These statements about transitory inflation are bs, it is INFLATION!

[UsualName]

I just shared - sorry, someone came in the office before I could edit it.

On 23 April 2020, EU leaders decided to work towards establishing an EU recovery fund aimed at mitigating the effects of the crisis. They tasked the European Commission to urgently come up with a proposal, which would also clarify the link between the fund and the EU's long term budget. The proposal, a recovery plan for Europe, was presented by the European Commission on 27 May 2020.

On 21 July 2020, EU leaders agreed on a €750 billion recovery effort, Next Generation EU, to help the EU tackle the crisis caused by the pandemic.

Alongside the recovery package, EU leaders agreed on a €1 074.3 billion long-term EU budget for 2021-2027. Among others, the budget will support investment in the digital and green transitions and resilience.

Together with the €540 billion of funds already in place for the three safety nets (for workers, for businesses and for member states), the overall EU's recovery package amounts to €2 364.3 billion.

The European Parliament and the Council reached a preliminary agreement on the package on 10 November 2020. The European Council on 10-11 December 2020 addressed the concerns raised on the agreement and cleared the path for the recovery package to be adopted.
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As for Global inflation, when China, the US and the EU blast their economies with a firehose of fiscal stimulus, it has wide reaching effects everywhere else.

Ok, so you’re not differentiating between stimulus and safety programs like in Europe that kept people from being laid off. To you this is all stimulus.

That’s kind of an odd place to be in because you’re essentially advocating for a depression without any stabilization measures.

 

[Tsing Tao]

Ok, so you’re not differentiating between stimulus and safety programs like in Europe that kept people from being laid off. To you this is all stimulus.

That’s kind of an odd place to be in because you’re essentially advocating for a depression without any stabilization measures.

Fiscal stimulus. That's the difference this time vs. all times previous with monetary stimulus. Fiscal finds its way into the greater economy. Giving people money, passing policy that forgoes debt payments (rent, student loans, etc) and essentially giving them a defacto UBI causes inflation. Couple this with shutting down the services side of the economy so people don't spend on trips, air travel, concerts, etc and locking them in their home so all they do is buy things and yeah, shortages. Too much money chasing too few goods. Textbook inflation.

Its actually very simple. I'm surprised someone of your self-described expertise in all things economics is arguing against this.

 

[Tsing Tao]

This is funny, but not unexpected from the politicians we've elected in this world. Betcha Biden is looking hard at it.

 

[Tsing Tao]

 

[UsualName]

Fiscal stimulus. That's the difference this time vs. all times previous with monetary stimulus. Fiscal finds its way into the greater economy. Giving people money, passing policy that forgoes debt payments (rent, student loans, etc) and essentially giving them a defacto UBI causes inflation. Couple this with shutting down the services side of the economy so people don't spend on trips, air travel, concerts, etc and locking them in their home so all they do is buy things and yeah, shortages. Too much money chasing too few goods. Textbook inflation.

Its actually very simple. I'm surprised someone of your self-described expertise in all things economics is arguing against this.

It’s not very simple, at all. You’re arguing demand increases and I pointed out that is not true in the euro zone. The euros actually saw decreased consumption. You move past points that don’t compute with your priors as if they don’t exist.

As to “classic” models of monetary supply based inflation, money is not moving through the economy at a speed that would create inflation:

https://corporatefinanceinstitute.com/resources/knowledge/economics/velocity-of-circulation/

I get you have opinions and things make sense in your mind but we have ways of measuring where inflation is coming from and money supply is not showing up right now.

And to you trying jab me as portraying myself as an expert, I’m not, but I do have a business degree and a graduate degree and both included economics courses. So yes, I do have some education in economics. I’m not an economist but I do know how to read the basics.

It can also be said that you yourself are trying to be as much of an expert as I am just by giving your opinion but the difference between me and you is I back my opinion up with the data whereas you do not. And you don’t because the data doesn’t back up your opinion.

 

[TreeFrogTrader]

This is funny, but not unexpected from the politicians we've elected in this world. Betcha Biden is looking hard at it.

Oh definitely. I talked about this quite a while back.

People were posting about how inflation was going to kill the dems at the polls and I said that most likely they would put a huge give-away inflation "relief" bill up for consideration right before the election so that the only way that you got your free stuff was to vote for the dems.

Nevermind that that "relief bill" would also be inflationary. They will also try to repackage that 3.5 million "build more bullshit back better" bill as an inflation-Putin-relief bill. They dont really care what funds go toward or what it is called, they just want something to dangle in front of voters.

 

[UsualName]

This is funny, but not unexpected from the politicians we've elected in this world. Betcha Biden is looking hard at it.

Toure going to love this, he should be looking at something like an energy tax credit.

 

[Tsing Tao]

It’s not very simple, at all. You’re arguing demand increases and I pointed out that is not true in the euro zone. The euros actually saw decreased consumption. You move past points that don’t compute with your priors as if they don’t exist.

As to “classic” models of monetary supply based inflation, money is not moving through the economy at a speed that would create inflation:

View attachment 284993

https://corporatefinanceinstitute.com/resources/knowledge/economics/velocity-of-circulation/

I get you have opinions and things make sense in your mind but we have ways of measuring where inflation is coming from and money supply is not showing up right now.

And to you trying jab me as portraying myself as an expert, I’m not, but I do have a business degree and a graduate degree and both included economics courses. So yes, I do have some education in economics. I’m not an economist but I do know how to read the basics.

It can also be said that you yourself are trying to be as much of an expert as I am just by giving your opinion but the difference between me and you is I back my opinion up with the data whereas you do not. And you don’t because the data doesn’t back up your opinion.

Just so we're clear, you're saying here that because the Velocity of M2 Money Stock that you got from the STLF is dropping, inflation isn't caused by spending. Is that your base argument? I just want to make sure I understand before I respond. Because you tend to get slippery when I answer and then go down other rabbit holes and its difficult to have a discussion as you do.

Remember, this started when you said "Biden was correct" in his tweet that said "You want to stop inflation? Make corporations pay their fair share in taxes". That, by the way, you still haven't fully closed the loop on after I've asked you multiple times.

 

[UsualName]

Just so we're clear, you're saying here that because the Velocity of M2 Money Stock that you got from the STLF is dropping, inflation isn't caused by spending. Is that your base argument? I just want to make sure I understand before I respond. Because you tend to get slippery when I answer and then go down other rabbit holes and its difficult to have a discussion as you do.

Remember, this started when you said "Biden was correct" in his tweet that said "You want to stop inflation? Make corporations pay their fair share in taxes". That, by the way, you still haven't fully closed the loop on after I've asked you multiple times.

Yes. Velocity of money would indicate monetary based inflation. See the link I provided.

No. I did not say Biden is correct, I said that the theory is a dollar out is a dollar out so theoretically if you believe raising the Fed rate would dampen consumption thus reducing inflation then it’s the same principle. My argument with you about that was it was not a failure of “quality control” by some staffer, but rather a theory to combat inflation.

 

[Tsing Tao]

Yes. Velocity of money would indicate monetary based inflation. See the link I provided.

No. I did not say Biden is correct, I said that the theory is a dollar out is a dollar out so theoretically if you believe raising the Fed rate would dampen consumption thus reducing inflation then it’s the same principle. My argument with you about that was it was not a failure of “quality control” by some staffer, but rather a theory to combat inflation.

Biden said if you want to combat inflation, make corporations pay their fair share of taxes. You then said:

Raising taxes is a legitimate means to dampen demand which will combat inflation.

And there is nothing unsound about Biden’s statement because in economics it’s totally legitimate way to remove money from circulation.

So before we get to M2 (and I definitely want to), can you clarify that this is not the same thing, and that you now agree that Biden's tweet was not correct?