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The reserves have been building up in the banks and many cash flush corporations, like Apple.
But the dividends have been increased and the value of the Stock of these entities has risen 20% this year alone as people have spent money to buy those same companies.
What this means is that the paper flood which is now dammed up stands ready to meet the inflation of prices which will break out as soon as the QE stops, as it must at some point, or wages rise by mandate of Min Wage increases and that money speeds back up.
If the velocity of the money actually out there, because of this artificial QE lending/borrowing, was not held for the coming rainy day a runaway inflation would otherwise immediately manifest.
Sorry I'm in no position right now to increase my employees wages. How about cutting our taxes some and create the same increased demands?
Taxes vary in regard to where the tax focuses, but the rate is always around 18-20% of the GNP.
Your problem only seems to be a Tax problem, when that bill is hardly any easier for you to pay than the Rent.
Your solution is more business from more customers.
Raising the minimum wage for your employees and your competitions employees will jus mean all of you in that particular business will have raise prices.
All together, the cost of the Jr. size Hamburger will be $2.00, up from $1.29 at Mac Donalds, Burger King, and Wendies.
(No pain, no gain.
Not to be unsympathetic, in that pain will accompany this especially for business men with low capital who will be squeezed for a short time, or an initial back lash by consumers who need time to adjust and "shop" as they realize everyone has raised the Price.
And, pain also, for those employees who must wait a while before the employers raise their wages as they did the Minimum wage.)
1) Start a thread I will show you "Why do people who don't know what they are talking about try to sound like experts," or re just dumocraps who have bought into their own emotionally charged koolaid.
2) The Laws passed through the Banking Committee during Clinton's 2nd term were intentionally set down in a way to allow charges of Red Lining against banks by the Acorn people (then being legal back up by Obama).
3) FHA.
A Wall Street Journal piece published on September 9th 2008 describes Barney Frank as the Patron Saint of Fannie Mae and Freddie Mac.
Billionaire R. Murdoch has stated Frank's plan in the early nineties which pushed Fannie Mae and Freddie Mac to make "bad" loans to "underprivileged" families as one of the major root causes for the financial turmoil today.
He did this within the Laws that were utilized to set policies at FHA.
How can you expect any credibility when you spout this utter nonsense. You are claiming that the big contributors...places like Countrywide and WaMu were active in disadvantaged neighborhoods? You are clamining that all the bad loans were in disadvantaged areas? You have any idea of what actually happened? You think $400,000 homes were being sold to the Hispanics in the Ghetto?
People in low cost housing sell their home for a big number and move up.
Start a thread on this and we can examine how the greed spread through America once the Clinton administration lead by Barney Frank allowed the FHA to under right mortgages on the low end of Real Estate.
Inflating the prices of all Real Estate rapidly, by moving people out of low cost properties into high cost Real Estate increased in equity in ALL properties at a rate 20% a year.
Of course everyone, with the means, or ability to lie about his credit worthiness, bought such investments.
Check put how Banks were, step-by-step by the regulators, taught to accept without validation the credit info of an applicant brought to the door of the Bank by Acorn representatives;
People in low cost housing sell their home for a big number and move up.
Start a thread on this and we can examine how the greed spread through America once the Clinton administration lead by Barney Frank allowed the FHA to under right mortgages on the low end of Real Estate.
Inflating the prices of all Real Estate rapidly, by moving people out of low cost properties into high cost Real Estate increased in equity in ALL properties at a rate 20% a year.
Of course everyone, with the means, or ability to lie about his credit worthiness, bought such investments.
Check put how Banks were, step-by-step by the regulators, taught to accept without validation the credit info of an applicant brought to the door of the Bank by Acorn representatives;
The Fed has artificially contained Inflation to almost zero growth.
As soon as QE3 ends, prices will jump enormously.
Added to this effect will be the rise in prices necessary for employers to cover their increased Cost for AbominalCare.
Wages, too, must rise so people can afford the mandated Abominalcare, whether they pay for it themselves, or get at the expense of their employer, or absorb it in their own small self employment.
In order to avoid economic collapse, the Fed must artfully raise interest rates very slowly over as long a period of time as is possible.
This will allow wages to adjust slowly upwards so the what seems higher prices is compensated by more spendable income.
A great tool available to the government is a mandated raise in Minimum Wages (in small semi-annual increases approaching $20/hour over 4 years) as they also slowly increase prices by raising Interest Rates.
If they ignore this threat of Hyperinflation due to public panic we will see the American Political and Economic Systems replaced.
So, we have only one alternative, since either the pain of a slow process by natural consequences is anticipated and preparations are made for the adjustment to what must be endured, or the chaos of great social changes and an economic upheaval comes upon us.
Our one alternative is do, rather than do nothing, and by raising the wages ourselves, rather than suffering with patience for our pay checks to have risen;
That always has come last, after prices and interest increases have come upon us, when our salaries were to low to accommodate that event.
Then, in the past, AFTER prices have increased, it has been clear that labor needs higher wages in order to exist. Then we in the general public, have received increases since the higher prices allow employers to pay more.
But, making the Minimum Wage higher now, incrementally, over the next four years, will treat the sickness that is this economic down turn with medicine that causes prices to go up, while salaries, this time, change first, rather than after the economic illness subsides.
According to your argument about whatever it is you say I claimed, YOU insist that the Monetary Base ought have been flat which clearly you are wrong about, since it did not?
You claim that QE cash flows through the monetary base and out into the broader economy. In that case, the monetary base should have remained flat rather than roughly quadrupling since 2008.
Quote:
Originally Posted by cupid dave
My claim is that the QE is lending money at a very nice low rate to the Bank and the Treasury by buying bonds from them both.
The Fed is not buying any securities at all from Treasury. The closest it comes is when the FRBNY acts as agent for foreign banks at Treasury auctions. And QE is not lending any money at all. It is engaging in asset swaps. Interest-bearing notes held by banks are swapped for credits to interest-bearing excess reserve accounts held at the Fed. As various posters have pointed out, you don't really understand how any of this works.
Quote:
Originally Posted by cupid dave
I also claim that this is increasing M2, and the monetary Base should be increasing as it actually is...
Do some homework. Excess reserves are a part of the monetary base. They are not part of either M1 or M2.
Every cent ALWAYS gets spent. Money never stops moving through the economy.
It changes velocity, and in this case, LACK of speed kills. Velocity decreases as you move up the income scale. Simple economic fact that you've managed never to learn. Giving more money to wealthy people is contractionary. Giving more money to poor people is expansionary. Bush learned this the hard way with his Tax Cuts for the Rich.
Quote:
Originally Posted by cupid dave
If rich people "buy" Savings Accounts, Bonds, Real Estate, Capital Gains type investments, they have spent that money.
The financial economy is like a circus sideshow tent where instead of funding actual jobs or output, money is diverted to chase around after little pieces of paper all day long. Money entering the tent is a drain on the real economy. It can only be of benefit when it eventually leaves the sideshow tent and returns to the real economy.
Quote:
Originally Posted by cupid dave
The Banks, for instance, take the Savings Account money and immediately put it to work making more money in the form of interest on Loans paid out for products and services the borrower wants.
In that case you would have money leaving the sideshow tent and re-entering the real economy. This is not at all a given. In fact it has only just begun to happen in the third quarter of this year, which at last saw a broad-based increase in consumer debt.
1) Start a thread I will show you "Why do people who don't know what they are talking about try to sound like experts," or re just dumocraps who have bought into their own emotionally charged koolaid.
You haven't shown me anything in this thread and would have very slim chances of doing so in any other. Your understandings of these various topics are simply too thin to support the production of anythiing having actual merit.
Quote:
Originally Posted by cupid dave
2) The Laws passed through the Banking Committee during Clinton's 2nd term were intentionally set down in a way to allow charges of Red Lining against banks by the Acorn people (then being legal back up by Obama).
Hopeless propaganda victim. There should be a Doctors Without Borders-type group set up to provide front-line help to those falling into such desperate straits. Discrimination is illegal. Has been since the 60's. If you do it and get caught, you are going to lose in court. Just as Citibank did in the Buycks-Roberson case on which Obama as a staff attorney earned less than $500 for the three hours of work that he contributed to the case. That case was filed in 1994 claiming violations of the Equal Credit Opportunity Act of 1974 and the Fair Housing Act of 1968. Senior attorneys on the case established through discovery that Selma Buycks-Roberson -- who had more assets than the amount she was seeking to borrow -- was one among many residents of her black neighborhood who had been denied credit while credit had been routinely approved for those living in nearby white neighborhoods who were in similar financial situations. Bzzzzt! Confronted with judicial doom, Citibank asked for a consent decree, wherein it agreed to do all sorts of things to make up for the wrongs they had done but didn't admit to any wrong-doing.
Quote:
Originally Posted by cupid dave
3) FHA.
Listen up: FHA at the time was a relatively small agency offering guarantees of a small subset of mortgage loans and passing the insurance costs of those back to borrowers. It still operates on that model, but it's role has expanded since 2008. The titans of the time were the GSE's -- Fannie Mae and Freddie Mac. In the 1990's and early 2000's, they were processing more than 70% of mortgages headed for securitization, all of them conforming loans that met established minimum underwriting standards. .
Quote:
Originally Posted by cupid dave
A Wall Street Journal piece published on September 9th 2008 describes Barney Frank as the Patron Saint of Fannie Mae and Freddie Mac.
Barney Frank was a staunch supporter of the GSE's, one who stood up to the waves and onslaughts of Bushie lies and liars pressing to scrap the agencies and turn their market share and mission over to the private sector. You know -- those fancy-pants boys on Wall Street who were the actual villains that caused the credit crisis and resulting Great Recession. Frank was also the guy who spear-headed the 1994 legislation expandng Fed powers to regulate subprime credit markets. You know -- the powers that Alan Greenspan never bothered to use so that Wall Street could continue making huge profits by writing bad mortgages and then selling them into the secondary markets where they would ultimately fail and cause the credit crisis. Elections have consequences, and when you elect Republicans, the consequnces are usually bad.
Quote:
Originally Posted by cupid dave
Billionaire R. Murdoch has stated Frank's plan in the early nineties which pushed Fannie Mae and Freddie Mac to make "bad" loans to "underprivileged" families as one of the major root causes for the financial turmoil today.
Right, the Australian dude behind the lies and shame of FOX News among other crooked and disreputable outlets. Wonderful source. What Barney Frank realized early on was exactly what CRA lending would soon prove and what eventually made subprime the hottest market sector -- namely that there were vast and untapped pools of profit waiting in populations and communities that had long been underserved by traditional lenders. Frank therefore championed affordable housing programs and the financing arrangements necessary to connect such housing to eligible borrowers. Despite the volumes of absolute rubbish that you have bought into, no law, policy, rule, or court decision ever required any lender to make any loan to a borrower who was not qualified for it.
Taxes vary in regard to where the tax focuses, but the rate is always around 18-20% of the GNP.
Except for receipts having been at around 15% of GDP recently, what with taxes hitting their lowest point since the 1950's and all.
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