Loading ...“Inflation is always and everywhere a monetary phenomenon.”
That is the famous quote by Milton Friedman. Don’t let the nonsense about inflation being transitory because of distortions created by Covid shutdowns, supply chain issues, etc. etc. etc. Unless and until you actually SEE the FED act, not talk about acting, inflation is going to continue and accelerate because the money creation continues, it is as simple as that. We are not getting a second coming of Paul Voelker. We are not going to see Jay Powell or any possible replacement raise interest rates. At best they will announce a disingenuous taper of either $5 billion a month for 24 months or more likely $10 billion a month for 12 months, with the dangling of possible future interest rate hikes after that is completed. That means inflation is going to continue at significantly high levels for another year or two! The recent gold and silver takedown was just the latest gift buying opportunity to convert rapidly declinning fiat into real money and protection of one’s purchasing power. Got Gold and Silver!
That famous quote has since been widely debunked.
Eg Shedlock from July
On July 19, I addressed Peter Schiff’s claim in Will the Fed Balance Sheet Get Spent into Circulation Causing Inflation?
Schiff is wrong because QE is not spendable money, nor is it money on deck waiting to be spent.
Lacy said the same thing but in different words. Let’s review.
Friedman’s famous phrase that “inflation is always and everywhere a monetary phenomenon” would only hold if the central bank’s liabilities were legal tender.
Lacy and I concur that IF central bank liabilities became legal tender, inflation would run rampant.
https://www.zerohedge.com/economics/lacy-hunt-debt-and-friedmans-famous-quote-regarding-inflation-money
Those commentators “opinions” don’t “debunk’ anything. The FED can shuffle money around into repos etc but it doesn’t chage the fact it creates new money out of nothing. Money supply over any given time has only INCREASED it has never gone down. Maybe back in the days when the gold convertibity applied you could surrender dollars for gold and actually reduce the amount of money in circulation. Hasn’t happened in fifty years. Just moving it from one pocket to another doesn’t reduce the amount outstanding.
I agree with you. The QE bullshit is just another smoke and mirrors game, another parlor trick to fog the reality of what they are doing. Then couple it with a suppression of commodity prices through the futures exchanges performed by their allies and their own non-transparent trading desk and there you have it.
“doesn’t chage the fact it creates new money out of nothing”
George Gammon and others have been all over this issue.
Those funds wind up as Reserves held by Commercial Banks AT Fed Accounts.
Those cannot be lent out, without changes in legislation.
Those Reserves ARE NOT MONEY. They are sequestered.
Lacy Hunt is probably the #1 “monetary” economist out there in the world today. His focus is primarily on the bond market. And pay attention to Eric Rosengren too, as he’s not that far behind him. He did his doctoral thesis on the bond market yield curve, and while I doubt with all the twisting it reveals honest signals anymore, his statements last week were quite telling because at least he gets it.
Could explain then what is the purpose of creating reserves for the banks?
See this discussion, and note this comment well into it …
https://news.ycombinator.com/item?id=24768045
Thanks for posting this. After watching I searched for some diagrams on this process and came cross another one of George Gammon’s videos (https://www.youtube.com/watch?v=oLhO7tIAtoY). He comes off super sketchy trying to me, almost like a get rich quick salesman, but the actual information in the video seemed legit.
Anyway, based on the discussions and videos, it seems like QE by itself is relatively neutral with regards to inflation. what’s really important is whether the process leads to more lending, but that is largely controlled by other factors.
Its pretty clear to me that you are WAY out of your element here.
I get the sense that you are clinging to a PM salesman’s narrative, grasping for whatever straws others are tossing around without an adequate understanding of their veracity on a foundational level. Spend some time at the link below. Then hit the tube links included therein, including the ones by Van Metre and plenty of others by Gammon. I’m not saying “no problem” … not in the least … but you’re off track on what the correct argument should be. Let us know when you catch up.
Not sure who you were responding to with last few comments. My original response to your first comments or JS Kauai?
If they were directed to me, the only element I am out of is the one where you once again slipped back into your little “troll” behavior. Once again in what was an attempt at serious discussion you get back into “childish” personal attacks. You have no idea what you are talking about on this and most subjects. I have tried to ignore your personal attacks but I am once again going to state something I have said before. When someone has something of value to add to one of my posts, even if it doesn’t agree with my opinion, that is fine. When someone who has an inflated ego and thinks he knows everything about everything makes reidiculous comments and personal attacks he reveals that he is obviously trying to compensate for a lack of something(possibly many things Don’t respond to my posts. If you want to comment on my posts make your own original post and address the topic that way. One final question/statement about inflation. Is it not running somewhere between 5-10% currently despite what the govt. & FED says? What is causing it, if it isn’t the FED, why did it accelerate from previous levels even if those weren’t actually as low as officials say and what is going to make it go back down if the FED doesn’t remove QE and raise rates. That is what caused inflation to increase and it isn’t going back down unless they remove QE and raise rates. The same egghead economists you cite are the ones that work for or in conjunction wth wall street, the banks , academia etc and they are all part of the system the same way the academics and medical community are with the govt. and medical establishment.