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Economy expands, money expands, what’s the problem

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Viewing 6 posts - 11 through 16 (of 16 total)
  • Mon, Jun 27, 2011 - 04:42am

    #11

    Damnthematrix

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    Last attempt…

I see absolutely no problem in the simple fact that money supply is growing as long as the economy is growing.

Right….. but the economy can NEVER grow as fast as the money supply.  I can’t spell it out any simpler than that…

Mike

  • Mon, Jun 27, 2011 - 05:07am

    #12
    plato1965

    plato1965

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    soddy agrees with you DTM

 

 http://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Debt

 Soddy was essentially the Malthus of Economics.

 Virtual wealth/debt can compound indefinitely, physical wealth can’t.

  “Debts are subject to the laws of mathematics rather than physics. Unlike wealth, which is subject to the laws of thermodynamics, debts do not rot with old age and are not consumed in the process of living. On the contrary, they grow at so much per cent per annum, by the well-known mathematical laws of simple and compound interest … It is this underlying confusion between wealth and debt which has made such a tragedy of the scientific era.”

 And he would have a laughing fit at the concept of Thomas’s “wealthmoney”…

 http://www.nytimes.com/2009/04/12/opinion/12zencey.html?_r=1&ref=opinion

 

 (some repeated links.. but they deserve repeating IMHO)


  • Mon, Jun 27, 2011 - 09:52am

    #13
    Marius Mollersen

    Marius Mollersen

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    Damnthematrix

[quote=Damnthematrix]

Right….. but the economy can NEVER grow as fast as the money supply.  I can’t spell it out any simpler than that…

[/quote]

Mike, you are spelling things out quite simply, but you are not pointing to what is wrong with the state of things, or rather, why the things you are pointing at are so wrong. So, money expands somewhat faster than the economy, and this leads to inflation. As long as inflation is low (whatever the exact figure might be) it seems everything runs smoothly.

  • Wed, Jun 29, 2011 - 02:58am

    #14

    Damnthematrix

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    mariusm98

[quote=mariusm98]

[quote=Damnthematrix]

Right….. but the economy can NEVER grow as fast as the money supply.  I can’t spell it out any simpler than that…

[/quote]

Mike, you are spelling things out quite simply, but you are not pointing to what is wrong with the state of things, or rather, why the things you are pointing at are so wrong. So, money expands somewhat faster than the economy, and this leads to inflation. As long as inflation is low (whatever the exact figure might be) it seems everything runs smoothly.

[/quote]

When debt finally reaches blow out proportions….. it can’t be repaid because of insufficient growth.  ESPECIALLY in the face of Peak Oil and other resource depletion pushing prices up.

 

  • Tue, Apr 17, 2012 - 10:44pm

    #15
    Khan

    Khan

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    You can’t explain this on a 7:13 clip

  http://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

I know this post is old, but why not.

I think you were a bit confused about chapter 8 clip as much I am  now.

You can click the link I provided on top. You can see that when the housing crash was just about to happen liquity facilities balance jumped. Then after series of injection to banks their balance has been decreased for some time now. The Fed does in a way create money, yet they don’t. The Fed, as they promised, did get the money back from the banks as it seems to show here. However, you can also see that the Fed has picked up their securities buying trend whenever balance from the liquity project slowed down a bit. Contrary to common beliefs these days, the Fed does have a balance sheet. However, the meaning of their balance sheet cannot be compared to regular banks or average joe like you or me or anyone else. They look at inflation. They are, too me, way too concern about misrepresented inflation rate. They will continue to buy securities to lower the rate in the market, to a certain degree obviously. What they are ultimately hoping for is that the economy will grow. IF, and that’s a big IF, economy does grow, then they will reverse their action. They will start dumping. Recently, as unemployment figures came out, many analysts were wanting the Fed to start dumping. They are concerned that if unemployment rate trend is as positive as it looks now then the Fed needs to react to retract the grow margin that will supposedly happen in the near future. You probably heard the Fed’s recent QE that entailed lending and borrowing back bonds. Unfortunately they are in a big trouble. The U.S. economy is not growing as fast as they want it to, but they cannot continue to inject money into the market unless they are willing to let the inflation take its course. In a way, the Fed is doing us a bit of favor. Logically, no one wants to lose money. We just had a solvency crisis and no one wants to lose and when some do lose then it will be too big of a hit. As so, all the Fed is doing now is to slow the crash and let it phase out. With the slow crash, you face high inflation rate with steady wage. Fast crash? You have low inflation rate with NO wage. Which one would you prefer? Obviously whoever created this website wants people to think that the Fed is evil, but I would like to see them come up with a new idea!

  • Wed, May 02, 2012 - 12:26am

    #16
    Carl Veritas

    Carl Veritas

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    “They look at inflation”

“They look at inflation” —–Khan

That’s odd.    Since the birth of the Federal Reserve the purchasing power of the US Dollar has declined by over 90 percent.  They should be looking at the mirror.

Who benefit from confiscating,  criminalizing and slapping a capital gains tax for using gold as money?  Banks and governments.   If fiat money was superior, why remove the competition?     What are they afraid of?

 

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