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Well, a lot of the banks have already paid back the money, so the question is what happens to the money now. If is eliminated, or is it added to the circulation.
The money is currently sitting in a "special" bank account controlled by Geitner to be loaned back out in the future. We of course are paying interest on this money while it sits in special accounts because all of this money is borrowed..
The money is currently sitting in a "special" bank account controlled by Geitner to be loaned back out in the future. We of course are paying interest on this money while it sits in special accounts because all of this money is borrowed..
To be loaned out or eliminated. That will determine whether or not it will cause inflation.
To be loaned out or eliminated. That will determine whether or not it will cause inflation.
Actually its being sat on in the event its needed to bailout more banks. Eventually the carrying costs of sitting on this money and the losses being taken on some of the investments will erode this capital away to a fraction of its previous amount.
Explain the process of what happens? I am reading some posts and would like to know what exactly happens to the economy? What can one do to protect themself? Some say eventually riots in the streets is this over the top?
Where are we headed?
Thank You,
Marilyn
first you have to understand that we have a debt based monetary system. the amount of money out there corresponds to the amount of debt. bear in mind that we have had gigantic defaults on debt, both consumer and business, and this has led to a huge decrease in the money supply. the actions of fed in printing this money has served to balance this out to avoid deflation. the problem is that the rest of the world seems to be growing tired of loaning us money and even more tired of the dollar as the reserve currency.
they might start wanting to TRADE using other currencies. this has the potential to be hyper inflationary for the dollar. for now however opec still prices oil in dollars and the world bank and the imf still price international debt in dollars. this means that countries around the world need dollars to pay back their loans to the imf/worldbank and countries who want to buy oil need dollars. while this arrangement is in place there won't be any significant change in the value of the dollar.
Actually its being sat on in the event its needed to bailout more banks. Eventually the carrying costs of sitting on this money and the losses being taken on some of the investments will erode this capital away to a fraction of its previous amount.
Currently, but what will they end up doing with it in the future is critical.
And when, of course.
Here is another chart about the trend since the 1970s
When you have more money in the system chasing limited resources and products inflation follows. Bernanke maintains the Federal Reserve can withdraw money from the system quickly to prevent this but that has yet to be seen.
he can withdraw money from the system. paul volcker did it! the problem is that if he does so we'll have rapid deflation and the banking system will collapse as will the economy.
Explain the process of what happens? I am reading some posts and would like to know what exactly happens to the economy? What can one do to protect themself? Some say eventually riots in the streets is this over the top?
this is extremely complicating for my small brain. I am reading this posts and too be honest , Im too stupid to understand this. FIrst off thanks shorebaby for that money link, that was good for me, mentality of a 5th grader!! Thanks all who posted, however Im having a hard time getting this concept.
Now here is another question, lets say you are a person who has no debit and has alot of money and want to by CD's at a bank. Yes I know this much not the best investment. But when inflation goes up doesnt those cd rates go up, so it good for some people?? I guess you just spend it anyway because you pay more for things? This is very confusing and what causes it is very confusing. Im TRYING!!!
first you have to understand that we have a debt based monetary system. the amount of money out there corresponds to the amount of debt. bear in mind that we have had gigantic defaults on debt, both consumer and business, and this has led to a huge decrease in the money supply. the actions of fed in printing this money has served to balance this out to avoid deflation. the problem is that the rest of the world seems to be growing tired of loaning us money and even more tired of the dollar as the reserve currency.
they might start wanting to TRADE using other currencies. this has the potential to be hyper inflationary for the dollar. for now however opec still prices oil in dollars and the world bank and the imf still price international debt in dollars. this means that countries around the world need dollars to pay back their loans to the imf/worldbank and countries who want to buy oil need dollars. while this arrangement is in place there won't be any significant change in the value of the dollar.
so devoiding deflation is good right??? This makes sense this post. Thanks
This is the best link for morons like me!! Perfect, thanks, I have some reading to do. Thanks so much. This is hard for someone to understand and this is a nice link. Marilyn
spoke too soon the end gets alittle complicated for me. Im TRYING!!
Who would have thought money could be so damn complicated.
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