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.
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?
I can’t find the link now but in one of the Credit Suisse Returns Yearbooks it was shown that population growth is a major determinant of long-term equity returns but not bond returns.
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?
So, why doesn't the government hand out a million dollars to every citizen so that everybody can live happily ever after? Of course printing money, by definition, is inflationary. The reason it doesn't show is that the economy has grown, thus swallowing the newly printed money so that it doesn't affect inflation as measured.
The correlation between M3/M4 is still there in the charts you show. Clearly it's a long-term correlation - if you zoom in on other periods in this chart there are still periods where they appear uncorrelated. But broadly, the last 40 years have seen the annual increase in money supply falling, and CPI falling. Where's the problem?
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?
I can’t find the link now but in one of the Credit Suisse Returns Yearbooks it was shown that population growth is a major determinant of long-term equity returns but not bond returns.
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....
Completely agree
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?
So, why doesn't the government hand out a million dollars to every citizen so that everybody can live happily ever after? Of course printing money, by definition, is inflationary. The reason it doesn't show is that the economy has grown, thus swallowing the newly printed money so that it doesn't affect inflation as measured.
The correlation between M3/M4 is still there in the charts you show. Clearly it's a long-term correlation - if you zoom in on other periods in this chart there are still periods where they appear uncorrelated. But broadly, the last 40 years have seen the annual increase in money supply falling, and CPI falling. Where's the problem?