[Rich Toscano]

[quote=CA renter] This is why I hate asset price inflation. It doesn’t affect wages or payments based on CPI, it only makes the wealty even wealthier.
[/quote]

I would also add that it causes misallocations of capital (eg, the production of vast tracts of Riverside housing as a result of overpriced housing, to name one in a long line of examples). This is a huge negative for the productivity and long-term prosperity of the economy.

[Rich Toscano]

[quote=CA renter] This is why I hate asset price inflation. It doesn’t affect wages or payments based on CPI, it only makes the wealty even wealthier.
[/quote]

I would also add that it causes misallocations of capital (eg, the production of vast tracts of Riverside housing as a result of overpriced housing, to name one in a long line of examples). This is a huge negative for the productivity and long-term prosperity of the economy.

[Rich Toscano]

[quote=CA renter] This is why I hate asset price inflation. It doesn’t affect wages or payments based on CPI, it only makes the wealty even wealthier.
[/quote]

I would also add that it causes misallocations of capital (eg, the production of vast tracts of Riverside housing as a result of overpriced housing, to name one in a long line of examples). This is a huge negative for the productivity and long-term prosperity of the economy.

[Rich Toscano]

[quote=CA renter] This is why I hate asset price inflation. It doesn’t affect wages or payments based on CPI, it only makes the wealty even wealthier.
[/quote]

I would also add that it causes misallocations of capital (eg, the production of vast tracts of Riverside housing as a result of overpriced housing, to name one in a long line of examples). This is a huge negative for the productivity and long-term prosperity of the economy.

[Rich Toscano]

Arraya’s chart of the liquidity trap is a good illustration of monetary velocity (or demand for cash balances if you are utilizing the Austrian framework). There’s no question that it is relevant, and that velocity is low/demand for cash balances is high — this is a key factor in helping to keep consumer price levels from rising.

Velocity is also a topic I covered in my article so I won’t rehash it here… but just to clarify so that things don’t become further confused, the discussion up til now has been about the amount of money in the economy. The amount of money is an important concept, and the velocity at which it is spent is also important — but they are two different topics. (Arraya I am not saying that you are conflating the topics, I just want to clarify the distinction in the attempts to keep the waters from getting even more muddied).

[Rich Toscano]

Arraya’s chart of the liquidity trap is a good illustration of monetary velocity (or demand for cash balances if you are utilizing the Austrian framework). There’s no question that it is relevant, and that velocity is low/demand for cash balances is high — this is a key factor in helping to keep consumer price levels from rising.

Velocity is also a topic I covered in my article so I won’t rehash it here… but just to clarify so that things don’t become further confused, the discussion up til now has been about the amount of money in the economy. The amount of money is an important concept, and the velocity at which it is spent is also important — but they are two different topics. (Arraya I am not saying that you are conflating the topics, I just want to clarify the distinction in the attempts to keep the waters from getting even more muddied).

[Rich Toscano]

Arraya’s chart of the liquidity trap is a good illustration of monetary velocity (or demand for cash balances if you are utilizing the Austrian framework). There’s no question that it is relevant, and that velocity is low/demand for cash balances is high — this is a key factor in helping to keep consumer price levels from rising.

Velocity is also a topic I covered in my article so I won’t rehash it here… but just to clarify so that things don’t become further confused, the discussion up til now has been about the amount of money in the economy. The amount of money is an important concept, and the velocity at which it is spent is also important — but they are two different topics. (Arraya I am not saying that you are conflating the topics, I just want to clarify the distinction in the attempts to keep the waters from getting even more muddied).

[Rich Toscano]

Arraya’s chart of the liquidity trap is a good illustration of monetary velocity (or demand for cash balances if you are utilizing the Austrian framework). There’s no question that it is relevant, and that velocity is low/demand for cash balances is high — this is a key factor in helping to keep consumer price levels from rising.

Velocity is also a topic I covered in my article so I won’t rehash it here… but just to clarify so that things don’t become further confused, the discussion up til now has been about the amount of money in the economy. The amount of money is an important concept, and the velocity at which it is spent is also important — but they are two different topics. (Arraya I am not saying that you are conflating the topics, I just want to clarify the distinction in the attempts to keep the waters from getting even more muddied).

[Rich Toscano]

Arraya’s chart of the liquidity trap is a good illustration of monetary velocity (or demand for cash balances if you are utilizing the Austrian framework). There’s no question that it is relevant, and that velocity is low/demand for cash balances is high — this is a key factor in helping to keep consumer price levels from rising.

Velocity is also a topic I covered in my article so I won’t rehash it here… but just to clarify so that things don’t become further confused, the discussion up til now has been about the amount of money in the economy. The amount of money is an important concept, and the velocity at which it is spent is also important — but they are two different topics. (Arraya I am not saying that you are conflating the topics, I just want to clarify the distinction in the attempts to keep the waters from getting even more muddied).

[Rich Toscano]

[quote=Nor-LA-SD-guy]Unless they start sending everybody checks, they don’t seem to have a way to get the money into circulation, without circulation, is the money supply really being increased?[/quote]

Personal incomes have risen, and the amount of money in circulation has increased, per the two graphs I posted in earlier comments… so I don’t understand the question.

[Rich Toscano]

[quote=Nor-LA-SD-guy]Unless they start sending everybody checks, they don’t seem to have a way to get the money into circulation, without circulation, is the money supply really being increased?[/quote]

Personal incomes have risen, and the amount of money in circulation has increased, per the two graphs I posted in earlier comments… so I don’t understand the question.

[Rich Toscano]

[quote=Nor-LA-SD-guy]Unless they start sending everybody checks, they don’t seem to have a way to get the money into circulation, without circulation, is the money supply really being increased?[/quote]

Personal incomes have risen, and the amount of money in circulation has increased, per the two graphs I posted in earlier comments… so I don’t understand the question.

[Rich Toscano]

[quote=Nor-LA-SD-guy]Unless they start sending everybody checks, they don’t seem to have a way to get the money into circulation, without circulation, is the money supply really being increased?[/quote]

Personal incomes have risen, and the amount of money in circulation has increased, per the two graphs I posted in earlier comments… so I don’t understand the question.

[Rich Toscano]

[quote=Nor-LA-SD-guy]Unless they start sending everybody checks, they don’t seem to have a way to get the money into circulation, without circulation, is the money supply really being increased?[/quote]

Personal incomes have risen, and the amount of money in circulation has increased, per the two graphs I posted in earlier comments… so I don’t understand the question.

[Rich Toscano]

[quote=jpinpb]Okay. I’m trying to follow along, but I’m still grappling w/understanding this. The only thing I keep coming back to is the houses, “asset” has gone down in value. That is fine if you just hold, don’t sell, etc. The money isn’t *destroyed*.

The reality is that people extracted money/equity and went on spending binges. They are not doing that now. Okay. To a lesser degree, people are living for free for up to 2 years, so they still are able to spend somewhat. Things didn’t come to a crashing, grinding halt. Nevertheless, the money being spent and circulated is considerably less.

Yes, the government is printing money. Indirectly this has also allowed people to live for free for 2 years, IMO, and hence money continues to be spent.[/quote]

Sounds like you understand it just fine… the only thing is there is more to the economy than home equity loans, so to the extent that home equity loans are no longer contributing to monetary growth/spending, there are other things that can.

[Author]

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