字幕表 動画を再生する 英語字幕をプリント Central banks around the world have injected money into the economy at a record pace to try to fight a global recession triggered by the coronavirus pandemic. Just getting word from the Federal Reserve. Bombshell announcement from the Federal Reserve. It is an absolutely historic week both in the terms of the speed of Fed purchases and, of course, the magnitude. Since mid-March, the Federal Reserve's balance sheet has ballooned from 4 trillion dollars to around 7 trillion dollars, equal to about one third of the value of the entire American economy. A new CNBC survey showing that market participants expecting trillions more in stimulus from both the central bank and Congress. At the same time, governments have enacted record amounts of fiscal stimulus to boost economies stalled by the pandemic. The infusion of cash into the financial system has renewed concerns that inflation could surge. As Milton Friedman said, inflation is always and everywhere a monetary phenomenon. If you believe that, you look at the central bank balance sheets exploding right now and you say there's going to be inflation. Supply shocks have driven up prices for some goods over the past few months. Yet recent history suggests inflation is more likely to stay low for a long time as unemployment remains near record high levels and consumer spending is subdued. While this certainly is quite a lot of disruption to the supply side of the economy, that's likely to be dominated by the huge hit to aggregate demand. So how will trillions of dollars of economic stimulus affect the outlook for inflation? Inflation refers to an increase in the prices of goods or services over time. One well-known measure of inflation in the U.S. is called the Consumer Price Index, or CPI. The CPI is about the prices that we pay for services and goods and housing and rent. Economists say some inflation is healthy for the economy. When the economy's growing, more consumers and businesses are out spending money on goods and services. This increase in demand results in higher prices. Demand is an important factor in the outlook for inflation. Generally, when unemployment is high and consumer demand is weak, inflation is low. Another factor that affects inflation is commodity prices. If oil prices rise because there's a cut in production, gas prices might increase too. Consumer and business expectations about prices are another piece of the inflation puzzle. If a lot of people expect prices will rise in the future, they might spend more now, ultimately causing inflation. The level of actual inflation that we get will be pretty heavily influenced by the inflation rate that actors in the economies, households, businesses, consumers, workers, investors expect to prevail. Like many other central banks around the world, the Fed targets a 2 percent yearly inflation rate. At that rate, a cup of coffee that costs 2 dollars this year would cost 2 dollars and 4 cents next year, not quite enough to break the bank. Central banks adjust their policies normally by changing interest rates to try to get to that 2 percent inflation level. You definitely want to keep enough inflation so you can still have enough space to raise and lower Fed funds over the business side. Too much inflation isn't a good thing either. As inflation rises, the money that you hold today becomes less valuable tomorrow. At a 15 percent inflation rate, for example, your 2 dollar cup of coffee today costs 2 dollars and 30 cents next year. Think of how that would affect a bigger purchase like a car. A ten thousand dollar purchase today would cost eleven thousand five hundred dollars next year. When the inflation rate is very high, it is very difficult to make any calculation about saving. Inflation concerns for now are to the downside. The risks are to the downside, not to the upside. We see prices moving down. That's because in a lot of parts of the economy, people are cutting prices. Lockdown's have already depressed prices in the US as consumers stay home and remain cautious about spending money in an uncertain economy. The second biggest drop in headline inflation since 1947. Energy commodities down 20 percent, with a 20 percent decline in gasoline. Fuel oil down 15 percent. There have been pockets of inflation in some areas, like groceries as more people cook at home. Disruptions in global trade from the virus have also raised prices for goods like medical supplies. Still, these supply shocks haven't offset overall weak demand. If you're in the average person's seat, we're talking about, you know, grocery stores and that sort of thing. The idea that there's going to be an outbreak of inflation, you know, 4 percent, 5 percent, that is just not on the horizon. Many economists and policymakers expect wages will stay low as unemployment remains high. Meanwhile, people are saving instead of spending their cash out of fear the economy could get worse. To try to boost the economy, policymakers in Washington have pumped trillions of dollars into the financial system in recent months. Economic theory suggests all this money printing could create the risk of inflation. Economist Milton Friedman famously said that if there's too much money in the economy, chasing too few goods prices will rise. When inflation was surging in the 1980s, Fed Chairman Paul Volcker put Friedman's theory to the test, and it worked. Volcker slowed the growth of money going into the economy and raised interest rates to tame inflation. But economists say there's been a break in the link between money creation and inflation in recent years as the banking system has become more complex. The rise of the financial system and the sort of the diversification of the financial system is one of the reasons why sort of the Milton Friedman view of the world really is not as applicable, particularly in the United States, as it was in an earlier time. It's important to understand that when the central bank prints money today, most of it isn't in the form of physical dollar bills. Instead, the Fed creates electronic money. It uses that electronic cash to buy assets and lend to banks, injecting money into the banking system. To buy treasuries, for example, the Fed uses so-called primary dealers, a group of around two dozen big banks and brokerage firms that trade bonds. What happens when the Fed creates money? It strictly creates central bank reserves. Those are held by the banking system. The banks decide, you know what what they're willing to lend out into the economy. That means that even if the Fed is pumping a lot of money into banks like it is today, the money won't reach the hands of consumers until banks lend it out. It is true that money has been handed out directly to citizens as part of the federal government's coronavirus response, like the 1,200 dollar stimulus checks. This cash infusion still may not result in inflation. Most Americans needed the checks to make day to day payments to make up for lost income during the crisis. Not to go out and spend lavishly on other purchases. I think of them as more life preservers, trying to prevent the economy from getting into a deeper hole because of the Kovik crisis. And they don't represent stimulus yet. Recent history suggests that all the fiscal and monetary stimulus daring the pandemic is unlikely to increase prices for consumers when the Fed bought trillions of dollars of assets after the 2008 financial crisis, inflation never surged. After the Great Recession, there was a conviction that all the fiscal and monetary stimuli were going to result in huge inflation. As a matter of fact, a number investors, including some very famous hedge funds, went to gold. Well what happened? Big deficits, but inflation has come down. The experience of the last decade is that central bank balance sheet expansion certainly need not generate a period of excess inflation. And in fact, even with a big balance sheet to be hard to get the inflation that you want. There are limits to what history can teach us when it comes to understanding the economic situation right now. Even if the economic stimulus doesn't result in higher prices for consumers, many say that inflation is showing up in the prices of other assets like the stock market or the housing market. One of the most interesting questions that we have right now is the difference between the price inflation that you and I see at the grocery store or at the gas pump or when we're buying something. That's one measure of inflation. But another measure of inflation that is also very important is asset price inflation. In other words, what's happening to the stock market and what's happening to credit spreads? I think we're looking at a very significant increases in asset price inflation. Inflation expectations are another risk. People start thinking all of the money supply is increasing. Inflation is going to be higher. Then expected inflation becomes high. Then you start asking for increases in wages and prices. And these expectations become what we call self-fulfilling. In the long term, factors like globalization, technology and aging populations all play a role in consumer prices. A weaker U.S. dollar or a backlash against global supply chains, which have been disrupted during the pandemic, could create inflation risks. If you were to seal the borders and literally cut off any imports and then embark on this huge monetary and fiscal stimuli, yeah, they could they could create inflation. There's one more big risk to inflation, and it comes with nine zeros attached. Record high public debt. Trillions of dollars in economic stimulus during the pandemic have increased government debt at a rapid pace. In recent years, some economists have argued in favor of deficit spending to fund public investment. Though many debate what effect this could have on inflation. Because government debts are set in fixed dollar amounts, higher inflation makes it easier to pay off those debts. Some worry that politicians might put pressure on central banks to chase higher inflation to help finance the growing national debt. We need not worry too much about the size of the Fed's balance sheet. What we need to be focused on is whether the Fed will at the appropriate moment have both the judgment and the institutional independence to raise interest rates, even if that might conflict with some other interests, for instance, the interest of the government of today.