re: If The Fed Was Serious About Inflation

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Just as a check - If "the money suppply" increased 3.5x higher since 2019, why are we only getting 8% CPI reads?

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Average inflation was ~2.3% for FY2019. 2.3% x 3.5 = 8.05%

The average CPI for FY2022 (thus far) is 8.288%.

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Why didn't GDP expand in a linear fashion with that growth?

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We sort of did.





The first stimmy check was March 2020.
The big drop was Q2 2020, when the economy got shut down.
The big spike was Q3 2020.
The second stimmy check was December 2020.
The third stimmy check was March 2021.

The first check was right as the lockdown started at the end of Q1 (this was also when they "temporarily" increased welfare benefits), no one was buying anything because almost all stores were closed. The few businesses allowed to stay open did well (looking at you, Home Depot) but there weren't that many and this was throughout Q2. That drop in GDP reversed mightily in Q3 as some allowances were made, more people began doing online shopping and more businesses moved to accepting online business in order just to survive.

The end of Q3 saw the rent moratorium and then the 2nd stimulus at the end of Q4 2020.

The final stimulus check was at the end of Q1 in 2021.

Remove the warping from the shutdown and we have increased GDP each quarter following a stimulus check (this makes sense since the checks were sent out at the end of the quarters). Even without removing the warping, GDP from Q1 2020 through Q4 2021 averaged at least a full percentage point above the entire prior period going back to at least '06.

So even though it wasn't completely linear, we did indeed see a definite increase in GDP both in the quarter immediately following the checks being released (when businesses were open), but also when comparing the average GDP growth from the period to the average from the previous decade(ish).

The Stimulus checks and PPP loans were debt financed spending that’s not printing money. Quarantine and rent moratoriums aren’t printing money. That’s exactly my point

The orchestrated global lockdowns, especially out East, had way more of an impact on the price of good and services than stimulus checks did. $1200 in the mail doesn’t change consumer behavior. Shutting down your city does.

Again as a test: where was this “inflation” from 2008-2019?

Bank reserves aren't money which is my point. As far as new money being "locked up" in asset prices we know that's not true. Capital flows, the business of wall street and stockbuybacks explain the multiple expansion over that time period. All coincidental with QE and low fed funds rates.

It’s a fake number on a general ledger

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It’s a fake number on a general ledger

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What's the number represent?

You've been grossly wrong about inflation for over a year, not sure it's even worth discussing

Yeah sorry for not responding on a Friday night

It represents commercial bank lending capacity. BTW I haven’t been “wrong”about “inflation.” I have a different definition than you. Commodity driven price increases isn’t inflation to me, big deal. Doesn’t mean our cost of living hasn’t gone up like 20-30% since the CARES Act was passed. I would rather crucify the Covid and climate freaks who are responsible for it not the boogie man Fed chair.

You’re the fintwit NPC of this board with an elementary understanding of inflation. Everything you’ve said for the past year is a deflection. Sad. I’ll continue holding calls in leveraged USD ETNs while y’all scream at the sky that CPI isn’t printing 50% and long rates are below 4%. You’re smarter than the bond market, I forgot.

I occasionally look at M1, M2, M2V. Overlay of Total Assets and inverted M2V graphs is interesting though.