Just wanted to add some data to the discussion about the recent energy and general price inflation.

This is not something I see discussed or generally known about by many people ,which its a bit shocking considering but I think is important if the current situation is going to be properly understood and put in context.

The amount of money that has printed by most countries in the last 3 years is absolutly phenomoinal. Priniting presses went into overdrive to keep economies afloat during the C19 lock downs. The massive price inflation we are now experiencing is a direct result. Prices have not increase, money has lost value directly proportional to the amount that is diluted by the digital printing presses.

US was by far the biggest printer, followed by China, the EU , UK.
We are now suffering the results.



Below graphs are for M2 money supply.

The UK....

EU money supply:

And to really put things in perspective, this graph of US money printing going back 80 years. Red line is inflation, gray line is money supply/printing, which skyrocketed in 2020:

Posted By: WillInAberdeenSo is that the end of the energy price crisis, or just a lull?

Not so much of a lull, more a gust, methinks. The graph you show gives day ahead prices. Spot prices have a similar structure but don't show the exceptionally low price at the end. And if you look at a five year graph instead of a one year graph, you can see that the whole of the latest year is way above historical rates, so things are definitely not normal. Prices recently have been influenced by the extremely windy weather we've been experiencing, and will no doubt go back up somewhat when the wind eases.

Energy prices started spiking massivley back in Sep 2021, long before the war in Ukraine.

Posted By: WillInAberdeenThat graph seems to be missing the most recent period?

The latest reading on the graph I showed is 14 Nov, whilst that on the one you put up is 7 Nov so I think you're misunderstanding.

Need to stop printing vast amounts of money, causing price inflation

Its interesting that EU energy consumption has has not grown since 1990.

So it seems from the Autumn Statement that renewable and nuclear generators are still allowed to charge over-inflated electricity prices, but now the Treasury will take a slice of their windfall profits in tax. Ironically, the Treasury will then pay out that money (and more) to subsidise the electricity prices for consumers, so further pumping up the windfall profits, in a circular payment scheme. Some funny tricks happening here, can't work out what/why!

It would be better if the renewable and nuclear prices were just reduced, to reflect their underlying costs which are not going up. IE renewables prices should be decoupled from the market price, which is mostly driven by the fluctuating cost of gas-fired generation, as we discussed a few pages ago.



On that, the continuing fall in wholesale electricity price in November seems to be driven by the ongoing fall in wholesale gas prices, down now from the panic pricing situation over the summer.

The forward price that companies pay for gas for next January delivery, is very much less now than if they had pre-purchased their gas in August for next January delivery (= hedged). Unfortunately, that's exactly what OFGEM required all the energy retailers to do (except it seems for Bulb) and so the retail price next January will remain very high, due to those unfortunate hedge pre-purchases. Someone is making a lot of money out of that off the backs of consumers, again it's not clear who!

The US printed 13 Trillion during the covid lockdowns.Increased money supply by 35 percent!!!

https://www.nasdaq.com/articles/money-printing-and-inflation%3A-covid-cryptocurrencies-and-more
Nov 16, 2021. Before the energy/gas "crisis"

" All-in money printing totaled $13 trillion: $5.2 for COVID + $4.5 for quantitative easing + $3 for infrastructure. Mountains of money cause inflation


All-in spending was approaching $13 trillion as of mid-2021. That’s more than the US spent in it’s 13 most expensive wars combined. We use wars because they’re the most expensive things we can think of. Money printing for Quantitative Easing (QE) appears to have worked, so the plan is to load on a bunch more paper money. Is there no limit?

The $5 trillion in COVID relief increases the money supply by 27% and does so very quickly – the floodgates are open."

Monetizing $5.2 trillion in COVID relief increases our money supply by 27% and comes on top of $4.5 trillion in QE. Add another $2 trillion in planned infrastructure spending and we have $13 trillion in new money, which is a 35% increase in paper money in circulation and 60% of GDP. It’s a lot of paper. The total cost of our 13 most expensive wars is $10 trillion.

$5.2 trillion in COVID relief will tip us over the monetary edge. We’ve been ”poking the bear” testing to see how much money can be printed without repercussions. The bear is awake now and about to attack. Baby boomers need to be especially concerned because their lives might never be the same if they don’t protect now. Younger investors have a shot at recovery. 
"

It's 'obvious' that increasing money supply (aka printing money) will 'dilute' the existing money that's out there, thus diminishing its value (what £1 will buy) in proportion.

Isn't that one of those unexamined 'common sense' beliefs that are falacious (like Mrs T's likening of the sovereign national economy to a housewife's purse), or one of those philosophical thought-experiments (like Adam Smith's market/competition/'hidden hand' hypothesis) which are incapable of respectable scientific experimental verification? Both of which persist for centuries because they suit the rich and powerful, against piles of less-than-scientific 'anecdotal' experience.

It all depends whose pocket the printed dosh ends up in (or passes through). Certainly if it becomes increased spending money in public's or firms' pockets, while supply of desirable things to spend it on remains static, then you have a bidding war, where the attainable (market) price of everything goes up and/or imports increase i.e. money value is diluted = the inflation that is supposed to follow inevitably (and frequently has done) from printing money.

Is that's what's happened with all the QE-type money printing lately? I don't think so - public and firms haven't suddenly felt flush with extra money, so what can we spend it on? The QE money went somewhere else, and AFAIK it very rapidly ended up as funds available to the rich, and corporations, to bid up the aggregate price of stocks, shares and securities, competing for those tokens of power and control.

The price of stocks are nowadays mainly fluctuating paper value in a speculation of 'making' money out of buying and selling money, having almost nothing to do with the 'real' economy of health (or not) of firms, people working, producing useful goods and services, getting paid, and buying those goods and services. Because nowadays 'making' money out of buying and selling money gives much better returns than investing same money as capital in the 'real' economy, and money tied up in such speculation is several times greater, and growing fast, than the 'real' value of world economies.

All that QE-style printing of money, by supposedly 'diluting' money, is not the cause of present inflation, which stayed away for 13yrs after the great QE-splurge post-2008.

Instead, money could be 'printed' but carefully targeted, by legislation and/or central-bank-style manipulation, to go where it's beneficial, and above all not into inflating stock market prices. Inflation may be because of excess money in public's and firms' pockets relative to static supply - or the other end of that eqation is unchanged spending money relative to inadequate supply e.g. Mrs T's dismantling of UK's dispersed manufacturing in favour of City of London 'financial services' (see above).

In that case, directing 'printed' money specifically to increase production/productivity/apprenticeships etc down the line), in corporations, firms, local businesses/startups, within a raft of measures to keep the money circulating locally, regionaly or nationaly. Don't say such 'direction' would be impossible - no one's tried such heresy yet. Would that be inherently inflationary? Even if it was, it would be as accompaniment to 'real' growth i.e. excluding stock market and speculative money-churn.

bdp, you say where the 2008 QE went - direct to businesses (fair enough), at least into restaurants in France, and imports, and somehow to maintain property prices (was that intentional?), tho AFAIK UK's QE went initially to keeping banks liquid after they'd lost piles of customers' deposits after using same as gambling chips - i.e. as I say sucked (before it even landed) out of the 'real' economy into 'making' yet more money out of buying and selling money.

Where do you say the 2020-22 printed money was routed? Could it have been carefully targeted and kept in useful circulation using legislation and central-bank manipulations, to ramp up production, as that was what was depressed, to soak the money up, thus expanding wages paid hence tax revenue (as well as seriously capping energy co prices/profits esp non-fossil energy producers)?

Even during and after the 2008 crisis, monetary printing/inflation was nowhere near the scale of the lockdown period, which historically speaking was like nothing seen before for the amount printed and the short timescale (except perhaps in Zimbabwe in the 2000s)

Well , to be fair its accepted by the Bank of England that the current inflation has been caused by 2020-2022 QE. So its not a theory, or an idea being put forward. Its accepted fact now by the BoE and other economic institutions.

The disconnect is happening on a media/political/social level. The story has been sold that this is an energy "crisis". The energy crisis is the symptom, the cause is QE/inflation. Again, because that would mean taking responsibility.

The money that was printed 2020-2022 basically replaced 2 years of taxes and GDP, and paid to keep the economy running (civil servant wages, NHS, local services, schools , hospitals etc) As well as business hand outs to stop them going under.

As far as I remember, inflation was being predicted before Covid, and before renewed money printing. I don't know what was going to cause that, but didn't seem surprising after so long with unnaturally little inflation.

But worse with Covid causing shortages of many things > still single figure %age price rises, then Mr.P causing massive gas rises, and all-other fuel massive rises due to unfettered profiteering.

OK I'm not an economics graduate so shouldn't question the experts. Especially if I read the Guardian, spitt.