I don't get what this cartoon is trying to say. The money supply was increased by 42% in 22 months thanks to the fed....maybe those pesky Austrian economists were right? And passing stimulus (ie pumping more $$ into the economy) when the fed is trying to raise interest rates is self defeating. That is a valid critique. I have no doubt Daniel's heart is in the right place, but his cartoons are lacking in substance.
Relentlessly pumping money into the economy through stimulus payments and near-zero interest loans does not result in increased demand - it just means there are more dollars chasing the same amount of goods and services, which means corporations can charge higher prices and earn larger profits. Supply only increases when there is an increase in PRODUCTIVITY, and higher profits do not automatically result in higher productivity. You cannot force a corporation to make more widgets just because it made more money. Increased productivity occurs by making it EASIER for NEW businesses to enter the market, employ more workers, and create more goods and services. That increases the supply, which lowers prices. THIS IS NOT THAT HARD. We need government policy focused on supporting the creation of NEW BUSINESSES. Lower prices, more jobs, more innovation, more competition - that’s the secret sauce.
The secret sauce of capitalism is a mix of blood, sweat and tears for those who have to lose in order for others to succeed. It's not pretty system no matter how the rich try to beguile us with their "carrots."
Actually the rich and large monopolies need to put forth neither blood, sweat or tears. They just need to fund lobbyists and propaganda to get what they want.
It is "socialism for the rich and rugged individualism for the rest of us"
Everybody who disagrees with me is not Hitler. Paul Krugman and Luigi Zengalis are two great economists who have published books and share their views on economics in public forums.
Their policy ideas are different. One is more conservative the other more liberal. Personally, i prefer Krugmans policy ideas over Zengalis.
But both are intellectually honest and true experts on things like Money supply. And neither of them disagree on the CAUSES of inflation. They may different policy solutions but they both know the correct CAUSE..
I would be fine with either of their policy ideas. they are both better than what we do today.
Neither side is HITLER. But most people don't understand inflation and it's causes and they revert to foolish propaganda invented by Milton Freidman and his cohort. There is almost certainly not an economist under 40, in the US , who believes MxV = PxY..
He was wrong. Has nothing to do with Hitler.. Has everything to do with a math formula that shifted GDP from the poor and middle class to the rich...
I had one lunatic tell me it was Obama's stimulus Checks (they were actually extended unemployment checks) that were causing todays inflation. You can't coach stupid.
Are you serious? It is 2022. The whole Trickle Down theory has not worked for 40yrs
The US Treasury has been "pumping" money into the system for 40yrs and inflation has been going down not up. The $600 stimulus checks sent out 2yrs ago are NOT causing inflation any more than Trumps stimulus checks sent out 3yrs ago caused inflation or Obama's extended unemployment checks from 2009 - 2012 caused inflation. More money was "Pumped" into the economy bailing out companies that did not need the money during the pandemic or bailing out Banks and share holders and their executive bonuses in 2009 yet we got NO INFLATION. In EVERY case the Treasury "pumped" out money. But for some reason we did not have inflation?
Why is that? (PS: I know you can't answer that question correctly. That is my point)
>> Are you serious? It is 2022. The whole Trickle Down theory has not worked for 40yrs
I never said anything about trickle down. Who are you addressing this to? Strawman 1.
>> The $600 stimulus checks sent out 2yrs ago are NOT causing inflation any more than Trumps stimulus checks sent out 3yrs ago caused inflation or Obama's extended unemployment checks from 2009 - 2012 caused inflation.
Again I never said they were. I specifically referred to the massive increase in
the money supply over a roughly two year period. I said nothing about $200 stimulus checks. That was something you made up. Strawman 2.
>> More money was "Pumped" into the economy bailing out companies that did not need the money during the pandemic or bailing out Banks and share holders and their executive bonuses in 2009 yet we got NO INFLATION.
Bailouts in 2009 were about preserving the valuation of already inflated assets to ensure the solvency of the global financial institutions who profited from them. Bernanke was afraid of deflation. Ever heard of the Bernanke doctrine? Printing to stop deflation uses the same mechanism of devaluation as printing causing inflation.
<<Bailouts in 2009 were about preserving the valuation of already inflated assets to ensure the solvency of the global financial institutions who profited from them. Bernanke was afraid of deflation. Ever heard of the Bernanke doctrine? Printing to stop deflation uses the same mechanism of devaluation as printing causing inflation.>>
How was 2009 different than 2020? In both cases the Federal Reserve bailed out corporate share holders and executive compensation. That is where the lions share of the deficits were spent. The actual banking bail out funds were literally paid back to the treasury at a profit.
In 2020 the US Treasury spent as much money bailing out business owners and their equity and income as was spent preserving banks share holderes and executives in 2009.
What was different this time? When you can answer that then you will have a much more precise view for what is the CAUSE of inflation this time and what POLICY should be enacted to address it.
<<I specifically referred to the massive increase in the money supply over a roughly two year period>> Nobody
1980 to 1990 saw the largest spike in M1 and people like you were saying it was going to cause inflation. It didn't. We had deflation
1990 to 2000 saw a massively larger spike in M1 and people like you were saying it was going to cause inflation. It didn't. We had deflation.
2000 to 2010 saw an even larger spike in in M1. Still no inflation, just deflation
2010 to 2020 (Before covid) say and even larger spike in M1. No inflation.
People like you have been WRONG about the correlation between money supply and inflation for 40yrs. Money supply growth keeps outpacing goods and services growth and yet we have had 40yrs of declining inflation and interest rates.
I love you you know what "people like me" think based off of one or two comments. Everyone who disagrees with you thinks the same thing, amiright? It certainly says something about you. Also, I see you dishonestly use M1 instead of M2 for your talking points.
Since you know what people like me already think, why bother discussing anything? Bye.
Here is the cause of inflation from intellectually honest people on the right and left.
The only ones that ignore either view are politicians (Dems and GOP) in power today because if they deal with the truth the solution does not serve the donor class. So they cling to refuted formulas from the past.
I don't know you personally. That is why i said people like you. I have been reading and hearing people that claim expansion of "Money Supply" is going to cause inflation for 40yrs. People like you have been WRONG for 40yrs
You can't answer the logical question, why is it different this time. That is why you have to stop discussing it. You need to cling to this story rather than deal with the truth. It's hardly a secrete. Most economists on the left and right are crystal clear on this.
But you run like a frightened child from the truth.. I get it. Nancy Pelosi and Mitch McConnell do as well..
During our brief exchange you constructed multiple strawmen, fired off entirely unprovoked personal insults, and used cherrypicked irrelevant data to fit your narrative. You bet I'm done. Let's just say I've made an assumption about people like you.
I hate talking in terms of "personal brand", but it's hard to avoid when someone's livelihood is largely tied up in independent journalism and writing.
Matt, this cartoonist is damaging your brand. You specialize in in-depth reporting that seeks to destroy the obviously self-serving head feints and deception that our corporate media wallows in.
This cartoon is shallow and reeks of the kind of economic understanding usually seen in 20 year old liberal arts majors.
This cartoon is arguing that it is corporate greed, something that is constant, that is responsible for current clusterfuck and not crazy policies by Brandon. Nah dawg.....
Economists have been warning about this for 2yrs... Republicans are brainwashed to believe that inflation comes from deficits. They never seem to know that while deficits went UP for the last 40yrs interest rates and inflation went down for the last 40yrs.
The two are not LINKED. Full Stop.. that is a LIE pushed out there by Corporate Media any time the government spends money on anything other than the rich or corporations or defense.
No, actually financing deficits with the printing press are not 'certainly' inflationary. The US has been funding growing deficits with the printing press for 40yrs now and the whole time inflation and interest rates went down.
Do you know what they went down for 40yrs while printing money?
Burt is correct. Michael, you're ignoring offsetting effects. In the last 40 years, the improvement in technology was deflationary (e.g., flat screen TVs) because of cheap energy, cheap labor and low interest rates which made it easy for companies to invest. The government debased the currency which was inflationary. This means for instance that a 65" inch TV sold for $3,500 in 2005 was available for $500 in 2020 could have been available for $50 if the government had not debased the currency by a factor of 10. That's how the government got away with ~2% annual inflation while running record deficits for decades. The problem now is the total public debt is too high as a percentage of GPD and could collapse on its own with rising interest rates. I suggest you follow Lyn Alden (free podcasts, free YouTube, Twitter) who is a very articulate and knowledgeable financial and economic expert. She breaks it down neatly and provides good explanation.
The "offsetting effects" of technology is also know as productivity growth.
Productivity growth, in the US, over the last 40yrs is actually smaller than it was in the previous 40yrs yet inflation has gone down while the deficit went up.
So that theory does not work. If Lyn Alden gave it to you she is wrong. She is not even an economist, isn't she some crypto person? The cost of a TV going from $3,500 down to $500 was done on the back of decreased wages for labor. When a TV was $3,500 (say 2000) the lower 50% of American wage earners got 20% of GDP. By 2020 that same 50% of wage earners share of GDP was down to 12%. That is massive wage decreases. Oh, and not shockingly the top 1%, over that time period saw their share of GDP go from 10% up to 18%. And all along productivity GROWTH was declining relative to the time before 1980. So "technology" was not the cause for the drop in the cost of the TV. It was the decline in wages to working class Americans that funded that.
Between the 1980's and today interests rates have gone from a high of 14% in the 80's down to a low of 2% in 202 and today are at about 4% while the deficit as a % of GDP has gone UP from approx 30% of GDP in the 80's to a high of 130% of GDP in 2020. Today Debt as a % of GDP is actually lower than it was two year ago, yet inflation is higher. So higher deficits do not correlate with higher inflation.
You can look to the Current Chair of the Federal Reserve, Jay Powell, who validated that in his comments in June before Congress. Or Nobel Prize Winning economists like Paul Krugman and Joseph Stiglitz will also validate that high deficits do not correlate with higher deficts. Of course how the deficit money is spent can and will impact inflation.
If inflation is being caused by a shortage of Gas, like in the 70's, creating a deficit that increases the availability of gas, will reduce inflation not increase it. Conversely, creating a deficit to cut taxes to the rich when your currency is not the worlds preferred currency will crash your bond market and force interest rates up, as we saw in the (post Brexit) UK during the short and failed leadership of Liz Truss.
Most politicians and pundits won't state these truths out loud. It takes a long time for Law Makers to internalize these things. It took the Chicago School (Milton Friedman et al) from 1960 to 1980 to convince law makers that deficits cause inflation. Turns out they were wrong. Despite the fact that the majority of economists have seen the data showing US deficits do not correlate with inflation, it will take a long time to get rid of law makers (like Clinton, Obama, Bush an Trump) that grew up thinking deficits cause inflation.
You did notice that there were no law makers claiming that Trump unfunded Tax Cuts would cause inflation. Or that Bush's unfunded war in Iraq would cause inflation. Why is that?
Because the donor class was getting the benefit. The pundit class only claims deficits cause inflation when working people are getting money, like Bidens stimulus or the massive decline in work force participation that was pushing up wages for the working class or like when Obama extended unemployment. Only then did the pundit class claim Deficits were going to cause inflation. They were WRONG with Obama. And it never happened with Bush and Trump.
So why it it different this time?
I would suggest you listen to pod casts from economists like Luigi Zengalis (University of Chicago) or read Paul Krugmans NYT times articles. Or better yet start reading books written by actual economists. Joseph Stiglitz "Power People and Pofits" is a good start. I'd also recommend a book by Economic Historian Adam Tooze named Crashed.
Friedman was wrong. The Federal government has been ignoring his policy ideas since 2000 when we had the dot com crash... In 2000, 2008 and 2020 the Federal Government printed a ton of money and it stimulated the economy and prevented it from crashing and with out causing inflation. (and with lower productivity gains) And in those 20yrs of "deflation" has been a bigger problem than inflation. But that is another discussion.
I don't get what this cartoon is trying to say. The money supply was increased by 42% in 22 months thanks to the fed....maybe those pesky Austrian economists were right? And passing stimulus (ie pumping more $$ into the economy) when the fed is trying to raise interest rates is self defeating. That is a valid critique. I have no doubt Daniel's heart is in the right place, but his cartoons are lacking in substance.
Relentlessly pumping money into the economy through stimulus payments and near-zero interest loans does not result in increased demand - it just means there are more dollars chasing the same amount of goods and services, which means corporations can charge higher prices and earn larger profits. Supply only increases when there is an increase in PRODUCTIVITY, and higher profits do not automatically result in higher productivity. You cannot force a corporation to make more widgets just because it made more money. Increased productivity occurs by making it EASIER for NEW businesses to enter the market, employ more workers, and create more goods and services. That increases the supply, which lowers prices. THIS IS NOT THAT HARD. We need government policy focused on supporting the creation of NEW BUSINESSES. Lower prices, more jobs, more innovation, more competition - that’s the secret sauce.
The secret sauce of capitalism is a mix of blood, sweat and tears for those who have to lose in order for others to succeed. It's not pretty system no matter how the rich try to beguile us with their "carrots."
Actually the rich and large monopolies need to put forth neither blood, sweat or tears. They just need to fund lobbyists and propaganda to get what they want.
It is "socialism for the rich and rugged individualism for the rest of us"
Spot on Mark Vol...
"Nobody" learned his economics from the propaganda invented and paid for by the Koch bros...
You remind me of the "Everybody who disagrees with me is Hitler" meme. I guess i'll add you to the troll list.
Nobody
Everybody who disagrees with me is not Hitler. Paul Krugman and Luigi Zengalis are two great economists who have published books and share their views on economics in public forums.
Their policy ideas are different. One is more conservative the other more liberal. Personally, i prefer Krugmans policy ideas over Zengalis.
But both are intellectually honest and true experts on things like Money supply. And neither of them disagree on the CAUSES of inflation. They may different policy solutions but they both know the correct CAUSE..
I would be fine with either of their policy ideas. they are both better than what we do today.
Neither side is HITLER. But most people don't understand inflation and it's causes and they revert to foolish propaganda invented by Milton Freidman and his cohort. There is almost certainly not an economist under 40, in the US , who believes MxV = PxY..
He was wrong. Has nothing to do with Hitler.. Has everything to do with a math formula that shifted GDP from the poor and middle class to the rich...
I guess Nobody's stimulus check is still in the bank....cause EVERYONE ELSE's is gone
I had one lunatic tell me it was Obama's stimulus Checks (they were actually extended unemployment checks) that were causing todays inflation. You can't coach stupid.
Are you serious? It is 2022. The whole Trickle Down theory has not worked for 40yrs
The US Treasury has been "pumping" money into the system for 40yrs and inflation has been going down not up. The $600 stimulus checks sent out 2yrs ago are NOT causing inflation any more than Trumps stimulus checks sent out 3yrs ago caused inflation or Obama's extended unemployment checks from 2009 - 2012 caused inflation. More money was "Pumped" into the economy bailing out companies that did not need the money during the pandemic or bailing out Banks and share holders and their executive bonuses in 2009 yet we got NO INFLATION. In EVERY case the Treasury "pumped" out money. But for some reason we did not have inflation?
Why is that? (PS: I know you can't answer that question correctly. That is my point)
>> Are you serious? It is 2022. The whole Trickle Down theory has not worked for 40yrs
I never said anything about trickle down. Who are you addressing this to? Strawman 1.
>> The $600 stimulus checks sent out 2yrs ago are NOT causing inflation any more than Trumps stimulus checks sent out 3yrs ago caused inflation or Obama's extended unemployment checks from 2009 - 2012 caused inflation.
Again I never said they were. I specifically referred to the massive increase in
the money supply over a roughly two year period. I said nothing about $200 stimulus checks. That was something you made up. Strawman 2.
>> More money was "Pumped" into the economy bailing out companies that did not need the money during the pandemic or bailing out Banks and share holders and their executive bonuses in 2009 yet we got NO INFLATION.
Bailouts in 2009 were about preserving the valuation of already inflated assets to ensure the solvency of the global financial institutions who profited from them. Bernanke was afraid of deflation. Ever heard of the Bernanke doctrine? Printing to stop deflation uses the same mechanism of devaluation as printing causing inflation.
<<Bailouts in 2009 were about preserving the valuation of already inflated assets to ensure the solvency of the global financial institutions who profited from them. Bernanke was afraid of deflation. Ever heard of the Bernanke doctrine? Printing to stop deflation uses the same mechanism of devaluation as printing causing inflation.>>
How was 2009 different than 2020? In both cases the Federal Reserve bailed out corporate share holders and executive compensation. That is where the lions share of the deficits were spent. The actual banking bail out funds were literally paid back to the treasury at a profit.
In 2020 the US Treasury spent as much money bailing out business owners and their equity and income as was spent preserving banks share holderes and executives in 2009.
What was different this time? When you can answer that then you will have a much more precise view for what is the CAUSE of inflation this time and what POLICY should be enacted to address it.
<<I specifically referred to the massive increase in the money supply over a roughly two year period>> Nobody
1980 to 1990 saw the largest spike in M1 and people like you were saying it was going to cause inflation. It didn't. We had deflation
1990 to 2000 saw a massively larger spike in M1 and people like you were saying it was going to cause inflation. It didn't. We had deflation.
2000 to 2010 saw an even larger spike in in M1. Still no inflation, just deflation
2010 to 2020 (Before covid) say and even larger spike in M1. No inflation.
People like you have been WRONG about the correlation between money supply and inflation for 40yrs. Money supply growth keeps outpacing goods and services growth and yet we have had 40yrs of declining inflation and interest rates.
What is different this time?
I love you you know what "people like me" think based off of one or two comments. Everyone who disagrees with you thinks the same thing, amiright? It certainly says something about you. Also, I see you dishonestly use M1 instead of M2 for your talking points.
Since you know what people like me already think, why bother discussing anything? Bye.
Here is the cause of inflation from intellectually honest people on the right and left.
The only ones that ignore either view are politicians (Dems and GOP) in power today because if they deal with the truth the solution does not serve the donor class. So they cling to refuted formulas from the past.
https://www.chicagobooth.edu/review/capitalisnt-causes-effects-todays-inflation
https://markets.businessinsider.com/news/stocks/paul-krugman-federal-reserve-interest-rates-economy-inflation-recession-unemployment-2022-9#:~:text=Paul%20Krugman%20said%20the%20Federal,crushing%20economic%20growth%20and%20employment.
Nobody,
I don't know you personally. That is why i said people like you. I have been reading and hearing people that claim expansion of "Money Supply" is going to cause inflation for 40yrs. People like you have been WRONG for 40yrs
You can't answer the logical question, why is it different this time. That is why you have to stop discussing it. You need to cling to this story rather than deal with the truth. It's hardly a secrete. Most economists on the left and right are crystal clear on this.
But you run like a frightened child from the truth.. I get it. Nancy Pelosi and Mitch McConnell do as well..
During our brief exchange you constructed multiple strawmen, fired off entirely unprovoked personal insults, and used cherrypicked irrelevant data to fit your narrative. You bet I'm done. Let's just say I've made an assumption about people like you.
I hate talking in terms of "personal brand", but it's hard to avoid when someone's livelihood is largely tied up in independent journalism and writing.
Matt, this cartoonist is damaging your brand. You specialize in in-depth reporting that seeks to destroy the obviously self-serving head feints and deception that our corporate media wallows in.
This cartoon is shallow and reeks of the kind of economic understanding usually seen in 20 year old liberal arts majors.
Can confirm. I used to be a 20 year old poli sci major. Thankfully I work in vaccine manufacturing now.
There's too much text in this cartoon.
Less is more in political cartoons imo.
Weak and tired. This is played out.
The Federal Reserve Bank of the United States is the greatest driver of wealth inequality in the history of humanity.
Point your gaze in that direction, and let the cartoons fly.
This cartoon is arguing that it is corporate greed, something that is constant, that is responsible for current clusterfuck and not crazy policies by Brandon. Nah dawg.....
Well increasing prices isn't going to DECREASE profits now is it?
And the German stock market posted huge gains during the Weimar Republic.
Economists have been warning about this for 2yrs... Republicans are brainwashed to believe that inflation comes from deficits. They never seem to know that while deficits went UP for the last 40yrs interest rates and inflation went down for the last 40yrs.
The two are not LINKED. Full Stop.. that is a LIE pushed out there by Corporate Media any time the government spends money on anything other than the rich or corporations or defense.
When you finance the deficit with a printing press that is most certainly inflationary.
Burt,
No, actually financing deficits with the printing press are not 'certainly' inflationary. The US has been funding growing deficits with the printing press for 40yrs now and the whole time inflation and interest rates went down.
Do you know what they went down for 40yrs while printing money?
Burt is correct. Michael, you're ignoring offsetting effects. In the last 40 years, the improvement in technology was deflationary (e.g., flat screen TVs) because of cheap energy, cheap labor and low interest rates which made it easy for companies to invest. The government debased the currency which was inflationary. This means for instance that a 65" inch TV sold for $3,500 in 2005 was available for $500 in 2020 could have been available for $50 if the government had not debased the currency by a factor of 10. That's how the government got away with ~2% annual inflation while running record deficits for decades. The problem now is the total public debt is too high as a percentage of GPD and could collapse on its own with rising interest rates. I suggest you follow Lyn Alden (free podcasts, free YouTube, Twitter) who is a very articulate and knowledgeable financial and economic expert. She breaks it down neatly and provides good explanation.
David
The "offsetting effects" of technology is also know as productivity growth.
Productivity growth, in the US, over the last 40yrs is actually smaller than it was in the previous 40yrs yet inflation has gone down while the deficit went up.
So that theory does not work. If Lyn Alden gave it to you she is wrong. She is not even an economist, isn't she some crypto person? The cost of a TV going from $3,500 down to $500 was done on the back of decreased wages for labor. When a TV was $3,500 (say 2000) the lower 50% of American wage earners got 20% of GDP. By 2020 that same 50% of wage earners share of GDP was down to 12%. That is massive wage decreases. Oh, and not shockingly the top 1%, over that time period saw their share of GDP go from 10% up to 18%. And all along productivity GROWTH was declining relative to the time before 1980. So "technology" was not the cause for the drop in the cost of the TV. It was the decline in wages to working class Americans that funded that.
Between the 1980's and today interests rates have gone from a high of 14% in the 80's down to a low of 2% in 202 and today are at about 4% while the deficit as a % of GDP has gone UP from approx 30% of GDP in the 80's to a high of 130% of GDP in 2020. Today Debt as a % of GDP is actually lower than it was two year ago, yet inflation is higher. So higher deficits do not correlate with higher inflation.
This will get you started.
https://seekingalpha.com/article/4315361-federal-debt-is-not-threat-to-economy
But don't trust me.
You can look to the Current Chair of the Federal Reserve, Jay Powell, who validated that in his comments in June before Congress. Or Nobel Prize Winning economists like Paul Krugman and Joseph Stiglitz will also validate that high deficits do not correlate with higher deficts. Of course how the deficit money is spent can and will impact inflation.
If inflation is being caused by a shortage of Gas, like in the 70's, creating a deficit that increases the availability of gas, will reduce inflation not increase it. Conversely, creating a deficit to cut taxes to the rich when your currency is not the worlds preferred currency will crash your bond market and force interest rates up, as we saw in the (post Brexit) UK during the short and failed leadership of Liz Truss.
Most politicians and pundits won't state these truths out loud. It takes a long time for Law Makers to internalize these things. It took the Chicago School (Milton Friedman et al) from 1960 to 1980 to convince law makers that deficits cause inflation. Turns out they were wrong. Despite the fact that the majority of economists have seen the data showing US deficits do not correlate with inflation, it will take a long time to get rid of law makers (like Clinton, Obama, Bush an Trump) that grew up thinking deficits cause inflation.
You did notice that there were no law makers claiming that Trump unfunded Tax Cuts would cause inflation. Or that Bush's unfunded war in Iraq would cause inflation. Why is that?
Because the donor class was getting the benefit. The pundit class only claims deficits cause inflation when working people are getting money, like Bidens stimulus or the massive decline in work force participation that was pushing up wages for the working class or like when Obama extended unemployment. Only then did the pundit class claim Deficits were going to cause inflation. They were WRONG with Obama. And it never happened with Bush and Trump.
So why it it different this time?
I would suggest you listen to pod casts from economists like Luigi Zengalis (University of Chicago) or read Paul Krugmans NYT times articles. Or better yet start reading books written by actual economists. Joseph Stiglitz "Power People and Pofits" is a good start. I'd also recommend a book by Economic Historian Adam Tooze named Crashed.
Friedman was wrong. The Federal government has been ignoring his policy ideas since 2000 when we had the dot com crash... In 2000, 2008 and 2020 the Federal Government printed a ton of money and it stimulated the economy and prevented it from crashing and with out causing inflation. (and with lower productivity gains) And in those 20yrs of "deflation" has been a bigger problem than inflation. But that is another discussion.
What is this cartoon even trying to say? The two things are certainly related, though I expect not at all in the way the cartoonist is insinuating.