Inflation was the concern at the time.
"Not in the short-term" but over the long-run was the phrase
9 months later & inflation is lower than when the pandemic started because velocity collapsed
2)
M1 money supply is rising at nearly 70% year over year
What is going on and does this mean inflation is coming?
Shorter Answer: No
Longer Answer: Not from the monetary channel
1)
Inflation was the concern at the time.
"Not in the short-term" but over the long-run was the phrase
9 months later & inflation is lower than when the pandemic started because velocity collapsed
2)
https://t.co/IOjiOnURxi
3)
Goods inflation (manufacturing upturn)
— Eric Basmajian (@EPBResearch) December 7, 2020
vs.
Services disinflation (social distance rules / changing consumer behavior). pic.twitter.com/mXEoI7OvEL
Right now, only condition #1 is satisfied which is why inflation is declining with record money growth.
4)
5)
Charted below we can see demand deposits are growing over 100% year over year.
6)
7)
To the extent the money is used to pay down debt, or used for basic needs like clothing, food & shelter, then M1 velocity will take another leg lower, offsetting inflation
8)
Using government debt to drive resources (away from investment) and towards consumption will not result in the inflationary increase many expect.
9)
In high-debt societies, the inflation rate is highly correlated to real GDP growth.
10)
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So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
If everyone was holding bitcoin on the old x86 in their parents basement, we would be finding a price bottom. The problem is the risk is all pooled at a few brokerages and a network of rotten exchanges with counter party risk that makes AIG circa 2008 look like a good credit.
— Greg Wester (@gwestr) November 25, 2018
The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.
This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.
The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."
This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
