Thanks. Can you help clarify what they mean by soaking up access liquidity out of the system? I hope I said that right and used it in the roper context. Please excuse my ignorance. I'm still trying to figure it all out. What steps would they have to take to keep inflation from spiraling out of control if the economy picks up and with such a huge money supply. In other words, how would they reign it all in before it goes out into peoples hands? Thanks again.
I'd need the full context regarding 'soaking up excess liquidity' because you can see from the masses of QE liquidity is something they are trying to create. If you are having to create liquidity, you have a shortage of it to begin with.
We are in a depression which is a period of depressed GDP growth, a result due to a lack of inflation of the money supply. 2020 GDP -3% and in 2021 we will be in a global recession yet again due to the lockdowns. They are fighting off deflation at the moment but also preventing CPI inflation which is why the rich are having a banger of a year and the rest of us are getting crushed.
For simplicity's sake if you want higher GDP growth, you require higher currency devaluation which will result in higher CPI, higher wage growth and a devaluation of your existing debt (monetisation of debt).
This is what CPI looked like over the decades - note CPI is our daily basket of goods only, not property and other stuff.......
1913-1919 --> 9.8%
1920-1929 --> 0.38% (central banks limited currency devalution to decrease inflation)
1930-1939 --> -2.08% (great depression a result of central banks refusal to devalue currency)
1940-1949 --> 4.86%
1950-1959 --> 1.82%
1960-1969 --> 2.45%
1970-1979 --> 7.25% (gold std abandoned and monetary devaluation ramped to pay off existing debt and create a boom)
1980-1989 --> 5.82%
1990-1999 -->3.08%
2000-2009 --> 2.54%
2010-2019 --> 1.86%
2020 --> 1.2%
2021 target--> 2%
For simplicity's sake again, if in 2019 you spent $100/week on all your daily shit, after 2020 those same things cost you $101.2 and after 2021 it will cost you $103.22 Keeping in mind you will have different spending habits - less expensive takeaway and more cheaper supermarket/home food which will be accounted for in the CPI.
To all the people claiming to be drowning in CPI, sorry but that simply isn't happening. There is broad misunderstanding of CPI and inflation in general.