It describes a very sharp increase in created money. The poster of the linked tweet is implying this is unique and we will see negative economic effects (like inflation) because of it.
Parent to that tweet is arguing we have not seen those effects despite past federal reserve action and so there is no worry.
The wider context to this conversation is that some people [who?] believe federal reserve policy is flawed and supported by systemic bias in the reporting of economic indicators like GDP.
It's not created money. We didn't just print this money. The money is printed on collateral, that is private industry traded assets for US dollars.
This graph also completely ignores that the US dollar is the de facto reserve currency of the world, so dividing dollars by US population is fairly meaningless in 2021.
Yes, don't worry guys. The Federal Reserve has got you covered. And if things get too expensive, you can always just ask for a raise, amirite! :)
Anyway, here's a cash crop chart for corn that has more than doubled in price since last year. Once the cost of making finished products with these crops increase, you can be sure that shop prices will also reflect it. Some of these charts are even growing exponentially.
If the comparison is with 2008, the answer is that the "money" was created on different sides of the balance sheet for different purposes. (We all remember that banks are effectively statistically multiplexing asset cash against liability deposits, nu?)
2008 the Fed printed $2 trillion asset cash(M0) and used it to buy bad debt off the banks books, and put the debt in a runoff fund. No discernible impact on M2. (well, it stopped it imploding).
2020 Fed prints ~$4 trillion of liability deposits, and hands it out to all and sundry to pay their rents, and support the stock market.
M2 goes vertical. Which it has never done for the US in the last 100 odd years. So this time it will actually be different.
There is no one definition of "money". M0, M1, M2, M3, MZM are various metrics which have been proposed over time for trying to track the supply of USD all with varying definitions. M2 is frequently used as the simplest and best general case proxy for "how much USD is out in circulation" in a way that tracks credit + currency.
So saying the M2 is high relative to population means that we have been "printing money" (increasing the USD money supply) at a high rate relative to population.
M2 is a measure of the money supply. There are different measures of the money supply, which roughly speaking are M0 (cash), M1 (M0+current accounts), M2 (M1+savings accounts) and M3 (M2+money market instruments). The fact that they have divided M2 by the population seems a little strange, but basically the graphic shows the amount of "money" (cash+current accounts) per person over a time period in the US.
R0b0t1|4 years ago
Parent to that tweet is arguing we have not seen those effects despite past federal reserve action and so there is no worry.
The wider context to this conversation is that some people [who?] believe federal reserve policy is flawed and supported by systemic bias in the reporting of economic indicators like GDP.
dlp211|4 years ago
This graph also completely ignores that the US dollar is the de facto reserve currency of the world, so dividing dollars by US population is fairly meaningless in 2021.
kebman|4 years ago
Anyway, here's a cash crop chart for corn that has more than doubled in price since last year. Once the cost of making finished products with these crops increase, you can be sure that shop prices will also reflect it. Some of these charts are even growing exponentially.
^1: https://www.barchart.com/futures/quotes/ZCY00/interactive-ch...
neffy|4 years ago
2008 the Fed printed $2 trillion asset cash(M0) and used it to buy bad debt off the banks books, and put the debt in a runoff fund. No discernible impact on M2. (well, it stopped it imploding).
2020 Fed prints ~$4 trillion of liability deposits, and hands it out to all and sundry to pay their rents, and support the stock market.
M2 goes vertical. Which it has never done for the US in the last 100 odd years. So this time it will actually be different.
anm89|4 years ago
So saying the M2 is high relative to population means that we have been "printing money" (increasing the USD money supply) at a high rate relative to population.
lottin|4 years ago
SigmundA|4 years ago