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How Much ‘Extra’ Cash Is Left Out There?
How much "extra" cash is out there?
That question is a fixture of the post-pandemic macro reality.
The policy response to the global health crisis entailed, in many cases, aggressive fiscal transfers enabled by monetary policy. Critics suggested the overt nature of that "partnership" was a recipe for inflation.
Monetarism (an endangered ideology) enjoyed something of a renaissance when inflation accelerated in 2021, but it was (and will forever remain) impossible to say how much of the blame
Oh, interesting. So global money velocity has trended down since the mid-1990s, and the periods when it rose (2004-2008 and 2021-present) are when global inflation surged (see FRED series “Inflation, consumer prices for the World” FPCPITOTLZGWLD).
https://fred.stlouisfed.org/graph/?g=1b8xL
But the same pattern is not obviously found using US M2/nominal GDP.
https://fred.stlouisfed.org/graph/?g=1baTs