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Its all from debt deflation. When banks lend money lots of money circulates .
The question of narrow money should be distinguished from questions about broad money. My original post was about the narrowest definition of money (notes and coins).
The legal uses of currency and coin are normally for transactions which are too trivial for electronic transfer, for emotional means, because of lack of credit, because you don't trust the other party, or you don't have a ready means to establish electronic transfer of cash (private party used car sales for example), you want anonymity (buying a gift for your wife), or you think some of your savings should be in the most liquid form.
Many foreigners hold onto US currency because they trust that it will hold its value better than their own currency. Foreigner hold 75%-80% of the c-notes in circulation.
Most of your comments have to do with broad money. But do you think it is the best thing to print so much narrow money?
The standard defense is that money is printed to meet demand, banknotes are not inherently evil (but they can be used for laundering), if the US (or EMU) doesn't do it, then someone else will, and lastly it is very profitable to the government. It's a false profit, as technically notes are a liability since they can always be returned , but in reality as the demand never diminishes they function as profit.
My question is does the US and EMU need to print so much money in large denominations? Canada prints about 10 c-notes per capita, whereas USA prints 25 c-notes per capita. The EMU is circulating almost 300 billion euros in 500 euro notes.
Of course our broad middle class has chosen more debt these past few decades, especially as their wages haven't kept up.
Its not complicated really. Lots of middle class home equity and HELOC was the effective cash flow.I never noticed if someone borrowed the money they gave me or if they had the crumpled, sweaty kind earned from lawn mowing all day. The economy didn't either. So what gives us 3% unemployment? trillion dollar per annum mortgage money and war deficits. If mortgage money is flat, a 1 trillion dollar deficit does not even come close.
To hear its money "we don't have". Have? Have what,? its a fiat, green screen, notch on a stick thing created on puters. It is an ex post facto opinion of mis allocation, but clearly we could do what we all did in the real economy, but for some reason only on private housing instead of mouldering and collapsing bridges. The difference is in one case HELOCs are a temporary money supply while deficits are not(till we run a surplus). Not a big deal when it nets to zero, but it is when its contracting let alone expanding.
What is an extra trillion in deficits going to do when mortgage debt goes from +1 trillion to nearly -500 billion like 2009 to 2010? Combined with FED and ZIRP, stagflation is what. I guessed it alright ,but I can guess a pin will drop when you let it go too. Sure I can predict the future when its the law of gravity.
The question of narrow money should be distinguished from questions about broad money. My original post was about the narrowest definition of money (notes and coins).
The legal uses of currency and coin are normally for transactions which are too trivial for electronic transfer, for emotional means, because of lack of credit, because you don't trust the other party, or you don't have a ready means to establish electronic transfer of cash (private party used car sales for example), you want anonymity (buying a gift for your wife), or you think some of your savings should be in the most liquid form.
Many foreigners hold onto US currency because they trust that it will hold its value better than their own currency. Foreigner hold 75%-80% of the c-notes in circulation.
Most of your comments have to do with broad money. But do you think it is the best thing to print so much narrow money?
The standard defense is that money is printed to meet demand, banknotes are not inherently evil (but they can be used for laundering), if the US (or EMU) doesn't do it, then someone else will, and lastly it is very profitable to the government. It's a false profit, as technically notes are a liability since they can always be returned , but in reality as the demand never diminishes they function as profit.
My question is does the US and EMU need to print so much money in large denominations? Canada prints about 10 c-notes per capita, whereas USA prints 25 c-notes per capita. The EMU is circulating almost 300 billion euros in 500 euro notes.
I for one couldn't tell you. I haven't done coins in a decade, and rarely use any paper notes.
I would say that one large reason the USD is so pervasive in the world includes the fact that thieves and crooks, including many people of power and influence world over most all stash their stash with USD. I can't imagine how much debt is out there, never to be redeemed!
I would say that one large reason the USD is so pervasive in the world includes the fact that thieves and crooks, including many people of power and influence world over most all stash their stash with USD. I can't imagine how much debt is out there, never to be redeemed!
Well, that is my point. It is my guess that with the new color $100 banknote coming out in a few days, that the USA will be circulating over $1 trillion in hundred dollar bills in two years. Couldn't you say that the US is cashing in on those illegal transactions?
The EMU is circulating half a trillion euros in large notes
288.5 billion Euros in 500 EUR banknote
38.1 billion Euros in 200 EUR banknote
176.8 billion Euros in 100 EUR banknote
I think the EMU is worse, because there is almost no legal transaction that can't be done relatively conveniently with the 100 Euro banknote.
My argument is with both the high denominations, and the huge quantities of these notes. There was a $1000 USA banknote printed in 1928 and 1934 series, but there was only about $3 billion worth. There are still some $165 million in circulation of thousand dollar bills which are held by collectors. There was also a very limited production of $5K and $10K notes in those series. In an age when electronic banking was basically nonexistent, some people needed large value banknotes.
The question of narrow money should be distinguished from questions about broad money. My original post was about the narrowest definition of money (notes and coins).
The legal uses of currency and coin are normally for transactions which are too trivial for electronic transfer, for emotional means, because of lack of credit, because you don't trust the other party, or you don't have a ready means to establish electronic transfer of cash (private party used car sales for example), you want anonymity (buying a gift for your wife), or you think some of your savings should be in the most liquid form.
Many foreigners hold onto US currency because they trust that it will hold its value better than their own currency. Foreigner hold 75%-80% of the c-notes in circulation.
Most of your comments have to do with broad money. But do you think it is the best thing to print so much narrow money?
The standard defense is that money is printed to meet demand, banknotes are not inherently evil (but they can be used for laundering), if the US (or EMU) doesn't do it, then someone else will, and lastly it is very profitable to the government. It's a false profit, as technically notes are a liability since they can always be returned , but in reality as the demand never diminishes they function as profit.
My question is does the US and EMU need to print so much money in large denominations? Canada prints about 10 c-notes per capita, whereas USA prints 25 c-notes per capita. The EMU is circulating almost 300 billion euros in 500 euro notes.
I can't say I made much of an analysis on the quantity of M0. I am always up for new insights. Though if someone has an account they can close it for cash can they not?
Well, that is my point. It is my guess that with the new color $100 banknote coming out in a few days, that the USA will be circulating over $1 trillion in hundred dollar bills in two years. Couldn't you say that the US is cashing in on those illegal transactions?
The EMU is circulating half a trillion euros in large notes
288.5 billion Euros in 500 EUR banknote
38.1 billion Euros in 200 EUR banknote
176.8 billion Euros in 100 EUR banknote
I think the EMU is worse, because there is almost no legal transaction that can't be done relatively conveniently with the 100 Euro banknote.
My argument is with both the high denominations, and the huge quantities of these notes. There was a $1000 USA banknote printed in 1928 and 1934 series, but there was only about $3 billion worth. There are still some $165 million in circulation of thousand dollar bills which are held by collectors. There was also a very limited production of $5K and $10K notes in those series. In an age when electronic banking was basically nonexistent, some people needed large value banknotes.
I've only seen a $1000 bill once in my life, around 1957. My uncle bought a box of cigars at the Harris supermarket in Charlotte, NC. He owned a night club in Brooklyn back then and always seemed 'shady' to me! <LOL>
I can't say I made much of an analysis on the quantity of M0. I am always up for new insights. Though if someone has an account they can close it for cash can they not?
There is no upper limit on cash transactions. A suitcase containing 22 lbs of $100 bills worth $1 million can be exchanged perfectly legally. The catch is that it is illegal to do a cash exchange for more than $10,000 without filling out a form for the IRS.
I believe that a bank can give you your account in cash, but they must fill out the IRS form if it is over $10,000. Furthermore they are also required to keep records of cash transactions over a certain amount (I think it is $3K) which can be subpoenaed by a court order.
Similarly, there is nothing illegal about having a $1000 banknote. There are an estimated 165,000 still in circulation out of the almost 3 million that were printed in 1928 and 1934. You can buy them on e-bay all the time. They are sufficiently rare that they are probably of no use to criminals anymore. But anyone who has kept one for 80 years probably lost a lot more in interest than they gained in the collectible value of the note.
The Canadian $1000 banknote was printed up until 2000. There are roughly a million in circulation. Since they are recent enough that they have no collectible value, it is assumed that most of them are in the hands of criminals. They use them to pay each other.
The 500 Euro note is very plentiful now, and is regularly used for money laundering operations.
Its all from debt deflation. When banks lend money lots of money circulates . Prices rose to adjust to all that bank credit. So now that it all went bust the only thing to even prop up price levels from deflation is a public deficit. Call it the Great Sub Prime War. I always ask people to pick one, bank credit, deficits, or depression.
That is very interesting!
An ad from a financial house states that "a quarter of all goods & service produced in all of human history have been produced in just the past 10 years". I do not know if this is precisely accurate, but I suspect it is mostly true.
Does that not imply that the money supply must expand to keep up? As such, would not any fixed currency be doomed to failure?
Last edited by shaker281; 10-02-2013 at 03:30 AM..
Its not complicated really. Lots of middle class home equity and HELOC was the effective cash flow.I never noticed if someone borrowed the money they gave me or if they had the crumpled, sweaty kind earned from lawn mowing all day. The economy didn't either. So what gives us 3% unemployment? trillion dollar per annum mortgage money and war deficits. If mortgage money is flat, a 1 trillion dollar deficit does not even come close.
...
Why would a trillion dollars of (borrowed) government spending not be equivalent to a trillion dollars of (borrowed) mortgage money? Both are fueling the economy are they not? Or is it because the government was spending a trillion and the banks were lending another trillion?
An ad from a financial house states that "a quarter of all goods & service produced in all of human history have been produced in just the past 10 years". I do not know if this is precisely accurate, but I suspect it is mostly true.
Does that not imply that the money supply must expand to keep up? As such, would not any fixed currency be doomed to failure?
Both depressions in this country happened on gold standards. It is not hard to imagine what will occur when a non perishable risk free asset grows in value , as Silvio Giselle observed. That isn't to say I am arguing for a position, all of which are far from ideal. To be honest I argue very little about the actual position. The battle is on just getting people to understand the situation.
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