Inflation is coming
08-20-2020, 12:38 PM
#11
Gets Weekends Off
Thread Starter
Joined APC: Apr 2017
Posts: 3,595
Originally Posted by rickair7777
Yes governments can and do cause inflation. As can outside events which effect the economy.
But inflation would happen regardless, with paper money. If your currency is rigidly backed by say gold, inflation would probably not happen naturally since a precious metal holds its value over time (subject to natural price swings).
Even precious metals are not utterly foolproof, if something changed the underlying value of the commodity to society you could get an associated step change in a backed currency. In the case of a precious metal that could be a black swan such as the (unlikely but possible) discovery of a massive reserve, or conversely a new industrial process which creates a vast new demand (something like lithium & batteries).
Unbacked currency is just a promise, and promises get weaker over time. Producers of goods and services will always prefer to deal with people who can provide goods and services in return, vice people sitting on a pile of old paper. Inflation is the quantifiable manifestation of that preference.
But inflation would happen regardless, with paper money. If your currency is rigidly backed by say gold, inflation would probably not happen naturally since a precious metal holds its value over time (subject to natural price swings).
Even precious metals are not utterly foolproof, if something changed the underlying value of the commodity to society you could get an associated step change in a backed currency. In the case of a precious metal that could be a black swan such as the (unlikely but possible) discovery of a massive reserve, or conversely a new industrial process which creates a vast new demand (something like lithium & batteries).
Unbacked currency is just a promise, and promises get weaker over time. Producers of goods and services will always prefer to deal with people who can provide goods and services in return, vice people sitting on a pile of old paper. Inflation is the quantifiable manifestation of that preference.
And yes, monetary inflation happens when government devalues the currency.
08-20-2020, 05:20 PM
#13
Gets Weekends Off
Joined APC: Jan 2019
Posts: 1,130
They weren’t even able to hit their 2% target inflation when things were roaring.
We could have inflation, deflation or neither. Nobody here knows what the supply and demand of goods will be next month or year.
It doesn’t matter how much cash their is if it isn’t in circulation. Let’s wait and see.
There are many deflationary Great Depression type behaviors going on.
We could have inflation, deflation or neither. Nobody here knows what the supply and demand of goods will be next month or year.
It doesn’t matter how much cash their is if it isn’t in circulation. Let’s wait and see.
There are many deflationary Great Depression type behaviors going on.
08-27-2020, 08:05 AM
#14
Works Fri-Sun, golf M-Th
Joined APC: Jan 2018
Position: Golf Cart
Posts: 264
Here’s my take at the FEDs announcement with inflation... it’s just a roundabout way to let institutional investors that they aren’t going to raise rates anytime soon. This era of near zero interest rates are now a policy that will most likely be in place for the rest of our lives.
MMT is only limited by inflation and unemployment... with that in mind at a time we’ve been creating large sums of money and increasing national debt you want to flirt with the thing that can bring it all down? J Powell said it was counterintuitive and I’m trying to find something in his speech that signals his approach but there’s not much there. This is fishy as f#$*. I’m thinking this is the first step for central banks to get into crypto, or at least a cashless society.
i guess I’ll listen to the talking heads about their take (josh brown - The compound show if you’re looking for a market podcast) On top of this gold and silver are down at this announcement?!?
MMT is only limited by inflation and unemployment... with that in mind at a time we’ve been creating large sums of money and increasing national debt you want to flirt with the thing that can bring it all down? J Powell said it was counterintuitive and I’m trying to find something in his speech that signals his approach but there’s not much there. This is fishy as f#$*. I’m thinking this is the first step for central banks to get into crypto, or at least a cashless society.
i guess I’ll listen to the talking heads about their take (josh brown - The compound show if you’re looking for a market podcast) On top of this gold and silver are down at this announcement?!?
08-30-2020, 07:14 AM
#15
Gets Everyday Off
Joined APC: Aug 2016
Position: Relaxed
Posts: 6,943
The Fed said they have changed their inflation goal of 2% for every year to an average of 2% per year. Some years more, some less. Average of 2%.
Large growth in the money supply causes inflation. The Fed has declared they plan on being able to keep interest rates at a low level for an extended period of time. These are not mutually exclusive.
Large growth in the money supply causes inflation. The Fed has declared they plan on being able to keep interest rates at a low level for an extended period of time. These are not mutually exclusive.
Thread
Thread Starter
Forum
Replies
Last Post
