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Old 01-24-2012, 11:51 AM
 
Location: Planet Eaarth
8,955 posts, read 18,716,821 times
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An explanation of the Fed that takes a comic book to finish!

No, the Fed Does NOT
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Old 01-24-2012, 05:03 PM
 
Location: WA
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When I worked for the Fed many years ago they would take delivery of currency from the treasury and distribute it to the banks. They also destroyed used bills. It was interesting to see pallets of bills wrapped in plastic.
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Old 01-24-2012, 07:01 PM
 
2,592 posts, read 4,858,212 times
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Yes and no. They can still flood the money with credit and try to make the market more "liquid" which is still similar to printing money. By controlling at what rate banks borrow at, they still control the money supply which in many ways is like printing money. When people say the Fed is "printing money" it doesn't specifically mean they are printing money but injecting credit or money supply into the system.
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Old 01-24-2012, 09:27 PM
 
Location: Metro Detroit, Michigan
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Umm, anyone familiar with the term "digital money"? Wish I could do that!
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Old 01-25-2012, 12:47 PM
 
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Good to know you can have people killed and proudly declare you don't kill people.
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Old 01-25-2012, 05:01 PM
 
Location: Victoria TX
42,661 posts, read 78,404,244 times
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"Money" doesn't necessarily have a picture of a president on it. Any instrument that can be exchanged for wealth is "money". If the government authorizes the printing of promissory notes, that is money. What we call money is, in fact, simply promissory notes printed in a readily recognized form that everyone will easily recognize.

I can create "money" by writing a promissory note, and as long as you trust me to redeem it, it is the same as cash. So any expansion of credit is in fact expanding the amount of de facto money that exists in the economy and can be used to exchange goods and services.

That's why we are currently in a deflationary mode. There has been a reduction of credit, which has the same effect as reducing the amount of money.
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Old 01-25-2012, 09:16 PM
 
Location: Metro Detroit, Michigan
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Quote:
Originally Posted by jtur88 View Post
That's why we are currently in a deflationary mode. There has been a reduction of credit, which has the same effect as reducing the amount of money.
Deflationary mode? Then why does everything seem to be getting more expensive? Oh yea, except our houses and labor value!
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Old 01-25-2012, 09:50 PM
 
Location: Victoria TX
42,661 posts, read 78,404,244 times
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Quote:
Originally Posted by andywire View Post
Deflationary mode? Then why does everything seem to be getting more expensive? Oh yea, except our houses and labor value!
Deflation is not defined by what seems to you to be getting more expensive when you go shopping. There is a larger picture than that, and the charts are readily available.

Gas is down 15% in 9 months. The dollar is up against the euro by 25% in four years. In globally comparative terms, the dollar goes farther. The reason prices seem higher to you is because everyday goods and services consumed by the middle and lower class workers are the prices that are increasing. Consumer prices are the only ones that can be increased in deflationary times, because the consumers are the only economic sector who have no power to demur, and they are the easiest to lie to.

To be sure, severe inflation is impending, and probably unavoidable, and could be catastrophic, and there are plenty of bloggers pointing that doomsday scenario out. But it is not happening yet. It won't until the powers that be discover that throwing credit around is the shortcut to spending which is the shortcut to "growth".

Last edited by jtur88; 01-25-2012 at 09:59 PM..
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Old 01-26-2012, 11:48 AM
 
19,337 posts, read 16,932,211 times
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Commodities are going up in price ironically because of the lack of demand. The easy credit is a double assault that not only undermines the faith in the currency, creating the desire to flee it, but also allows one to cheaply convert this desire into "safe havens" like oil, farmland and commodities. In other worse we have a savings glut.

What we are doing is the exact opposite of what should be done. Its been 4 years but Americans are so hopelessly brain washed they cannot even conceive of one simple fix which is high deficits and high interest rates. Of course it simply follows the same logic of allowing the assets to crash with no bailouts. That would have been even better.

Post bailout, shutting off easy credit from the banks would halt the free flow of money driving up resource rents like land, minerals and commodities. Public credit would replace the gap in the money supply creation and support wages so they do not drop with asset prices.


I really don't know what the problem is other than mass induced economic insanity. Basically the market is saying assets are priced too high and the FED is not allowing this to happen in our so called "free market" economy. The FED is doing everything it can to defeat the market pricing of assets. We are undermining the currency at the FED while refusing to give credit to goods and services. This toxic combination plays so devastatingly well together since easy credit into commodities creates a profane feedback loop.


In sum we have

* cheap credit
* savings glut
* rent seeking
* lack of organic demand

Basically engineered stagflation.
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Old 01-26-2012, 11:52 AM
 
286 posts, read 182,793 times
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At this point, who cares who prints the money, Obama, the Fed and the CFR are about to take America cashless anyway.
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