1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
This is a must listen to interview of Lacy Hunt:
https://www.podbean.com/eu/pb-w9ebx-e63066
I want to know what our Twetch Economists think!
Replies
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
thanks I agree with the fischer equation. I don't agree that economics is science.
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
Fischer was sharp, but enamored of the "economics as engineering" metaphor in a way that leads to silly error.
Also don't ask him about those 1929 predictions of "permanent highs" in the markets.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
He thinks there's going to be deflation? Right now people are disincentivized from holding cash so they prefer bonds on bad terms (low real interest rate)
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
but if the economy crashes and people can't pay off loans, then people want to hold hash more even though cash still sucks. That's why there would be deflation. However, there can still be inflation if there's an alternative to … cash, which there is.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
If people just figure out that the bitcoin economy isn't in the dumps like everything else you'll see inflation of the dollar pretty quick!!!
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
The argument he is making (which I agree with) is because everyone is sitting at home not doing …, no spending and/or production is occurring, thus velocity decreases.
So even though the money supply increases, it doesn't manifest in the markets.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
I don't agree with that at all. Changes in the price level have to do with how much people want to hold cash, not how much they want to spend it.
19gAUDU4VQoVuLgeL9pwTepPsZonqvALhv (678) ·
There was a severe deflation at the start of the great depression in the US. 10% a year for 3 years
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
How do the Austrian economists explain how the dollar is stronger today since 2007 despite an 8x increase in the money supply by the Federal reserve since the 2008 financial crisis?
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
The velocity of money is silly as a way to predict general prices.
It approaches the economy like an abstract mathematical equilibrium. Only individuals can act. Billions of these actions alter prices, not speed of aggregate circulation.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
Stronger by what measure?
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
https://mises.org/wire/money-velocity-myth
Though better to read Mises.
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
What does " dollar is stronger" mean?
Compared to what?
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
(Checks market for stocks, homes, boats, cars, food....)
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
@24 to this point, other fiat. Until this recent spike, mostly commodities (gold/silver).
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
Yes, to be clear I am not suggesting velocity is some indicator in a vacuum. I mean when production is factored in.
I think that is the point Lacy is making, that if the Fed injects money it doesn't really matter if it isn't actually spent.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
Yes it does. Increasing the supply always makes people want to hold less.
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
Agreed, but do you think most Americans understand this?
https://www.cnbc.com/2020/06/21/banks-have-grown-by-2-trillion-in-deposits-since-coronavirus-first-hit.html
1JJQeMNQX2jnrLh3mAHiEUsLkJ4vrMud3X (523) ·
Yes, the inflation has resulted in an increase in the asset prices.
The comment above yours is in the context of the scamdemic. Despite the crazy balance sheet expansion, we have yet to see the same impacts. Is the hyperinflation scenario so close?
1Q3jjKsoGJtNTysY5hjVUvbqbhcnqTLNpH (1752) ·
Time dilation, the rest of the world is also run on keynesian fiat, no one realizes that the US dollar emperor has no clothes because none of them have clothes.
When everyone realizes they’re all … and they’ve run off a cliff gravity will catch up.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
That's hard to say. Austrian econ is really only able to say what will bring us closer to equilibrium, not the time scale.
1Pbz4esEs8BGKqqHcNBqm1yEcLdacauFPA (10895) ·
Provide evidence that the dollar is stronger today than in 2007... because it isn't.
19gAUDU4VQoVuLgeL9pwTepPsZonqvALhv (678) ·
There is a difference between increase in monetary base and increase in money supply. right now bank reserves getting thicc, businesses are hoarding and not investing etc
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
It can take a while for prices to reflect new information. Maybe people aren't paying attention.
1Pbz4esEs8BGKqqHcNBqm1yEcLdacauFPA (10895) ·
That's a red herring at best, since all fiats inflate. Purchasing power decreases regardless, which is what really matters.
1Abd9yJS6mrzMmj1Ni6kjQB9GqtyaNujrm (3375) ·
Right.
19nTUyw97xhqL7eVJzmAJT2RbTvbW84gwv (561) ·
the question is, will the dollar die because of hyperinflation once velocity rises again, or will it die of an endless fall of its velocity to 0 as wall street hoards it but mainstreet stops using it and moves to alternatives like bitcoin?
19nTUyw97xhqL7eVJzmAJT2RbTvbW84gwv (561) ·
the first scenario is well known in fiat history. But I have never heard of the second one? people didn't use to have an alternative that was better at being cash, so they reverted to gold which had a lower velocity than cash by its physical nature.
1JTLqvQSJNv2G55DpzxQUGbnWjZmeAtLU6 (4364) ·
gordian knot something something
17hwsWwRfKtyJZFcJZxg8ampDsL4dVD12i (2331) ·
Wile E. Coyote
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
Inflation gets channeled many places depending upon how it's introduced and other conditions.
Until 2008, banks kept 10% reserves on books. Since, they've kept 90%.
The new money often waiting for less uncertainty. Most has been channeled into equities.
15jx1bP54GxstAZG8oZkgYeFRHgGaxt6tm (190) ·
So in that sense, "consumer prices" appear less volatile in dollar terms than they would if inflation was dropped from a helicopter. But look at financial markets and you see it like crazy. Stocks. VC. Crypto for gods sake!