you're missing the investor preferences bit. You could print $7T or whatever crazy amount Sam Altman wants, and if everyone puts that money under their mattress instead of stocks or spending, there will be no observable effect on the real or financial economy. In short, the transmission mechanism of money creation to real effects is laggy and and somewhat unpredictable. e.g. why NVDA and not gold?
> you're missing the investor preferences bit. You could print $7T or whatever crazy amount Sam Altman wants, and if everyone puts that money under their mattress instead of stocks or spending, there will be no observable effect on the real or financial economy.
If you go through my posting history you'll see I've more than once mentioned that velocity is much more important than simple quantity.
A good analogy from Cullen Roche that I often use:
> But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy.
