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re: The Fed is already floating the Ukraine situation as an excuse to delay rate hikes
Posted on 2/24/22 at 3:21 pm to wutangfinancial
Posted on 2/24/22 at 3:21 pm to wutangfinancial
quote:
stable prices
If inflation is high, prices are not stable.
I’ve got crayons if you want to play word games.
quote:
The Federal Reserve Act mandates that the Federal Reserve conduct monetary policy "so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."1
Their own website
1
Posted on 2/24/22 at 5:34 pm to BamaCoaster
Now explain how the Fed can do anything about those unstable prices dipshit 
Posted on 2/24/22 at 11:10 pm to wutangfinancial
By lowering M1.
What do I win?
For a supposed financial advisor, you seem shallow.
What do I win?
For a supposed financial advisor, you seem shallow.
Posted on 2/25/22 at 7:49 am to BamaCoaster
You would definitely ace a macroeconomics 101 class. M1 hasn't been accurate since the 60s and your theory won't play out because the Federal Reserve does not control the money supply in the U.S. BTW consumer price increases are driven by commodity prices and food. Your "solution" would make it worse.
For a supposed gump, you seem sharp but this topic is CFA level IV probably above your pay grade.
Posted on 2/25/22 at 8:31 am to wutangfinancial
Are you staying there is no correlation between M1 and inflation?
You have insinuated there is no correlation between artificially low interest rates and inflation, but can you verify you believe that as well?
Edit: In my opinion, to stave off inflation, we need to lower M1 and raise interest rates.
We cannot raise the interest rate, however, so lowering M1 is our only shot.
Also, the graph you posted still shows M1 at levels 200% higher than in 2005, and that’s terrifying in my “uneducated” opinion.
Edit 2: if the fed does not control money supply in the US, wtf does?
I’m baffled.
You have insinuated there is no correlation between artificially low interest rates and inflation, but can you verify you believe that as well?
Edit: In my opinion, to stave off inflation, we need to lower M1 and raise interest rates.
We cannot raise the interest rate, however, so lowering M1 is our only shot.
Also, the graph you posted still shows M1 at levels 200% higher than in 2005, and that’s terrifying in my “uneducated” opinion.
Edit 2: if the fed does not control money supply in the US, wtf does?
I’m baffled.
This post was edited on 2/25/22 at 8:42 am
Posted on 2/25/22 at 9:25 am to BamaCoaster
quote:
Are you staying there is no correlation between M1 and inflation?
I'm saying that it's an incoherent measure of the money supply. Most of the exponential growth you can obsere in 2020 is unrealized credit being realized in money market accounts, and taxpayer backed lending that would not have otherwise occured without the CARES Act passing. Control that measure for population growth and pin it against CPI and you will find over time the relationship does not hold up.
quote:
Also, the graph you posted still shows M1 at levels 200% higher than in 2005, and that’s terrifying in my “uneducated” opinion.
If the money supply grew by 200% do you think that would flow through CPI as 7%? You're looking at base money expansion in the banking system. Basically the Fed creates an entry to swap bank reserves for assets, and neither ever leave the balance sheet of the Federal Reserve so the only affect is psychological. In simple terms they are expanding the ability to create new money but that decision is not in the hands of the Fed to create new deposits.
quote:
In my opinion, to stave off inflation, we need to lower M1 and raise interest rates.
Money is too tight for interest rates to increase. There's a million reasons why that is, but banks are basically signaling there is nowhere to lend other than the largest institutions with the highest credit quality and the widest moats. Interest rates won't go up until there's the underlying economic conditions to support it. We are sadly trending into the opposite direction at the fastest pace in recent history.
quote:
if the fed does not control money supply in the US, wtf does?
Private banks
Posted on 2/25/22 at 10:52 am to wutangfinancial
quote:
quote: if the fed does not control money supply in the US, wtf does?
Private banks
Exactly right. The Fed controls the money supply on the wholesale side to government and money center banks. Banks control the money supply on the retail side by issuing credit to businesses and individuals.
I actually think the Fed wants to bypass all this and have control of it all. And they will if they ever introduce CBDC (Central Bank Digital Currency). Once this happens, we are all trapped in the cattle pen with negative interest rates and taxes kicking us square in the nuts even more.
Posted on 2/25/22 at 11:11 am to Hussss
quote:
I actually think Congress wants to bypass all this and have control of it all
This post was edited on 2/25/22 at 11:11 am
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