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Energy and food based inflation was already a huge problem before Russia's invasion of Ukraine. There is no monetary phenomenon. It's clear as day on the Fed's

Energy and food based inflation was already a huge problem before Russia's invasion of Ukraine. There is no monetary phenomenon. It's clear as day on the Fed's balance sheet the reason for inflation. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... If one can't understand why the value of their money goes down as the government buys trillions of dollars of their own debt with non-existent money, I'm not sure how to help.

testesttest 4y ago
But, see, your analysis doesn't inspire confidence in the economy which is bad for the economy. We need a different explanation. Ya know like "transitory inflation". Dam, used that, I guess Ukraine.
thrwyoilarticle 4y ago
"If you don't include war, other countries, or a shipping crisis, all inflation is due to the fed!"
- Forgeties79 4y ago
  I am going to need to borrow this as a retort because frankly it's a very fair response to the parroted line above, which I keep hearing variations of.
ChrisLomont 4y ago
>It's clear as day on the Fed's balance sheet the reason for inflation Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... So maybe your simple claim is not what is the cause. More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? In fact, your total assets graph is misleading. Look at the same graph, under the selected liabilities breakdown - the monetary base has been steady, with no inflation for most of it. The big recent increase is in purchase of Treasuries, which is the money the govt gave to the people to help them through the COVID caused downturn. This is a good use of money, and of course giving people money with no gain in production will lead to inflation, but it's not the Fed at fault - it's elected officials voting for free money.
- Gareth321 4y ago
  > Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy, despite the aforementioned QE? QE works great following a recession. For quite a number of years later, in turns out. But not forever. At some point the economy recovers and continuing to pour gasoline on it stimulates it beyond the target inflation zone.
  - JumpCrisscross 4y ago
    > Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy You and the comment you’re responding to agree on the Fed’s balance sheet being insufficient per se to explain core or non-core PCE. It's a complicated phenomenon.
    - Gareth321 4y ago
      Thanks for clarifying. I guess I missed that.
- discardedrefuse 4y ago
  > More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? Unsurprisingly, the lion's share of that money handed out for covid relief wasn't given to people. It was corporations that, once again, walked away with most of it. Going back even further, the 2016 tax bill also provisioned way more money to corporations compared to the time-limited-bone they threw at people. While its fair to say handing out money can cause inflation, lets not kid ourselves about who is really getting that money. https://theintercept.com/2020/12/04/covid-irs-corporation-tax-refunds/ https://theintercept.com/2020/12/04/covid-irs-corporation-ta... https://www.washingtonpost.com/graphics/2020/business/coronavirus-bailout-spending/ https://www.washingtonpost.com/graphics/2020/business/corona... https://www.forbes.com/sites/christianweller/2019/05/30/the-2017-tax-cuts-didnt-work-the-data-prove-it/?sh=6130d91d58c1 https://www.forbes.com/sites/christianweller/2019/05/30/the-... https://www.nytimes.com/2018/01/16/us/politics/banks-are-big-winners-from-tax-cut.html https://www.nytimes.com/2018/01/16/us/politics/banks-are-big...
lalaland1125 4y ago
Energy inflation only really spiked once the war started. Energy commodities are up 48% this year, but 37% of that increase was over the last month.
- fallingknife 4y ago
  Oil (WTI) is up only ~10% since the war started
  - lalaland1125 4y ago
    Oil products such as gasoline have risen more. See https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
lamontcg 4y ago
Was I imagining things or were we just talking about supply chain problems a few months ago? Didn't we all go through that period early in the pandemic where spot oil prices briefly went negative? Weren't "bullwhip effect" articles regularly making the rounds on HN or did I dream that all?
deleted 4y ago
[deleted]
whimsicalism 4y ago
Many people on HN seem really unfamiliar with the concept/importance of monetary velocity. Given that price level * output = Money * Velocity, you would think you might want to look at a chart of velocity before blaming the price level on the balance sheet.
- chillacy 4y ago
  Afaik Monetarists like Friedman assume that velocity is a constant, but this trickles down to most gold bugs I meet not even knowing the inflation equation.

testesttest 4y ago

But, see, your analysis doesn't inspire confidence in the economy which is bad for the economy. We need a different explanation. Ya know like "transitory inflation". Dam, used that, I guess Ukraine.

thrwyoilarticle 4y ago

"If you don't include war, other countries, or a shipping crisis, all inflation is due to the fed!"

Forgeties79 4y ago
I am going to need to borrow this as a retort because frankly it's a very fair response to the parroted line above, which I keep hearing variations of.

ChrisLomont 4y ago

>It's clear as day on the Fed's balance sheet the reason for inflation Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... So maybe your simple claim is not what is the cause. More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? In fact, your total assets graph is misleading. Look at the same graph, under the selected liabilities breakdown - the monetary base has been steady, with no inflation for most of it. The big recent increase is in purchase of Treasuries, which is the money the govt gave to the people to help them through the COVID caused downturn. This is a good use of money, and of course giving people money with no gain in production will lead to inflation, but it's not the Fed at fault - it's elected officials voting for free money.

Gareth321 4y ago
> Yet there was not this inflation during the Fed balance sheet runup in 2008-2018...... Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy, despite the aforementioned QE? QE works great following a recession. For quite a number of years later, in turns out. But not forever. At some point the economy recovers and continuing to pour gasoline on it stimulates it beyond the target inflation zone.
- JumpCrisscross 4y ago
  > Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy You and the comment you’re responding to agree on the Fed’s balance sheet being insufficient per se to explain core or non-core PCE. It's a complicated phenomenon.
  - Gareth321 4y ago
    Thanks for clarifying. I guess I missed that.
discardedrefuse 4y ago
> More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people? Unsurprisingly, the lion's share of that money handed out for covid relief wasn't given to people. It was corporations that, once again, walked away with most of it. Going back even further, the 2016 tax bill also provisioned way more money to corporations compared to the time-limited-bone they threw at people. While its fair to say handing out money can cause inflation, lets not kid ourselves about who is really getting that money. https://theintercept.com/2020/12/04/covid-irs-corporation-tax-refunds/ https://theintercept.com/2020/12/04/covid-irs-corporation-ta... https://www.washingtonpost.com/graphics/2020/business/coronavirus-bailout-spending/ https://www.washingtonpost.com/graphics/2020/business/corona... https://www.forbes.com/sites/christianweller/2019/05/30/the-2017-tax-cuts-didnt-work-the-data-prove-it/?sh=6130d91d58c1 https://www.forbes.com/sites/christianweller/2019/05/30/the-... https://www.nytimes.com/2018/01/16/us/politics/banks-are-big-winners-from-tax-cut.html https://www.nytimes.com/2018/01/16/us/politics/banks-are-big...

lalaland1125 4y ago

Energy inflation only really spiked once the war started. Energy commodities are up 48% this year, but 37% of that increase was over the last month.

fallingknife 4y ago
Oil (WTI) is up only ~10% since the war started
- lalaland1125 4y ago
  Oil products such as gasoline have risen more. See https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm

lamontcg 4y ago

Was I imagining things or were we just talking about supply chain problems a few months ago? Didn't we all go through that period early in the pandemic where spot oil prices briefly went negative? Weren't "bullwhip effect" articles regularly making the rounds on HN or did I dream that all?

deleted 4y ago

[deleted]

whimsicalism 4y ago

Many people on HN seem really unfamiliar with the concept/importance of monetary velocity. Given that price level * output = Money * Velocity, you would think you might want to look at a chart of velocity before blaming the price level on the balance sheet.

chillacy 4y ago
Afaik Monetarists like Friedman assume that velocity is a constant, but this trickles down to most gold bugs I meet not even knowing the inflation equation.