at social developments in Western societies, you see a division emerge between 70% haves and 30% havenots. I think that's the main social-economic problem for Western societies at the moment....
Something is not clear to me. If inflation does not follow from monetary expansion, then it's free? I mean it needs to have a cost, right? Otherwise we would've found the magical silver bullet to all human problems, just print money. Human hunger... print money. Not enough houses ... print money. So if inflation is not the cost of monetary expansion, then what is?
And furthermore, do you agree that in the extreme, inflation is a monetary phenomenon?
Was it true for Weimar Republic? Was it true for Zymbabue?
If it is true for these cases, then how can it not be true for more mundane examples?