All Questions
Tagged with money-supply inflation
65 questions
0
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1
answer
25
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Does money supply growth minus inflation measure economic growth?
Does the difference between growth in money supply and growth in the price level tell us something meaningful about economic growth? Is there some type of accounting equality or economic theory that ...
- 125
1
vote
1
answer
70
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When inflation expectations cause inflation, where does the corresponding money supply come from?
One cause given for inflation is inflation expectations. When firms expect inflation, they raise prices and employees demand increased wages
However, this additional money in the economy must come ...
- 11
1
vote
1
answer
121
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What are exported inflation and imported inflation?
I read in some articles that there are such notions as "exported inflation" and "imported inflation".
But it was not written about in detail.
What are exported inflation and ...
- 139
3
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2
answers
2k
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Why didn't M1 grow much during 1970s inflation?
One of the most widely cited reasons for the '70s stagflation was expansionary monetary policy employed by the central bank.
Below is M1 during this time period (source), and it does not look like ...
- 70
1
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2
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160
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Where did the money supply go?
The money supply went from about \$4 trillion in 2020 to about $20 trillion today. Where did all that money go?
When the money supply went from about \$1.4 trillion to about $1.7 trillion, I was ...
1
vote
1
answer
45
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If the interest rate is increased to limit inflation, doesn't that increase the money supply?
If the interest rate is increased to limit inflation, doesn't that increase the money supply? Because one year later, 5% of the total bond will need to be created and put into circulation.
This, in ...
- 111
2
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1
answer
70
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Are there valid concerns of USD hyperinflation post stimulus?
This article The Dollar Endgame is probably one of many doomsday predictions that exist, but there were a few points mentioned that were new to me and seemed scary:
"Debt virtually always has a ...
0
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2
answers
226
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Does printing more money necessarily lead to inflation?
Does printing more money necessarily lead to inflation? For instance, if the money supply increased, but the money just sat around and wasn’t distributed to people, would that still cause inflation? ...
- 347
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2
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564
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Is it possible for the stock market to beat inflation forever?
Just a few thoughts on the possibility of markets beating inflation in the long, long term (say, hundreds of years). I am a theoretical physicist, not an economist, so please forgive my ignorance.
I ...
0
votes
1
answer
34
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GBP Currency Crisis - Forex supply and demand affecting exchange rates
Reading this article on Why China Buys US Treasury Bonds I understand the notion of supply and demand affecting a currency value against the other and how they need to buy up the excess dollars they ...
- 103
1
vote
1
answer
66
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How do Foreign Investments by Central Banks increase the Money Supply of an Economy?
Trying to understand if "money supply" and "currency in circulation" apply only to the money within the borders of the country or does it also include its money in foreign nations ...
- 43
1
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1
answer
98
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Japan: Will the quantity of money per unit of output and the consumer price index show a huge divergence in the decades after 1980?
Milton Friedman, in one of his talks in 1980, showed a series of examples to illustrate his statement that inflation was a monetary phenomenon.
One of the examples he used was Japan. The following ...
- 187
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3
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295
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Is supply-caused inflation different from demand-caused inflation
I've heard numerous times that the current inflation problem is caused by supply-side issues including supply chain disruption, lower productivity from fewer people working, impacts from trade ...
- 211
1
vote
0
answers
43
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Where is all the cash in an economy where saving is high?
Where is all the cash in an economy where saving is high, today inflation in Argentina hit a monthly rate for march of ~7.6%, what this means for me is that I try to move away from the peso as soon as ...
- 63
0
votes
1
answer
87
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Money supply vs inflation - repository of raw data?
I would like to do may own analysis of the relationship between the money supply and inflation. Can anyone suggest a good source for raw data? I would like to have access to data for multiple ...
- 1,046
2
votes
1
answer
108
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How much money is owed to the Fed?
The Fed maintains its target interest rates by "lending" money to commercial banks:
When the actual federal funds rate is higher than the target, the Federal Reserve Bank of New York will ...
- 584
0
votes
1
answer
51
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What are the standard models of monetary theory?
I am currently conducting research on a digital economy which has recently faced inflation issues and thus implemented monetary policy to tackle them. My paper seeks to compare how real life digital ...
31
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8
answers
8k
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If no one knew about inflation, would inflation take place?
I’m not an economist and would like some insight into this thought experiment. If people, the news, social media, etc. suddenly stopped talking about inflation, would inflation still take place? ...
- 421
3
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4
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929
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Who controls money supply if the fed does not?
This whitepaper states (bold mine):
According to the consensus view, the two leading culprits of inflation
risk today are the fiscal deficit and the money supply. To illustrate,
take this CNBC ...
- 133
1
vote
3
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153
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How do we know that inflation derives from supply chain issues and not from monetary expansion of Central Banks?
Everybody is talking about the fact that the current inflation derives from problems on supply chain distribution but Fed also printed tons of money.
How can they affirm that inflation is from supply ...
- 23
1
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1
answer
64
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Why does absolute price inflation depend on interest rate while relative price inflation does not?
This is a follow-up of my previous question: How come there is inflation in a model with no money? I have answered my own question with an example.
To briefly recap the example, consider a closed ...
- 480
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2
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786
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How come there is inflation in a model with no money?
I'm watching the video lectures of Financial Theory (ECON 251) by John Geanakoplos, Yale University. In Lesson 5, Chapter 4 at 33:41, Geanakoplos defined inflation as the ratio of prices between two ...
- 480
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2
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2k
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Why was Friedman so wrong about inflation?
In a famous 1977 lecture, Milton Friedman claims that inflation depends purely on the monetary policy and he proves it with a convincing chart (youtube video here)
I have reproduced his chart using ...
- 309
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2
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158
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Puzzled by proposed inflation mechanisms
There are some explanations for long term inflation that completely baffle me in that they seem so deeply flawed that I wonder how come they are taken seriously.
So take for example the idea of a &...
- 1,046
-1
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1
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32
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What was the annual real growth rate in the US from 2010 to 2015?
If we look at the US M0 money supply after the global financial crisis (GFC):
we see that it doubled from 2010 to 2015.
If we look at the Consumer Price Index in the same period:
it rose by 8%.
So ...
- 219
1
vote
2
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401
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Why in the quantitative equation: $MV=PY$, $V$ and $Y$ can be taken as fixed?
To equation is
\begin{align}
MV=PY
\end{align}
where $V=\frac{1}{k}$.
Why $V$ and $Y$ can be taken as fixed or constant?
Why can $V=\frac{1}{k}$ too?
Thanks in advance
- 215
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votes
4
answers
1k
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Why does the inflation not follow the money supply?
To my understanding classical economic theory tells us that inflation occurs when the money supply is increased faster than the economic growth.
Lately there has been a sharp rise in the rate of money ...
1
vote
3
answers
216
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How is the differential definition of money supply, velocity, and GDP defined?
I was reading: This article on money velocity (see the summary section)
Where two formulas are presented:
first an equality:
$$\text{Quantity of Money} (M) \times \text{Velocity of Money} (V) = \...
- 113
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votes
3
answers
3k
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What is the difference between "borrowing" money and "printing" money?
When a country's government has a budget shortfall, that country has to find some way to pay its contractors/emplooyees. Unlike a normal company, the government can't simply go to the bank and ask to ...
- 159
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1
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60
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Why don't Governments do away with the optics of taking on debt against new currency, and instead issue a limited currency every year (say 5% of GDP)?
Governments engage in the optical illusion of taking on debt against issued currency.
The debt is effectively owed by the Government to itself.
The value of the debt is completely controlled and ...
- 187
1
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1
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62
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Oliver Hart said that financing deficits by printing money can lead to hyperinflation "once the economy is close to full capacity". What does he mean?
In response to a poll on Modern Monetary Theory, Nobel Laureate Oliver Hart said that Governments financing deficits by printing more money "can quickly lead to inflation or even hyperinflation ...
- 187
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2
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61
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For stability, is there a limit to the sovereign debt that a Government owes to itself against issued fiat currency?
Looking beyond the optical illusion of Governments owing debt to Central Banks, Governments effectively owe themselves the sovereign debt created against issued fiat currency.
By definition, there ...
- 187
1
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2
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55
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Can printing money with simultaneous government intervention to increase supply prevent inflation?
Just as above...If we print money and simultaneously introduce some sort of government intervention in order to increase supply/ production, then supply and demand would be 'balanced' and therefore ...
- 11
1
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0
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49
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How would a global Robin Hood deed affect the economy? [closed]
In one fiction series about a dystopian world, a small group of wealthy criminals owned a large fraction of the world's cash, which was on their bank accounts in a single offshore bank. In the happy ...
- 119
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2
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346
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What effect has the 30% increase in money supply from Feb-June of 2020 had?
I commented on a previous question that this is probably a better one. Old question
Generally speaking, how has the increase in money supply resulting from the CARES act stimulus package affected the ...
- 121
1
vote
1
answer
203
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Why may printing trillions of dollars not lead to inflation?
By definition, inflation should be affected by the increase of the money supply. During the pandemic, there have been numerous huge monetary policies executed, e.g., quantitative easing (QE), ...
- 618
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2
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272
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Does inflation equal change in M1 or M2?
According to monetarism, inflation can be predicted precisely by the change in money supply and GDP growth.
Does "money supply" here refer to M1 or M2, i.e. does it include debts created by ...
- 19
4
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1
answer
136
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How buying bonds indirectly from the government prevents the central bank from financing government deficit?
From Krugman's macroeconomic textbook (highlighting is mine):
"In an open-market operation the Federal Reserve buys or sells some of
the exist- ing stock of U.S. Treasury bills, normally through ...
- 1,135
4
votes
4
answers
557
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Why does an economic slowdown lead to deflation?
Usually economists say that in recession there is deflation, so increasing the money supply does not lead to a high level of inflation.
According to the Quantity theory of money, the price level is ...
- 618
0
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3
answers
490
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How does an increase in USD money supply affect inflation?
Say an average american household is bringing in $50,000 a year.
Between ongoing quantitative easing and the drastic stimulus packages passed in February-May 2020, the USD Money Supply increased by 25%...
- 121
1
vote
1
answer
83
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Does Direct Benefit Transfers make an economy poorer?
Printing money and giving to the poor causes inflation.
Increases demand and hikes prices. This is basically certain.
But on the contrary, a paper titled Debunking the Stereotype of the Lazy Welfare ...
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2
votes
1
answer
104
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How does the Monetary base, Narrow money and Broad money affect inflation?
In a lot of countries (e.g. Hungary) the M0, M1, M2 and M3 all doubled, tripled or even quadrupled in the past 10 years. How does this directly affect inflation?
Since just because M2 doubles, it ...
- 618
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1
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69
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Why has QE produced hyper-inflation in other countries, but not US and China? [duplicate]
QE and similar methods ("printing money", increasing M2 money supply) have caused currencies in countries such as Zimbabwe and Venezuela to collapse.
Why hasn't it caused similar issues in countries ...
- 103
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1
answer
208
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Can stimulus packages lead to hyperinflation?
I have a limited understanding of economy, however, I've been trying to catch up from various resources. Recently, the news are all about the enormous stimuli bills debated/implemented by governments ...
- 121
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1
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83
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Can government just print a little of money to purchase some foreign resources?
We know that government shouldn't just print money, because it's gonna be bad. Bad what if to do it in a small scale, just a little, for example to hire some scientist (probably nothing gonna happen ...
- 101
3
votes
2
answers
626
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Why has M1 grown a lot faster than M3 after the financial crisis?
While the fed has printed a lot of money the last decade and the M1 money quantity growth rate has gone up significantly (red), the M3 growth rate (blue) is almost exactly the same as before the ...
- 115
0
votes
1
answer
873
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Quantity theory of money
Suppose the velocity of circulation (V) is constant. Annual growth rate of real GDP is 5%. The money
supply grows by 14% per year. Use the quantity theory of money to calculate the inflation rate.
My ...
2
votes
2
answers
101
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Why did it take so much QE by the ECB to raise the Eurozone inflation to 2%?
From 2015 to 2018 the ECB increased the money supply by around 20% (around 6% y/y), with a GDP increase rate under 1%. Yet the inflation rate remained under 2%. A back-of-the-envelope calculation ...
2
votes
1
answer
212
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Does Not Having a Fractional Reserve System Cause More Inflation?
It is my understanding that countries without fractional reserve requirements still have capital requirements, but what I do not understand is how equity can be used to satisfy these requirements ...
-1
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1
answer
149
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Inflation and stock price
I have indicated my understanding and problem on the attached image below. I'm a bit confused on the impact of inflation on stock price. As increase in inflation would cause nominal interest rate to ...
