/biz/ - Business & Finance

>>13467932
so 'traditional' inflation that you learn about in a basic macroeconics class does mean that.
if there is more money in circulation (called the 'money supply'), but the same amount of resources, each unit of currency is worth less, so it takes more of it to buy the same amount of assets.

The federal reserve has a mandate from congress to keep money supply and asset prices stable, while keeping unemployment low.
But they realized a trick to get around this: if they print money and directly buy equities and other financial instruments, the money doesn't get out into the pedestrian money supply.
In this way, 'they' can increase the price of things like the S&P, through a quasi-inflation (an inflationary process), but the price of a loaf of bread doesn't increase as much.

does that kind of make sense? the money directly goes into financial assets, not 'real' assets. So it's a targeted inflation, to try and keep the financial system from collapsing, to try and keep pensions and municipalities afloat, etc.
No one knows the long term consequences, if it can be stopped or normalized, etc.