<story><title>Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply</title><url>https://m1chart.com/?ref=hn</url></story><parent_chain><item><author>nabla9</author><text>This is very confused &amp;quot;Internet economics&amp;quot; take on the issue.&lt;p&gt;Money in band account that is not used is just a number. As Fed puts more money into the economy, the velocity of money decreases as the money is used less. &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&lt;/a&gt;&lt;p&gt;Federal Reserve can increase and decrease effective money supply as it pleases. Money supply does not determine the prices as we have learned over last two decades.&lt;p&gt;---&lt;p&gt;Edit: some real issues affecting stock price valuation.&lt;p&gt;(1) Global savings glut &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Global_saving_glut&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Global_saving_glut&lt;/a&gt;&lt;p&gt;(2) low &lt;i&gt;real&lt;/i&gt; interest rates, typically measured as yields on inflation-indexed government bonds &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;DFII10&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;DFII10&lt;/a&gt;  If real interest rate is 10%, only this years earnings matter. If the interest rate is very low or negative, like they are now, time horizons grow accordingly.&lt;p&gt;---&lt;p&gt;Edit2. &amp;quot;real&amp;quot; things in economy are things like real output.&lt;p&gt;The level of goods and services produced  depends  on the factors of production. How much capital, labor, level of technology  rather than the amount of currency circulating. This means that the money supply can&amp;#x27;t affect the real level of output in the long run.</text></item></parent_chain><comment><author>swixi</author><text>&amp;gt; Money in band account that is not used is just a number. As Fed puts more money into the economy, the velocity of money decreases as the money is used less. &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&lt;/a&gt;&lt;p&gt;A couple questions because I don&amp;#x27;t understand this very well.&lt;p&gt;Do we have an idea how much is actually sitting in a bank account vs being put into the market?&lt;p&gt;And, if people put money into stocks and park it there, wouldn&amp;#x27;t the velocity still be much lower than it usually is (when people are spending more on goods and services)? My interpretation of what&amp;#x27;s being shown here is that a large amount of newly &amp;quot;printed&amp;quot; money has gone into the stock market, thereby inflating asset prices. I don&amp;#x27;t see how low velocity refutes that.</text></comment>
<story><title>Show HN: M1 Chart – The stock market adjusted for the US-dollar money supply</title><url>https://m1chart.com/?ref=hn</url></story><parent_chain><item><author>nabla9</author><text>This is very confused &amp;quot;Internet economics&amp;quot; take on the issue.&lt;p&gt;Money in band account that is not used is just a number. As Fed puts more money into the economy, the velocity of money decreases as the money is used less. &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;M2V&lt;/a&gt;&lt;p&gt;Federal Reserve can increase and decrease effective money supply as it pleases. Money supply does not determine the prices as we have learned over last two decades.&lt;p&gt;---&lt;p&gt;Edit: some real issues affecting stock price valuation.&lt;p&gt;(1) Global savings glut &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Global_saving_glut&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;en.wikipedia.org&amp;#x2F;wiki&amp;#x2F;Global_saving_glut&lt;/a&gt;&lt;p&gt;(2) low &lt;i&gt;real&lt;/i&gt; interest rates, typically measured as yields on inflation-indexed government bonds &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;DFII10&quot; rel=&quot;nofollow&quot;&gt;https:&amp;#x2F;&amp;#x2F;fred.stlouisfed.org&amp;#x2F;series&amp;#x2F;DFII10&lt;/a&gt;  If real interest rate is 10%, only this years earnings matter. If the interest rate is very low or negative, like they are now, time horizons grow accordingly.&lt;p&gt;---&lt;p&gt;Edit2. &amp;quot;real&amp;quot; things in economy are things like real output.&lt;p&gt;The level of goods and services produced  depends  on the factors of production. How much capital, labor, level of technology  rather than the amount of currency circulating. This means that the money supply can&amp;#x27;t affect the real level of output in the long run.</text></item></parent_chain><comment><author>JMTQp8lwXL</author><text>&amp;gt; Money supply does not determine the prices as we have learned over last two decades.&lt;p&gt;I don&amp;#x27;t think we can just accept this as fact, based on two decades evidence. The Phillips curve held for much longer for two decades, until it didn&amp;#x27;t. 2 decades of verified observation cannot be extrapolated into an infinite future.</text></comment>