patrick.net

Just like Germany a century ago?

Hey, the track record of the Mises place is on par for their usual failed predictions and economic genious, why not continue to be wrong? I enjoy the way those people double-down on their moronic theories.

I know, I know, buy gold and the end is near........hyperinflation is going to happen any day now, and the Federal Reserve is illegal and the dollar is backed by cheese.

upisdown says

hyperinflation is going to happen any day now

With Benny printing 6 trillion in the past 5 years or so, it would seem to be a legitimate concern.

What I found interesting in the article was, "“going from 60 percent [inflation] to 1,000 percent is a lot easier than going from 3 percent to 40 or 50 percent.” As disturbing as the thought is, the difference between the U.S. and other Western economies and Venezuela is merely one of degree, not of kind."

Don't whistle past the grave yard, it won't help.

Print all you want, but in a society with as much debt as this one, and no chance of wage inflation, it won't matter.

indigenous says

Don't whistle past the grave yard, it won't help.

I know, just wait 'till tomorrow, right? Does free beer and pizza arrive on that day too?

indigenous says

Don't whistle past the grave yard, it won't help.

Mainstream America prefers to just Whistle Dixie for the remainder of our downward spiral...

sbh says

especially once the nascent condition is factual.

Since it has been going on for forty years is nascent still apt?

Back when the mortgage rates were 18% and a single income was no longer enough to support a family.

Yea it is true that Chinese imports, technology, cutting back on credit, have cooled the inflation rate since then but it sure isn't because of monetary policy. The debt will not be out grown by the economy.

My vote is for a corn-backed currency. It's multi-faceted (food, fuel, liquor...) And with the increase in the incidence of lactose intolerance.... Well, I think you know where I'm going with this.

Though I agree that there are certain behaviors that are linked to inflation, it's difficult to compare economies of nations with such different histories, complexities, size, management, laws, etc... It's tempting, for example, to say that our problems would have been solved had we just taken a lesson from Iceland. But our sheer size and our well established global tentacles would have made for a different result than Iceland.

There is no one-size-fits-all-economies answer. That's what makes what the US is going through so troublesome. It seems like we're just throwing fecal matter at walls and seeing what sticks. Clearly, we are a country more interested in maintaining an illusion of recovery than actually fixing the problems from which we are pretending to recover. But who would be willing to commit political suicide for the alternative? You think that tensions might be building with all these soft-landing tactics? I don't think you'd want to see what hard-landing tactics would have resulted in.

turtledove says

it's difficult to compare economies of nations with such different histories, complexities, size, management, laws, etc...

No it isn't, it occurs when the money supply is increased.

turtledove says

There is no one-size-fits-all-economies answer.

Yes there is don't inflate the money supply. Inflation is not organic to the economy it is created by central banks.

indigenous says

No it isn't, it occurs when the money supply is increased.

An increase in money supply causes inflation. However, it isn't the only thing that causes inflation. For example, prices of goods and services go up when the price of oil goes up. OPEC proved that rather effectively in the 70s and 80s. That's called market power. All things dependent on petroleum went up in price, resulting in inflation. The money supply increased when people and firms went into debt and sold assets to meet the increases in price.

Demand pull causes price increases when bottlenecks of certain supplies cause price bidding. Again, money supply is increased when people and firms go into debt and sell assets to meet these increases in price.

Asset booms are another culprit. Speculation in futures, fueled by groupthink, increases prices, as well. Once again, people and firms go into debt and sell assets in the hope that the price of said commodity will go up, thus fueling the increase in price, all the while increasing the money supply.

Money as debt.

prices of goods and services go up when the price of oil goes up.

That is debatable since the dollar is the reserve currency of the world.

Infation is caused by an inctease in the money supply period.

indigenous says

Infation is caused by an inctease in the money supply period.

Let's start with the definition of inflation:

"a general increase in prices and fall in the purchasing value of money."

Now, a quiz:

What happened first? 1) Starting in the 1970s, OPEC increased the price of oil; 2) The US printed more money.

What happened first? 1) Increases in construction in 2004 caused a bottleneck in supply of lumber increasing the price of lumber; 2) The US printed more money.

What happened first? 1) People wanted to participate in the speculative bubble of the housing market, bidding up prices and taking on unprecedented mortgage debt; 2) The US printed more money.

Yes, money printing happens and yes, money printing causes price inflation, but it doesn't always precede price inflation.

Inflation is caused by an increase in the money supply, when and how fast it happens depends on the velocity. Unless that money is hoarded indefinitely so that it never goes into circulation, inflation WILL happen. If there was anything good about inflation, we would have our personal digital printing presses and could just mint our money as we see need and fit. What the central banks are doing is nothing but (legalized) crony capitalist thuggery.

turtledove says

1) Starting in the 1970s, OPEC increased the price of oil; 2) The US printed more money.

In this case OPEC had a temporary monopoly and were able to increase the price of oil which was easily accommodated by the dollar being released from gold.

turtledove says

What happened first? 1) Increases in construction in 2004 caused a bottleneck in supply of lumber increasing the price of lumber; 2) The US printed more money.

The money came from lending by Greenspan and started in 2001.

turtledove says

What happened first? 1) People wanted to participate in the speculative bubble of the housing market, bidding up prices and taking on unprecedented mortgage debt; 2) The US printed more money.

Again this came from the credit market.

turtledove says

Yes, money printing happens and yes, money printing causes price inflation, but it doesn't always precede price inflation.

So what it is still cause and effect, an increase in the credit market is the same as printing money. I might also add that this is when China was buying treasury bonds.

thats because inflation is inflation and rising prices is rising prices. Not always the same thing.

Purchasing power of our wages is falling. That is what really matters, whatever you wanna call it. (Our standard of living?)

turtledove says

indigenous says

Infation is caused by an inctease in the money supply period.

Let's start with the definition of inflation:

"a general increase in prices and fall in the purchasing value of money."

Now, a quiz:

What happened first? 1) Starting in the 1970s, OPEC increased the price of oil; 2) The US printed more money.

What happened first? 1) Increases in construction in 2004 caused a bottleneck in supply of lumber increasing the price of lumber; 2) The US printed more money.

What happened first? 1) People wanted to participate in the speculative bubble of the housing market, bidding up prices and taking on unprecedented mortgage debt; 2) The US printed more money.

Yes, money printing happens and yes, money printing causes price inflation, but it doesn't always precede price inflation.

OPEC increased the price of oil in 1973 BECAUSE the US increased the printing of money to pay for Vietnam and the Great Society in the 1960's and finally went off the gold standard in 1971. OPEC increased the price to ensure they would get value for their product

In all your examples the printing of money or the reduction in interest rates which makes money more easily available happened first.

http://smaulgld.com/why-saudi-arabia-matters-in-helping-to-keep-the-u-s-dollar-as-the-worlds-reserve-currency/

http://smaulgld.com/why-the-end-of-quantitative-easing-may-be-bad-for-the-dollar/

An increase in the monetary supply does not necessarily cause inflation. If the money sits in silos, i.e., banks, and the velocity of money is less than optimal, it would appear that there would be little inflation.

Blurtman says

An increase in the monetary supply does not necessarily cause inflation. If the money sits in silos, i.e., banks, and the velocity of money is less than optimal, it would appear that there would be little inflation.

Yes, or if private debt is swapped for public debt (Japan) and there is no additional change in private spending (for a while, eventually there will be). However, money is printed for one reason, to eventually spend and eventually it WILL cause inflation, that's a mathematical truth. Also, as BACAH mentioned, prices can be relatively stable while wages fall = inflation. Again, if it were beneficial in only the slightest way, we would be allowed to print our own money. It isn't.

Blurtman says

An increase in the monetary supply does not necessarily cause inflation. If the money sits in silos, i.e., banks, and the velocity of money is less than optimal, it would appear that there would be little inflation.

It always causes inflation-the increase itself is inflation. You are correct that there may not be consumer price inflation as a result of an increase in the money supply , but there will be some type of inflation that will appear.

In the current case we have had an increase in asset prices-that is what QE was designed to do- create a wealth effect-by pumping up real estate prices and the stock market.

If there was no inflationary impact there would be no reason for the Fed to increase the money supply. They do it precisely to cause inflation

mell says

Blurtman says

An increase in the monetary supply does not necessarily cause inflation. If the money sits in silos, i.e., banks, and the velocity of money is less than optimal, it would appear that there would be little inflation.

Yes, or if private debt is swapped for public debt (Japan) and there is no additional change in private spending (for a while, eventually there will be). However, money is printed for one reason, to eventually spend and eventually it WILL cause inflation, that's a mathematical truth. Also, as BACAH mentioned, prices can be relatively stable while wages fall = inflation. Again, if it were beneficial in only the slightest way, we would be allowed to print our own money. It isn't.

The Fed can also unprint.

sbh says

e "this-one-thing" theme is for cheerleaders. Any one of money, credit, supply, demand, debt is never the sole causal element. Rivers of contributory elements can be disappeared in myriad events that may occur overnight or across a generation.

That is true BUT an increase in the money supply is always a factor-its the reason central banks add money to the system.
-even if they prop up the banks by printing money inflation is created as they stave off the deflation that would happen if the banks failed and could not lend money.

Increasing the money supply is always inflationary. Indeed with out the current round of QE we would have had falling prices the past five years

Blurtman says

The Fed can also unprint.

the way they unprint is by selling what they bought by printing. If the economy were roaring they could sell into the market. The problem now is that they can't sell into the market having become THE market for the junk they have spent $4 trillion on

smaulgld says

Blurtman says

The Fed can also unprint.

the way they unprint is by selling what they bought by printing. If the economy were roaring they could sell into the market. The problem now is that they can't sell into the market having become THE market for the junk they have spent $4 trillion on

There's always a market at the right price.

Blurtman says

smaulgld says

Blurtman says

The Fed can also unprint.

the way they unprint is by selling what they bought by printing. If the economy were roaring they could sell into the market. The problem now is that they can't sell into the market having become THE market for the junk they have spent $4 trillion on

There's always a market at the right price.

Yes and that market price would result in higher interest rates as the fed is basically the primary buyer of mortgage backed securities and us treasuries at the current low rates. If they stop buying or worse try to sell rates will rise

sbh says

When factor begets consequence I'll regard it differently.

Start regarding differently, nascent it ain't.

sbh says

smaulgld says

an increase in the money supply is always a factor

indigenous says

Since it has been going on for forty years is nascent still apt?

When factor begets consequence I'll regard it differently. Until then it's a nascent condition that may very well never reach accretion. If you want to ascribe potentialities to factors you better be able to hedge, watch, and wait, because you can be wrong for all the right reasons and get your head handed to you.

The current round of QE monetary inflation has demonstrably boosted home and stock prices as it was designed to do

sbh says

There is no undebatable historical number series or event line in economic analysis that proves a single and sufficient cause for price inflation. The "this-one-thing" theme is for cheerleaders. Any one of money, credit, supply, demand, debt is never the sole causal element. Rivers of contributory elements can be disappeared in myriad events that may occur overnight or across a generation.

If one is devoted to following the money supply increase across time, never to acknowledge any exculpatory interaction with the other elements on the globe, you can surely have your thematic triumph. Just be sure to start with a ton of bread crumbs and the demand that your opponents assume your inviolate definitions.

In an unhampered market free of central banks' ability to control the money supply inflation can occur due to some of the imbalances you cite.

The purpose of central banks,however, has been to increase the money supply and create inflation. That is why the EU, US and Japanese central banks have set inflation targets.

smaulgld says

Blurtman says

smaulgld says

Blurtman says

The Fed can also unprint.

the way they unprint is by selling what they bought by printing. If the economy were roaring they could sell into the market. The problem now is that they can't sell into the market having become THE market for the junk they have spent $4 trillion on

There's always a market at the right price.

Yes and that market price would result in higher interest rates as the fed is basically the primary buyer of mortgage backed securities and us treasuries at the current low rates. If they stop buying or worse try to sell rates will rise

Great! Set the market free.

sbh says

As to price it remains an as yet inconsequent condition. It matters more to you
and your ontology of money.

It is difficult to sound the depths of your perfunctitude.

I don't see hyperinflation because of technology, the shrinking of the credit market, the devaluing of the dollar, a dearth of business investment because of government burdens, the fact that QE does not filter down.

It would appear that growth will be better in foreign markets.

hmm, an alternate approach:

http://research.stlouisfed.org/fred2/graph/?g=pot

blue is per-capita money supply Japan (left)

red is CPI

I think here the take-away is that the Japanese consumers are saying no-mas wrt inflation, after 1990.

No wage inflation, no inflation basically.

7M money supply per person is $70,000, almost twice the US:

http://research.stlouisfed.org/fred2/graph/?g=pou

money doesn't stay long enough in the paycheck economy to actually give us more inflation I guess.

http://research.stlouisfed.org/fred2/series/M2V/

sbh says

sound

1. To measure the depth of (water), especially by means of a weighted line; fathom.

sbh says

perfunctitude

A coined word from perfunctory:

1. done superficially, only as a matter of routine; careless or cursory

I do not believe in any "ontology of money" but rather observe the axioms of money.

Another thing that is particular to the US money printing is the impact it will have on china. If china follows through with its intentions to stop buying us treasuries, rates will rise BUT the dollar will not strengthen with the increase in rates.

When that happens since a large part of our consumer goods are from china the cost of living will increase in the US as the price of those goods will increase as the Chinese renminbi rises and the dollar falls relative to it.

There will be no offsetting wage inflation to make up for the price inflation due to the increase in price of foreign goods

HydroCabron says

Print all you want, but in a society with as much debt as this one, and no chance of wage inflation, it won't matter.

Correct re price inflation coming from that but price inflation will come from a declining value of the dollar as china stops buying us treasuries and allows its currency to rise against the dollar
then we'll have stagnant wages and rising consumer prices=stagflation coming soon

smaulgld says

When that happens since a large part of our consumer goods are from china the
cost of living will increase in the US as the price of those goods will increase
as the Chinese renminbi rises and the dollar falls relative to it.

That is a good point I'm reading a book recommended by Mish regarding that point (it is a bit over my head) but the author Michael Pettis states that what is often overlooked on this subject is the impact of international monetary policy and that the main reason is that the US is a deficit country is that it was forced into spending by virtue of the fact that the Chinese bought such a volume of treasury bonds, which btw was required of the US because it is the reserve currency of the world.

The result will be that the US will no longer have the benefit of cheap household goods on the other hand jobs will transfer from China as the dollar has less value and the renminbi has greater value which will lead to greater household consumption in China and lower consumption of commodities as China does less capital investment.