Scrappy: Scenario of "run" on US Treasury
#21
Google must have seen a correlation between "US government collapsing!" websites and interest in "grow your own vegetables!" as well as "free electricity!" crap. Before my knee surgery I looked up how long it takes to get hooked on pain meds and for weeks google thought I was trying to shake an addiction.
?? Based on what?
#22
P.S. The author does NOT advocate:
- violence
- joining a "militia"
- tax resistance
- living "off the grid"
The above are like cutting off your nose to spite your face.
He advocates finding and marketing a niche business that won't suffer if/when the gov't meaningfully cuts its budget. He says if you want to be active politically, do it in local politics.
- violence
- joining a "militia"
- tax resistance
- living "off the grid"
The above are like cutting off your nose to spite your face.
He advocates finding and marketing a niche business that won't suffer if/when the gov't meaningfully cuts its budget. He says if you want to be active politically, do it in local politics.
#23
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Originally Posted by JasonC SBB
You missed the step where he said that the Fed will have to buy debt (causing inflation).
Originally Posted by Scrappy Jack
Clarify for me your definition of "inflate." In what way does the Federal Reserve buying US Treasury securities cause this inflation? What is the mechanism that gets you from A (Federal Reserve actions) to B (inflation)?
"High powered money" = reserves at the Fed + cash held by the public?
Are you using "inflation" as short hand for "price inflation" as most people do or are you considering an increase in the broader money supply measures alone as inflation?
#24
That's stupid, that's like concluding some gearhead is considering turboing miatas, comes here, and sees all the cat threads, and confirms his suspicions that miatas are owned by gay weirdos.
Google must have seen a correlation between "US government collapsing!" websites and interest in "grow your own vegetables!" as well as "free electricity!" crap. Before my knee surgery I looked up how long it takes to get hooked on pain meds and for weeks google thought I was trying to shake an addiction.
?? Based on what?
Google must have seen a correlation between "US government collapsing!" websites and interest in "grow your own vegetables!" as well as "free electricity!" crap. Before my knee surgery I looked up how long it takes to get hooked on pain meds and for weeks google thought I was trying to shake an addiction.
?? Based on what?
#28
I am not trying to be obtuse here. I want to answer your question from my perspective but you and I are operating with fundamentally different models and the language can be muddy.
"High powered money" = reserves at the Fed + cash held by the public?
Are you using "inflation" as short hand for "price inflation" as most people do or are you considering an increase in the broader money supply measures alone as inflation?
"High powered money" = reserves at the Fed + cash held by the public?
Are you using "inflation" as short hand for "price inflation" as most people do or are you considering an increase in the broader money supply measures alone as inflation?
#29
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Location: Central Florida
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Inflation = increase in money supply due to HPM multiplied by money multiplier, usually followed by price increases. Yes I know the recent increase in HPM was not followed by an overall increase in money supply (M2?) because banks aren't lending (which means a reduction in the money multiplier)
Banks do not lend reserves or deposits. Loans create
If you reject that premise, do not bother reading any further.
For those seeing the massive wall of text below and about to TL;DNR:
Cliffs: The foundation of the arguments presented by the original author are based on out-dated textbook concepts that are not reflective of the operational reality of the way the monetary and banking systems in the USA currently operate.
It's like being concerned your wife's Optima (with a factory 10.5:1 compression ratio and a turbocharger) is going to spit a rod out the block because she ran 87 AKI fuel with boost and that high a compression ratio.
On the money multiplier in the current operational landscape of the US monetary system:
Originally Posted by Carpenter and Demiralp, by way of the Federal Reserve Board (emphasis and selective quotation mine)
Casual empirical evidence points away from a standard money multiplier and away from a story in which monetary policy has a direct effect on broader monetary aggregates. The explanation lies in the institutional structure in the United States, especially after 1990. First, there is no direct link between reserves and money—as defined as M2.
Following a change in required reserves ratios in early 1990s, reserve requirements are assessed on only about one-tenth of M2. Second, there is no direct link between money—defined as M2—and bank lending.
[...]
We argue that changes in the sensitivity of bank loans may stem from the demand side, and that a better test for the lending channel is to check whether bank loans are financed by reservable deposits. Our findings suggest that this is not the case.
All of these points are a reflection of the institutional structure of the U.S. banking system and suggest that the textbook role of money is not operative. While the institutional facts alone provide compelling support for our view, we also demonstrate empirically that the relationships implied by the money multiplier do not exist in the stem from the demand side, and that a better test for the lending channel is to check whether bank loans are financed by reservable deposits. Our findings suggest that this is not the case.
Last edited by Scrappy Jack; 03-28-2012 at 06:37 PM. Reason: Caught a typo and corrected (with a strikeout), cleaned up some phrasing and formatting
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