Re:The Collapse of SVB Exposes the Largest Crack in the Economy
by Dalewyn on Friday March 10, 2023 @06:36PM
(#35102871)
At a very basic level, more monies in circulation means each individual money is worth less than before. If each individual money is worth less than before, you need more monies to buy something. This is fine if you have more monies on hand to compensate, but generally this isn't the case for individual persons.
Thus, you have inflation: The price of goods inflate(!) because the value of monies drops inversely to the monies in circulation.
Re:The Collapse of SVB Exposes the Largest Crack in the Economy
by lxgr on Friday March 10, 2023 @06:50PM
(#35103025)
Your model is missing money velocity.
Creating money does not automatically cause it to circulate, as the ECB and others have demonstrated between 2008 and 2022.
Re:The Collapse of SVB Exposes the Largest Crack in the Economy
by Dalewyn on Friday March 10, 2023 @06:55PM
(#35103079)
What part of "very basic" do you not understand?
If we want to get deep into the thickets of finances we absolutely can, but that's not what I'm here for.
Re:The Collapse of SVB Exposes the Largest Crack in the Economy
by nostromo on Friday March 10, 2023 @07:05PM
(#35103204)
It's not accurate to say the EU has been printing money like crazy for 10 years, when for most of that time, the money printing was minor compared to 2020-2022.
Europe, much like the US, was printing money, at a fairly steady rate from 2008 to 2020, at which point they doubled the money supply in a little over a year. That is, they printed more money in ~18 months then they had since the EU was formed.
Yet everyone keeps talking about how the money supply is causing inflation, even though there is no plausible direct connection [1] between the amount of money in some bank account somewhere and consumer prices. The bakery down the street does not look at federal reserve rates when figuring out their bread prices.
[1] I'm guessing that someone will be able to explain this to me. But keep in mind that your explanation should cover how we could have over a decade of near-zero interest rates and the respective money supply inflation without seeing any significant consumer price inflation.