Money Supply Increase Needed?

[Chung Tran]

https://www.marketwatch.com/story/th...ney-2019-08-21

article makes some good points, but the key argument seems to center around the inflation rate, which is never stated in the body.. 2% inflation or more, the Author says, is necessary to beat back deflation.

but what is inflation now? maybe the "official" rate is under 2%, but prices we actually pay is up well over that, the past year.

and pumping in more money would likely trim interest rates "naturally", as opposed to the Fed enacting lower rates by decree, but there is already gobs of money in the system. what is needed is a business demand for the already large amount of money sitting, waiting for utilization.

[gnadfly]

Did somebody say free money?

[The Ghost of Jeff Epstein]

Liberals believe we should just print more money to give to everyone in America(illegals included) then all of our problems would be solved.

[Chung Tran]

no, not free money, unless you think not paying interest on excess reserves is a form of free money.

I was hoping for something erudite, beyond "free money", retorts.

[bb1961]

CHANGSTER a thread or comment by you...erudite

[Tiny]

Originally Posted by Chung Tran

https://www.marketwatch.com/story/th...ney-2019-08-21

article makes some good points, but the key argument seems to center around the inflation rate, which is never stated in the body.. 2% inflation or more, the Author says, is necessary to beat back deflation.

but what is inflation now? maybe the "official" rate is under 2%, but prices we actually pay is up well over that, the past year.

and pumping in more money would likely trim interest rates "naturally", as opposed to the Fed enacting lower rates by decree, but there is already gobs of money in the system. what is needed is a business demand for the already large amount of money sitting, waiting for utilization.

You know more about this than I do, and LustyLad's probably the only person on this forum who could intelligently address this. That said, you may have hit the nail on the head in your last sentence. As Lusty pointed out here, the money supply has been growing at a rapid clip, it's just that the velocity of money has slowed. Inflation has ranged from 1.5% to 2% in YTD 2019, we're certainly not experiencing deflation. Going forward, I'm more worried about inflation going up than going down.

[Unique_Carpenter]

Umm, ok, Chung, and/or the newsies, know more than the Fed Reserve professional economists do.
Has hell frozen over?
The article author is a wall street financial guy with vested interest in financial market transactions. Thus, a paid "forecaster" of financial interests. If he really was an independent economist, he wouldn't be bringing up 1970s economic stories as comparatives to today's quite fluid worldwide economics. There is no valid comparitive and if he can't eco model today's world using today's various eco models, he should be getting ready for retirement instead of embarrassing himself.

In brief, just cause the Fed dropped rates a smidge, why do folks think the end of the world is coming? Fed has plenty of room.

And yes the Fed keeps an eye on the US money supply, as well as the money supply of other nations. Of course these are part of the Feds economic platform. Geez, ya really think they wait for newsies to bring stuff to their attention?

And btw, all inflation rate indexes do contain consumer staples.

I am just amused when folks with an eco 3 college class think they know more than the Fed does.

[JRLawrence]

Originally Posted by The Ghost of Jeff Epstein

Liberals believe we should just print more money to give to everyone in America(illegals included) then all of our problems would be solved.

LBJ did that with his war on poverty and the war in Nam at the same time. The result was that we hit a 21% rate under Jimmy C. That means that if you had money in savings, it was not worth a lot less because the price of everything went up.


Under the Damdemocraps the only thing that is worth a dollar today, and 10 years from now, is a dollar bill. Everything else, including gas and a loaf of bread will cost more than it did 10 years ago. Duh, the dollar now buys less; for the same dollar. Duh, that means the value of your savings account went down. The Damdemocraps have taken the value of your savings and put it in their pockets.

The Republicans seem to know this, and have kept inflation down. Trump, because he has actually studied economics and business, knows this and had kept a tight handle on the economy. We now have the best economy ever, more jobs for everyone, and especially more jobs and income in the minority areas of the cities.

That in less than three years. That is why he will be elected. It is time for everyone to wake up. The damdemocraps steal from us. Trump may be a blunt guy, but who cares: he has improved the country. Sometimes it is just time to kick some ass, and get something done. Trump has done that. The dumb democraps just don't like getting their ass kicked.

Thank you Donald!

[JRLawrence]

Originally Posted by Unique_Carpenter

.......

In brief, just cause the Fed dropped rates a smidge, why do folks think the end of the world is coming? Fed has plenty of room.

......

Hey Carp,

If I remember this right, The Fed had dropped the rate once under Trump, a smidge. At the same time they have had numerous rate increases under Trump. Under Odumbo the Fed continued to drop the interest rate and the economy was still tanking because of Odumbo policies. Lack of jobs, and the Economy in the tank.

Trump may be a rude guy, but as least he has kicked some ass to get the economy restarted. He has had to fight the Fed tooth and nail, and they still screw with the money supply, and rase the rates repeatedly. Doesn't matter, he has still made positive progress on the economy.

Economics is not a simple subject, but as least now we have a smart guy who understands business and finance. Odumbo and Hillary have no idea of how the economy is suppose to work, and don't care: everyone knows it.

Thank you Donald!

JR
MBA

[Chung Tran]

Originally Posted by Unique_Carpenter

In brief, just cause the Fed dropped rates a smidge, why do folks think the end of the world is coming? Fed has plenty of room.

it's not about who is "smarter", or who knows more than the Fed.. the Author just suggested a different approach to the same goal. I don't agree or disagree on method, I'm asking why the money supply needs to be increased at all? the Fed and the Author both agree that it does.

plenty of room? depends how you look at it. with the relative strength the economy now has, the idea of cutting rates at all, seems a bit absurd.. peeling back the layer of the rate cut decision, underscores the long-term fear the Fed has, that the economy is headed for trouble. we have plenty of money already, savers are not getting paid to save. cutting interest rates exacerbates that.

Originally Posted by Tiny

As Lusty pointed out here, the money supply has been growing at a rapid clip, it's just that the velocity of money has slowed.

right.. velocity was the word I wanted, but could only hint at

another point.. Savers from Europe want a place to put their money, since they are getting negative yield. why not utilize those funds, instead of following the spiral down to zero or negative rates? if our economy and dollar is REALLY strong, there is no need to finesse the model.

[nevergaveitathought]

money is just like any other thing

more of it cheapens it as it is in greater supply

as it cheapens it takes more of it to purchase the sought after item

increased velocity of money is needed as well, the number of times a dollar turns over

and voila, inflation

there is a relationship between interest rates and inflation, normally an inverse one

when rates are low, people tend to borrow and spend, purchases increase and heightened inflation can occur, and savings rates don't entice people to save as much

when interest rates are higher, borrowing and spending are lessened; additionally savings rates are higher which attract money and again spending is lessened

[Tiny]

Originally Posted by Chung Tran

right.. velocity was the word I wanted, but could only hint at

another point.. Savers from Europe want a place to put their money, since they are getting negative yield. why not utilize those funds, instead of following the spiral down to zero or negative rates? if our economy and dollar is REALLY strong, there is no need to finesse the model.

Negative rates are bizarre, like bitcoin. I don't understand why someone would pay the German government 0.7% per year for the privilege of loaning them your money. Why not just put
your Euros in a safety deposit box?

[gnadfly]

Sounds like ya'll are still talking about free money. Call it quantitative easing. Call me crass.

But "free money."

You ever hear this story about the King who walked around naked but nobody would call him on it?

[friendly fred]

Originally Posted by Chung Tran

https://www.marketwatch.com/story/th...ney-2019-08-21

article makes some good points, but the key argument seems to center around the inflation rate, which is never stated in the body.. 2% inflation or more, the Author says, is necessary to beat back deflation.

but what is inflation now? maybe the "official" rate is under 2%, but prices we actually pay is up well over that, the past year.

and pumping in more money would likely trim interest rates "naturally", as opposed to the Fed enacting lower rates by decree, but there is already gobs of money in the system. what is needed is a business demand for the already large amount of money sitting, waiting for utilization.

I would much rather print money than have higher taxes, plus my real estate would benefit from inflation.

We are never paying the debt down anyway so who gives a shit? As long as suckers value the USD we still have a country, such as it is.

[Chung Tran]

Originally Posted by friendly fred

I would much rather print money than have higher taxes, plus my real estate would benefit from inflation.

We are never paying the debt down anyway so who gives a shit? As long as suckers value the USD we still have a country, such as it is.

Ha!

well, your Real Estate has a price increase squeeze-point, that will shut out buyers at some level. but yeah, as long as the Dollar is the King of the Mountain, might as well keep playing the game until it stops working..