Does this seem normal to you? Imagine you are a patient and you took data like this to your doctor. Would he say you are healthy after having such a gradual rise all your life and then complete chaos?
If things have been going great the past few years I’d say maybe it doesn’t matter, but things don’t seem to be going great for anyone except the wealthy (those by nature closest to the money printer).
https://www.aspeninstitute.org/blog-posts/charts-that-explai...
>Since 2007, wealth has declined for all but the top 20%.
Oddly (or not oddly) enough that’s when the monetary base graph starts skyrocketing.
Yes. Currency is a mean of exchange, nothing more.
Economy is essentially how to satisfy the needs of its participants with the limited resources available. For the graph that you linked in a somewhat alarmist fashion to make sense, you need to compare it with a plethora of other information for it to make sense.
What is the productivity of people and corporations? What are the level of imports and exports? What is the cost of living? How much in taxes did the government earn? How adequate are the expenses in infrastructure? What is the level of debt held by the public and private sectors? Is that debt sustainable?
All those are just questions that I haphazardly put together while writing this reply, and they all tell other facets about the state of the economy that the money supply won't tell you.
>>Since 2007, wealth has declined for all but the top 20%.
>Oddly (or not oddly) enough that’s when the monetary base graph starts skyrocketing.
A deflationary economy would massively widen wealth inequality, as it heavily favors capital holders (as money itself gets more expensive over time).
A lot other things happened after 2007 that helped increase wealth inequality. I see the "skyrocketing" money supply as a side-effect of those things.
Correlation does not mean causation.
Inflation makes people work harder, but it's not the right thing to do, and not good for the economy in the long term. Economy is not just the GDP; it's also happiness, freedom and mental health.
All productivity increases in the economy should belong to the people who are working and saving their money. They made the decision to limit their consumption and wait for cheaper products.
Inflationary currency is very unethical, and will result in total centralization of wealth when productivity keeps increasing.
For all the talk and posture of it being a return to "hard money", all it is used for is as another investment tool for the wealthy.
And that is me giving it the benefit of doubt.
As someone who knows a doctor or two in the Bay Area, where it's apparently common for self-diagnosed charts to be texted in panic by clueless patients at 2AM, this analogy is apt.
Hyperinflation is bad, but there are ways to solve it.
Deflation is potentially worse.
And companies sometimes dilute the value of shares. It's part of the risk in investing in a company.
On the other hand, companies can use buybacks for the exact opposite effect.
Either the company's board and leadership are trustworthy (i.e. are acting in the best interest of all, not just majority or voting, shareholders), in which case they'll have carefully weighed the cost (dilution) and benefits (additional capital) of issuing new shares.
Or they aren't – in which case dilution is one of many problems and it's questionable why I'd want to continue owning shares in that company.
In 2009 and 2021, the USD’s “board and leadership” has shown it’s willing to massively inflate its existing liabilities to help it solve its severe problems.
It’s very questionable why any country with large trade surpluses would want to hold US treasuries at this point. That’s precisely why China has brokered energy deals denominated in RMB, and BRICS is exploring a basket of their currencies to act as a new reserve.
Fair point – then maybe they shouldn't!
But I'm not a large country; I need to pay for rent and food in USD, and my highest priority for the USD accordingly is short and medium term price stability for those two things. For long-term savings, there's other assets.
If the USD continues falling short on short term price stability as well, I agree that that would be a major problem.
Central banks may be useful in preventing banking crises every ~20yrs as happened back in the 1700s and 1800s. But even that’s not a certainty since the two most severe banking crises in history - the Great Depression and Global/Great Financial Crisis - happened under the watch of central banks. Some even argue the latter occurred because of the central bank keeping interest rates too low too long.
One benefit of central banks is to depoliticize monetary policy by moving it away from the Executive Branch, and giving it a Congressional mandate that it must prioritize in its policy and operations - low inflation and high employment. That’s probably one of the few indisputable advantages they have.
As for whether inflationary or deflationary money is better, I don’t know. Both have their pros and cons. The more I go down rabbit hole on each of these, the less decisive I am about it. But this website makes a comprehensive case for deflationary money, fwiw: https://wtfhappenedin1971.com/
After the switch to burn a portion of funds on every transaction as well as the switch from proof of work, to proof of stake, Ethereum is now deflationary [0].
Say what you will about the cryptocurrency experiment, it will be fascinating to watch the effect of this over time.
Why is this a bad thing?
This is repeated by the crypto people as some kind of root of all evil, and it puzzles me.
I see monetary policy - including the ability of devaluing a currency - as a powerful tool central banks have to keep the economy working.
I fail to see how "hard money", which normally comes peppered with some vague desire for a deflationary economy as desirable. In my view this would very quickly turn into an intolerable distopia.