Why inflation is still reported low?
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Recently I heard from Richard Koo's video, that central banks have injected so much money to the banking system. There is enough reserves in the U.S. banking system to increase money supply 16 times. In other words, according to Richard Koo, the inflation should have been around 1600% over the last 10 years. However, as per the inflation reported by the federal reserve, it is still under 2%.
I understand that the asset prices have gone up in the last 10 years in terms of stock prices and housing prices. But why is inflation still low?
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This question came from our site for finance professionals and academics.
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Recently I heard from Richard Koo's video, that central banks have injected so much money to the banking system. There is enough reserves in the U.S. banking system to increase money supply 16 times. In other words, according to Richard Koo, the inflation should have been around 1600% over the last 10 years. However, as per the inflation reported by the federal reserve, it is still under 2%.
I understand that the asset prices have gone up in the last 10 years in terms of stock prices and housing prices. But why is inflation still low?
untagged
$endgroup$
migrated from quant.stackexchange.com 2 hours ago
This question came from our site for finance professionals and academics.
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I'm voting to close this question as off-topic because it seems better suited for economics SE.
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– LocalVolatility
3 hours ago
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$begingroup$
Recently I heard from Richard Koo's video, that central banks have injected so much money to the banking system. There is enough reserves in the U.S. banking system to increase money supply 16 times. In other words, according to Richard Koo, the inflation should have been around 1600% over the last 10 years. However, as per the inflation reported by the federal reserve, it is still under 2%.
I understand that the asset prices have gone up in the last 10 years in terms of stock prices and housing prices. But why is inflation still low?
untagged
$endgroup$
Recently I heard from Richard Koo's video, that central banks have injected so much money to the banking system. There is enough reserves in the U.S. banking system to increase money supply 16 times. In other words, according to Richard Koo, the inflation should have been around 1600% over the last 10 years. However, as per the inflation reported by the federal reserve, it is still under 2%.
I understand that the asset prices have gone up in the last 10 years in terms of stock prices and housing prices. But why is inflation still low?
untagged
untagged
asked 4 hours ago
nsivakr
migrated from quant.stackexchange.com 2 hours ago
This question came from our site for finance professionals and academics.
migrated from quant.stackexchange.com 2 hours ago
This question came from our site for finance professionals and academics.
$begingroup$
I'm voting to close this question as off-topic because it seems better suited for economics SE.
$endgroup$
– LocalVolatility
3 hours ago
add a comment |
$begingroup$
I'm voting to close this question as off-topic because it seems better suited for economics SE.
$endgroup$
– LocalVolatility
3 hours ago
$begingroup$
I'm voting to close this question as off-topic because it seems better suited for economics SE.
$endgroup$
– LocalVolatility
3 hours ago
$begingroup$
I'm voting to close this question as off-topic because it seems better suited for economics SE.
$endgroup$
– LocalVolatility
3 hours ago
add a comment |
1 Answer
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There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into the general economy in the form of goods and services, then you would have seen higher inflation.
answered 1 hour ago
dm63dm63
1995
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1 Answer
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1 Answer
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$begingroup$
There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into the general economy in the form of goods and services, then you would have seen higher inflation.
answered 1 hour ago
dm63dm63
1995
$endgroup$
add a comment |
$begingroup$
There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into the general economy in the form of goods and services, then you would have seen higher inflation.
answered 1 hour ago
dm63dm63
1995
$endgroup$
add a comment |
$begingroup$
There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into the general economy in the form of goods and services, then you would have seen higher inflation.
answered 1 hour ago
dm63dm63
1995
$endgroup$
There's a pretty simple answer to that. The money injected into the banking system does not acquire any velocity- it just gets redeposited at the Fed. If they had spent the same amount of money into the general economy in the form of goods and services, then you would have seen higher inflation.
answered 1 hour ago
dm63dm63
1995
answered 1 hour ago
dm63dm63
1995
answered 1 hour ago
dm63dm63
1995
answered 1 hour ago
dm63dm63
1995
1995
add a comment |
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$begingroup$
I'm voting to close this question as off-topic because it seems better suited for economics SE.
$endgroup$
– LocalVolatility
3 hours ago