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3) But, really, it depends on what you hold constant. I.e. if you rename "cents" to "dollars" and "dollars" to "100xdollars", then x goes up 100x, as does y; things "inflated" 100x, but everyone has just as much bread as before.

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Mar 18

5) Why? Well, let's start with a case where printing money doesn't do _anything_, and then find the differences. Let's say that the gov't prints $0.50 for each $1 that exists, and airdrops those dollars pro-rata on everyone; so if you had $6 before, you have $9 now.

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4) So what *did* happen? Well, roughly speaking, over the past few years: x: up 40% (twitter.com/SBF_FTX/status) y: up 15% So... does the world have 25% more bread?

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Mar 18

4) Anyway: over the past decade, western central banks have increased monetary supply. A lot. US: Change in $Trillions M2 Debt M2/yearDebt/year 1960-20087 9 0.10.2 2008-20207 14 0.61.2 2020-20227 7 3.53.5

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5) Not really. In fact, the world probably has ~5% *less* bread: a) COVID --> supply chain issues --> harder to ship bread b) war in Ukraine --> literally lighting bread on fire So if the world has 40% more $, and 5% less bread, why has the price of bread only increased 15%?

6) Well, a fuller explanation: x (total $): +40% y (price of bread): +15% amount of bread: -5% *median* $: +5%

7) Much of the $ increase went to the rich, who can only consume so much bread. (twitter.com/SBF_FTX/status) So much of the increase in x didn't lead to an increase in y. But even $ to the rich lead to higher demand for e.g. energy, which in turn leads to more expensive bread.

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Mar 18

24) And, the thing is--what drives CPI? Well, CPI is, basically, bread. Elon Musk is worth roughly one million times as much as the median American. @elonmusk does not eat one million loaves of bread per day. So CPI tracks the median American more so than the average one.

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8) So really we have a few effects superimposed on each other (all estimates!) a) burn 5% of bread due to war and COVID; +5% inflation. This is bad inflation! b) print 5% money for everyone; +5% inflation. This is fine; inflation is just the flipside of having more money.

9) c) print +17.5% money, which goes to the rich; they spend on $SPY and $BTC and stuff. No inflation from this. d) print another +17.5% money, which goes to the rich; they spent on energy and stuff, which makes bread more expensive; +5% inflation. This is "bad" inflation.

10) You can't increase monetary supply and expect that to be free. But by the same token, when inflation follows, don't forget that you still have more $! Stock splits aren't free money; they *also* aren't pure dilution. They're two sides of the same coin, perfectly balanced.

11) Except sometimes they're not perfectly balanced. In the end, if you want to know how good things are, look at the actual goods we get in the end; do we have more or less of them, and how are they distributed? COVID sucked. War in Ukraine sucks. So we have less stuff.

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