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Comment by duxup | Hacker News Reader

I remember the banking crisis and the money printing after that, it was absolutely assumed inflation would follow, how much was debatable, but there wasn't much debate about the impending inflation.

Didn't happen... for <insert reasons that are now thought to be obvious but nobody knew before hand>.

Who knows what to make of the rules these days.

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Some say that inflation did happen, but it ended up in real estate prices, which aren't counted in the formal inflation definition.

I'm not smart enough to tell how true that is.

Yeah, I don't know how someone can look at housing prices say, 1990-2020 and say there wasn't inflation after the housing crisis. House prices dropped, but not as much as they "should" have to eradicate the evident bubble of '00-'08, despite the very public beating housing & banking took. And 2-3 years on they were shooting up again!

Is it really inflation if the cost of a house doubles but the cost of servicing a mortgage halves because interest rates are so low?

This reads to me like "is it really inflation if money just got cheaper?" Which... I think the answer is "yes, that's exactly what it is"?

No, that's just a single overlevered market with, well, the banks laughing all the way to the bank? Because apparently they can get away with it.

Individual markets have crazy price increases all the time. It's happened to gold, oil, wheat, and virtually every tradeable thing ever, including housing. That it happens in one place is no reason to cry inflation.

Evil landlord owns an apartment, he jacks up prices to the maximum possible that people can afford. Fed happens and the value of the apartment goes up. The landlord jacks up prices to maintain a stable price to rent ratio. Yet nobody can afford to rent the apartment.

It's not really inflation, it's something different. The cost of financing has gone down. If financing dries up, real estate prices will go up again.

>"Didn't happen... for <insert reasons that are now thought to be obvious but nobody knew before hand>."

That's not exactly true, MMT was right about that beforehand, this is from 2009:

"There are also those that claim that quantitative easing will expose the economy to uncontrollable inflation. This is just harking back to the old and flawed Monetarist doctrine based on the so-called Quantity Theory of Money. "

From: http://bilbo.economicoutlook.net/blog/?p=661

I feel like saying it won't be 'uncontrollable' isn't the same as calling that there won't be inflation and getting the reason right.

I think you feel that way because you can't appreciate the argument from only a small quote. They get it right.

The reason QE was (is) not inflationary is because that money it's not being spent in the economy, it's only adding bank reserves. Bank reserves make the interest rate go lower, but, it will not go lower than zero, after that you can create all the reserves you want.

Lower interest rates make credit more cheaper, but cheaper credit doesn't influence the economy if nobody is borrowing.

Also, bank lending is not constrained by reserves. Lowering the interest rate will make borrowing more attractive for borrowers, but that doesn't make easier for banks to lend, because they are not constrained by reserves. They are constrained by the number of borrowers to whom makes business sense to lend.

So, the quantity theory of money is wrong and the fractional reserves model is a fallacy. That should be obvious by now. The Modern Monetary Theory guys were saying that, way before 2008.

In the meltdown of 2008, about $4 trillion disappeared. The Feds pumped $4 trillion into the economy. Net result: close to zero. That was good, because the result of $4 trillion disappearing was going to be quite a deflationary crash.

The trick was going to be removing that $4 trillion that they injected at the right rate. And what actually happened is that they didn't remove it. Is it showing up now, years later, in asset inflation, because they failed to remove it all this time? I could see that.

we have high inflation, CPI is just not a good measurement.

https://twitter.com/LynAldenContact/status/13875210431207587...

https://tradingeconomics.com/commodities

Only because housing cost usually isn’t included in the definition of inflation for some crazy reason. Housing costs are out of control.

Housing costs is included, I'm not sure where you got the impression it wasn't. And considering you thought its exclusion was "crazy," why didn't hearing that fact prompt you to investigate?

https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...

https://www.bls.gov/opub/hom/cpi/calculation.htm#estimation-...

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