Bingo! Yes, this is what I was expecting. Thank you!
I mean, it seems like common sense that this would hold, but sometimes economics is really weird and I just don't get it, so need basic affirmations every now and then.
Real changes in the general price level for everyday goods from Romir as of 1 August 2024. There is no more recent data, they were banned from publishing. Confirmation of your calculations. https://romir.ru/index/deflyator-pribavil-v-iyule-23
So how can M2 grow without there being matching inflation? (Or without GDP growth?) Where is all that extra money sloshing around? Its almost a factor of 3x higher; that's a lot!
Main reason is obfuscating the numbers. For example, Russia can sell itself military equipment more cheaply, include that in CPI and say inflation isn't as bad as it is. Military production can also boost GDP even though it's all destroyed. There's lots of ways to doctor things.
The gap between each line gets wider every year since the start of the war. They can't keep this up forever. Let's just hope trump doesn't bail them out.
I'm sure that the increased money supply is outpacing what I imagine is stagnant economic growth, so that should mean inflationary pressure(more money chasing the same amount of goods), right?
Hum... inflationary problems, central government putting pressure on the central bank to reduce interest rates and a government putting it's head in the sand .... popcorn time
Growth of m2 money supply. They claim that the growth rate of m2 money supply has actually declined compared to 2023 and bank notes in circulation has started to decrease even. I’m not sure what to make of this. Feels a bit like economy is de-roubleizing.
Comments
M2 growth=17%
Real gdp growth= -6%
Inflation = ~ 23%
I mean, it seems like common sense that this would hold, but sometimes economics is really weird and I just don't get it, so need basic affirmations every now and then.
Official real gdp growth is 4% ish.
That means nominal gdp is up 14%.
If the real inflation rate is 20%+...
...as the Moscow bond market says...
...then real gdp is down 6% or worse.
Calculating the actual rate of inflation in Russia while the Kremlin is running interference by multiple mechanisms is essentially impossible, imho.
Between the price controls and state subsidy of major aspects of life (e.g. mortgages)... it's hopeless.
But the bond market does not lie.
https://www.cbr.ru/eng/
1-month residual bonds do not require effective yields 12 percent above the real inflation rate.
The real inflation rate is over 20%
Every year starts higher (lower) than the last, trend through the year points to …
"We checked the projections against the real numbers. It's worse than we anticipated. Again. Start the printer! Again."
Also, the data to make this chart came from the Russian Central Bank.