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SG Markets
Source: insight.sgmarkets.com
Article summary:
1. Monetarists, who accurately predicted the current inflation take-off, have been pushed to the edge of the economics world and ignored by central bankers who no longer look at money supply.
2. The current shocking decline in the money supply is being ignored, which could prove to be a mistake of the highest order as 'higher for longer' may cause a surprise economic and financial collapse.
3. US M2 is falling at its fastest rate since The Great Depression, and if monetarists are right, economic growth and inflation may soon collapse as central bankers make yet another huge policy error.
Article analysis:
The article discusses the decline in money supply and its potential impact on the economy, arguing that central bankers have ignored the warnings of monetarists. The author suggests that the current inflation take-off was accurately predicted by monetarists, but their predictions were ignored. The article also highlights the recent BIS paper that looks at the link between money supply and high inflation rates.
While the article raises some valid points about the potential risks of declining money supply, it is important to note that it presents a one-sided view and ignores other factors that may be contributing to inflation. For example, supply chain disruptions caused by the pandemic and increased demand for goods and services as economies reopen could also be driving up prices.
Additionally, while the author argues that central bankers are primarily responsible for the current situation, it is important to consider the role of fiscal policy in addressing economic challenges. Monetary policy alone may not be sufficient to address all economic issues.
The article also makes unsupported claims about a potential economic collapse without providing evidence or exploring counterarguments. It is important to consider multiple perspectives and potential outcomes when discussing complex economic issues.
Overall, while the article raises some valid concerns about declining money supply, it presents a biased view and ignores other factors contributing to inflation. It is important to consider multiple perspectives and evidence when analyzing complex economic issues.
Topics for further research:
Factors contributing to inflation beyond money supply
Role of fiscal policy in addressing economic challenges
Supply chain disruptions and their impact on prices
Increased demand for goods and services post-pandemic
Multiple perspectives on potential economic outcomes
Evidence-based analysis of complex economic issues