Money supply went from 4 Trillion Dollars in February 2020 to 20.7 Trillion in April 2022. Now it stands at 18 Trillion.
https://fred.stlouisfed.org/series/M1SL
What happens if they print another 17 Trillion when the next recession strinkes and the money supply jumps to 35 Trillion within two years? Is is hyperinflation, economic collapse or something else? Would it even have a beneficial effect or make things only worse?
What happenes if they try to print themselves out of the next recession?
byu/Tiredworker27 ineconomy
by Tiredworker27
8 comments
More inflation? Further wealth disparity.
It will be the German mark in 1933
You seem kinda confused
They don’t need to do that. If they want to inject money into the economy they can drop the interest rate. They plan to do this in September. They won’t drop it much, it will largely be for show to test the waters to make sure inflation keeps going in the right direction.
This is part of the value of having the interest rate above zero. During ZIRP we couldn’t drop the rate any further and to inject money we had to do QE.
Itll really go brrrrrrrrrrr
The reason we haven’t hit hyperinflation is because the USD is the world currency; however, since there’s some countries, BRICS, and more ditching the dollar, hyperinflation will hit when the dollar is no longer the world currency.
By the dollar bring the world currency, this excess in printing makes the rest of the world bear our inflation, so it makes sense why BRICS was formed and why they’re ditching the dollar.
Imagine if you lived with a roommate who was an overspender to the point where you had to cover their at 1st, food cost, then escalating to rent cost.
Eventually, you dip into your savings just to survive, so eventually, you have to kick your roommate out and find another one who is more financially responsible.
Most of the time, something this big happens in forgetful times. It’s the same why so many traders get excited in the stock market during elections.
As the notes for the chart to linked to point out, the vast majority of the increase in M1 since 2020 was a change in the definition that had no real impact on money supply.