The fed "printed" a shitton of money during Covid, dismissed all inflation concerns, and now, two years later, we're facing record inflation. I'd say there is a good chance that it does in fact affect inflation
Happy to see an article or w/e from you in 2020 correctly predicting the actual inflation and when it was going to occur. Saying everytime the fed does something that it'll cause inflation and then waiting years to say "Ha told you so!" is not impressive and not even p-hacking since you don't even have a p variable.
For most significant spikes, there's a two year delay to a spike in inflation. 2009 and 2012 being a clear violation of that observation.
It does look like there are only 3 scenarios ('74, '80, '22) of a spike in m2 preceding a spike in inflation. But the m2 spike in '22 is so much larger (~2x) than '74 and '80 and the inflation spike is so much less (~0.7x) so the correlation of those variables based on those 3 samples seems poor.
But there's also '61, '67, '83, '01, '09, '11 where there was solid m2 growth or a spike and no inflation.
Don't think there is much credible evidence or opinion regarding the latter.
Reality is never all else equal.
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> Are you implying that it's impossible to draw such a conclusions from particular events such as those of 2020?
That's not my claim at all. In fact I've invited the person to link me to their article explaining their analysis of 2020 and why it would lead to inflation in 2022. My point is strictly that people always claim that X is going to cause inflation and then just wait until inflation occurs to say "Aha, X does cause inflation" while doing 0 analysis to show that it was X as opposed to literally any other reason.
Agreed, but that's not really relevant to the discussion.
> My point is strictly that people always claim that X is going to cause inflation and then just wait until inflation occurs to say "Aha, X does cause inflation" while doing 0 analysis to show that it was X as opposed to literally any other reason.
But we are talking about the money supply. Prices are measured in units of money. You are suggesting that there is not a reason to think that changes in the size of the money supply influence price inflation. That makes no sense. Unless that additional money is just being systematically hoarded which seems unlikely in the long run.
Put another way, a mismatch between the money supply and the demand for money (for use as a medium of exchange) is essentially what price inflation is, almost by definition. So whatever the underlying "cause" of inflation, it's also always fair to say that the money supply was or became too large to keep it in check.
To argue that an increase in money supply wouldn't lead to price inflation (again, all else equal) implies that the difference would just be hoarded indefinitely rather than used to buy anything, which seems unlikely just on the face of it.
Imo, once us states began reopening the fed should have carefully moderated their equity and qe buys maybe even selling positions they opened in April 2020 as early as July 2020. Combine that with vaccine timing around May 2021 where a single 50bps change could have eased in.
In fact, the countries that use the same euro currently posted different inflation rates. In your economic model we should have evenly distributed inflation.
So there you go.
> the countries that use the same euro currently posted different inflation rates.
this is expected.
> In your economic model we should have evenly distributed inflation.
no one expects inflation to occur uniformly. its well understood that one of the prime distortionary factors that result from money printing is that the price level does not adjust uniformly, but responds to where the money is spent. This is bad for inequality because typically the newly printed dollars are preferentially routed to politically connected client groups who then use these new (unearned) funds to purchase assets at prices that have not had time to adjust to the increased money supply.