Economics Thread
- Thread starter sturg33
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sturg33
I
The market is anticipating further M2 expansion thanks to the BBB, as well as reduced interest rates that Trump is begging for
Further M2 expansion + reduced interest rates = rising asset prices + inflation
Too bad for the poor
If the past decade or so has taught me anything, it’s that the stock market has in fact proven to be actively unreliable in this respect and that the market has become untethered from the health of the economy as it pertains to how it’s working for most Americans in a way that our leaders have failed to acknowledge. There are so many mechanisms that exist to make the line go up that neither fuel job creation or economic opportunity, and I don’t actually know what can be done to resolve that discrepancy. That’s not to say it’s meaningless and should be ignored, but I can’t get past the existential dread I feel when I see record highs corresponding with such a poor economic environment.
Indeed. But it turns out “too bad for the poor” has historically not worked out in the long run for the power structures in charge.
Odd since core inflation metrics are showing cooling despite the 'anticipation' of more printing and tariffs.
Usually these things front run wouldn't you say?
Disregarding the obvious other flaws in this argument for a second and taking it briefly at face value, it does in fact appear that taking in a bunch more tax revenue from the citizens than you anticipated when you did the federal budget is beneficial for balancing said budget.
sturg33
I
Can you explain who and how?
Flawed premise
sturg33
I
inflation isn't "anticipation" it's a consequence of inflating the money supply
tariffs also are a tax. and costs are in fact rising on highly tariffed goods
you spent 4 years agreeing that cpi is a horribly misleading statistic that underscores the true inflation... now you will use it as gospel. even so, CPI is still HIGHER than the horrible elevated days of the Biden admin
chop2chip
Well-known member
Calculating an exact correlation rate between M2 money supply and asset prices requires specific data sets (e.g., M2 growth rates and asset price indices like the S&P 500, Case-Shiller Home Price Index, or commodity indices) over a defined period, which I can’t compute directly without access to real-time statistical tools. However, I can provide an informed estimate based on historical studies and economic analyses.
Studies from the Federal Reserve and academic research (e.g., papers from the 2000s and post-2020 analyses) suggest the correlation coefficient between M2 growth and asset prices typically ranges from **0.4 to 0.8** (moderate to strong positive correlation) depending on the asset class, time frame, and economic conditions. For instance:
- **Stocks (e.g., S&P 500)**: Correlations often hover around **0.5–0.7** during periods of monetary expansion (e.g., 2009–2015 or 2020–2022), as liquidity fuels equity markets. Data from the St. Louis Fed shows M2 growth and S&P 500 returns aligned closely post-2008, with a correlation of ~0.65 in some models.
- **Real Estate**: Housing prices tend to show a slightly weaker correlation (~0.4–0.6) due to local market factors, but studies post-2020 stimulus noted stronger links (~0.6–0.75) as low rates and high M2 drove demand.
- **Commodities**: Correlations vary widely (0.3–0.8), with stronger links during inflationary periods when M2 growth signals rising prices for goods like oil or gold.
These figures are rough, as correlations fluctuate with lags (money supply affects assets with delays), interest rates, and external shocks (e.g., recessions or policy shifts). For example, the correlation weakened in the 1990s in Japan due to deflation, dropping below 0.3 for some assets.
If you want a more precise correlation for a specific asset (e.g., stocks, housing) or time period, I can try to search for recent studies or data on X or the web to narrow it down. Let me know your preference!
Nice try, Grok is a woke liar now.