Money flat spin
Here’s an interesting article: http://market-ticker.denninger.net/archives/703-Uh-Oh…..-Monetary-Flat-Spin.html
His thesis is that the money multiplier’s recent drop below 1.0 may be the event horizon for massive inflation. I rather think it’s the other curve in the article, showing the steadily declining increase in GDP per dollar of new debt, that should cause the most worry. The money multiple can be quickly reversed by cajoling and/or forcing banks to increase their lending. But to what avail, if each new dollar lent is already producing much less than $1 of increased GDP?
Thanks trickard, I was going to post that article too.
I just think its amazing the multiplier dropped below 1…it is possible to change the multiplier, but I think part of the problem too is the unwillingness of many people now to take out loans. Although housing prices are pretty low, every indication is they are still going lower, so most people are just not taking out loans to buy a house unless its absolutely necessary (i.e. they had to move for a new job). Car sales and other consumer spending is down too, further lowering the demand for new loans…I think until some of the macro economic indicators start to turn around, people will be afraid to take out new loans for spending, and this multiplier will remain depressed until that happens.
My worry then would be if the multiplier does bounce back, so much money has been created that inflation could really get out of countrol quickly.
I don’t think our policy makers (the private Federal Reserve banks) will change their plans one bit even if we are indeed starting in a flat spin. They are acting on their own interests, not ours. They are content to enslave us in debt that we can never pay – then they will pluck our land and other valuable assets.
Many pundits make the mistake of claiming the Federal Reserve and our government are stupid or incompetent. They are not either. This has been carefully planned.
The Federal Reserve owns our media directly and control our politicians through bribes, blackmail and threats. We don’t have a government anymore, we have dupes.
powers of financial capitalism had a far-reaching plan, nothing
less than to create a world system of financial control in
private hands able to dominate the political system of each
country and the economy of the world as a whole…
secret is that they have annexed from governments, monarchies,
and republics the power to create the world’s money…"
Prof. Carroll Quigley,
Thanks for the link. I’m confused though . . . . perhaps it is a question of terminology. You say that the drop in the multiplier is an event horizon for massive inflation. Although Denninger suggests that the Fed will print, print (the opposite of what it should do in response to the decline in the multiplier) he also clearly seems to be a deflationista. He is not calling for any price inflation. Look at his predictions for 2009. Can you help me out here? I enjoyed his site btw, thanks for turning me on to it.