Comments by "JP 72" (@739jep) on "Jamie Dimon: The Economic Hurricane and Stock Market Crash of 2022 (Quantitative Tightening Begins)" video.

  1. Current inflation is most likely fiscal/ supply related. The fed doesn’t print money , it prints reserves which can only be used by banks. It doesn’t directly go to the hands of consumers. Commercial banks are the institutions that create money. For a long time now , commercial bank lending (which is the true money printing mechanism) has been uncorrelated with changes in bank reserves. Central banks have been admitted they can no longer control lending via creation of reserves. Put another way , the fed does not control the quantity of money , it can only control the cost. Commercial banks are thus only constrained by demand for loans and their own profit motive (not by reserve requirements). Changing to the cost of money may impact demand for loans but it is certainly not the only factor. I understand that hasnt always been the case , but it has been this way for a while now ever since banks started holding large amounts of excess reserves. Even if you were to grant that the fed has control of the money supply , there’s no clear link between money supply and inflation. Just look at Japan who has exploded their money supply over the last few decades and has struggled with deflation. This is monetarist theory that has been largely debunked in economics for a long time now , it just doesn’t work empirically. It is a persistent myth though , and seems to be mostly ideologically driven , as it’s not driven by data. It is true that QE was largely ineffective. But not because it causes inflation, it was ineffective precisely because it was unable to cause inflation and economic growth. Now when governments keep issuing bonds and central banks keeping buying them, this can be inflationary. But this is largely the responsibility of governments. If govt spending/debt grows in relation to future expected surpluses this can be inflationary. The danger here is that monetary policy may not be as effective as we hope it to be , at least not without the cooperation of fiscal policy. If monetary policy tightens too much , it could make the govt less likely to honor its debts , it could create more supply chain pressure or it could even stunt production of goods and services - all of which could be inflationary. If certain inflation pressures reverse and rates are too high we may risk entering a deflationary spiral. The narrative of ‘feds money printer go brrr’ =‘ inflation is an outdated economic theory that was largely driven by political ideologies in the mid 20th century. It should be abandoned. Inflation is far more complicated than that.
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