An item that costs $1, costs $2 when you double the amount money for the same amount of assets.
This is a common misconception. One big reason it's not true is because the vast majority of the wealth in the economy is stored in assets other than money (real property, stock, bonds, etc.), so doubling the money supply is very different from doubling the amount of wealth everyone has.
Now I imagine some might still be skeptical, but luckily this has been studied, and there are metrics like M2 that represent money supply. If you look at a graph of M2 vs inflation, they look pretty independent, and indeed studies have failed to find any statistically significant correlation between the two.
Inflation is just a tax, a way to tax the poor.
Real Estate, stock, bonds and goods will, in aggregate, go up.
Sure, the distribution is going to be uneven but I wouldn't say "prices of goods are not going up" and then complain you can't afford a house.
Cui bono is definitely at play here.
Secondly, it doesn’t matter where the “wealth” is stored unless it’s sitting in someone’s basement like Scrooge McDuck[0]. The money gets out into the economy through loans and businesses doing business causing prices to rise because there’s more money chasing the same amount of goods.
[0] though, apparently, this is a Silicon Valley thing as was seen by SVB.
Total money supply means that eg doubling the amount of liquidity does not double the price of items, but printing money can cause inflation on goods depending on where that printed money is absorbed. Making free money for building houses is different then sending a check to every American.. but in practice the Gov did the latter and now eggs are more expensive!
Where you add the money makes a big difference!
Unless you suddenly think "rent seeking" jumped right as the Government happened to start printing more money, it sure looks like inflation tracks quite nicely.
Here's a nice investopedia breakdown of how printing money can cause inflation: https://www.investopedia.com/ask/answers/042015/how-does-mon...
Unless you are proposing that every company in the world is secretly conspiring together to raise prices, I assume you agree with me that the actual source of the increase is the huge influx of money supply that governments created and injected into the economy.
Businesses will absolutely adjust their prices to whatever the market will pay. However, they are dependent on (or follow) inflation for the actual pricing numbers.
One of the major US issues was that the vast majority of the $6,100,000,000,000 in funding the last couple years that was added to the money supply was given to the wealthy via ownership in companies. They used it to purchase commodities, houses, stocks, and many other assets causing the producers of those assets to raise prices to adjust for the inflated money supply.
This means we see houses doubling when really, money supply doubled and our purchasing power halved.
it affect prices of assets, houses, but this does not, in any way, affect prices of food. The entire argument is fictitious.
Regardless, even it if had only been for banks. Anyone was able to borrow nearly interest free money to turn around and spend.
This means anyone (that was wealthy enough) could take their $100k and borrow an additional $X00k they used to purchase assets. When half the purchasing power of the country does that you suddenly have 2x inflation as there are 2x more purchasers (or 2x more money).
Do wealthy borrow money to purchase perishable food?
We've been through this, we've printed money in 2008 and food prices did not increase.
You cant blame every economic problem on money supply
Between 2008 and 2015, the Fed’s balance sheet, its total assets, ballooned from $900 billion to $4.5 trillion. Likewise, food prices also increased.
However, this time we injected over $6 trillion in only a few months. A much faster rate of growth resulting in quickly rising inflation.
You mean like crypto or meme stocks?
Is it really "conspiring" when economists speculate that inflation is coming and businesses fulfill that prophecy to either enrich or insulate themselves? It's not even a stretch, just obvious.
Curious how much inflation would happen if it weren't announced that it's time to do inflation.
Two different things they try really hard to make sure people can’t tell the difference.
Headlines are crafted for maximum consumer reach.
Nor is there ever a proposed formula for what the 'correct' money supply should be.
The big critics seem to only be able to come up with Gold standard/bitcoin.
They do not propose how money supply should expand when GDP grows.
They also never talk about relationship between velocity of money and interest rate, and the fact that if velocity of money is low, then the debt of everyone in the economy pile up to infinity, and cause collapse.
They do not address the perverse incentives we have to park vast amounts of money unproductively, instead of investment in the real economy.
The private banks ability to create money is limited by government regulations.