Posted on 04/27/2008 3:01:19 PM PDT by shrinkermd
Yes, but you did not create the short term cash in order to liquidate your stock portfolio. The Federal Reserve did.
Your problem is that in that joy to be a smarmy jerk like Toddster you overlook simple fundamental facts, like the fact that short term money equivalents, unlike credit, are not created out of thin air but genuinely reflect short term cash created by the Federal Reserve.
There is a wealth of economics literature on the subject if you need to go educate yourself on it. You can start with the Federal Reserve itself.
You see, if the federal reserve did not create the liquidity for the system, you could and everyone else could not liquidate stock portofolios at ever increasing valuations because one liquidation would decrease the amount of short term cash available for the next liquidation. There is only so much money to go around, unless Bernanke stays as busy as he has been and creates more of it.
BTW I know of no serious economist or member of the federal reserve board or economist at the federal reserve who argues that the federal reserve does not create short term money. The argument is not about whether they do, but whether they should, and whether they should be creating moral hazard by liquidating the excesses of the banking system.
Prove it. LOL!
Baghdad, you must be the only person I know who thinks that the Federal Reserve does not create money. Even the Federal Reserve says they create the money, and publish the statistics on how much money they create.
No, clown, prove that this $2 trillion jump was caused by the Fed running the printing press. Prove that it was not caused by individuals and corporations deciding they wanted to hold more cash. It should be easy, if you know how the Fed creates money.
Even the Federal Reserve says they create the money, and publish the statistics on how much money they create.
If only you understood the statistics that they publish. LOL!
No you obtuse twit. People can want all the cash they want, and the demand for cash is infinite. The limit is how much cash there is to hold, and there is only one source for cash.
Now try thinking clearly instead of like a smarmy jerk all the time.
Wanting cash and holding a larger portion of your wealth as cash are two different things.
and the demand for cash is infinite.
Not even close. What yield do you currently earn on your cash?
The limit is how much cash there is to hold, and there is only one source for cash.
Excellent! Prove the Fed created $2 trillion more cash over the last few years. Should be easy, even if you are an ignorant jerk.
I will take the published statistics of the Federal Reserve for it. You apparently believe that it is all a fiction.
Wanting to hold more of one's assets in cash does not make more cash available.
If everyone holding non cash financial assets (stocks, bonds, real estate gold, etc.) in the US tomorrow decided instead they wanted to hold cash, the total value of all non cash assets would plummet to some fraction (less than 100%) of all cash currently on hand. It would not create an extra dime of cash not already in the banking system (less a certain amount of money currently stuffed in matresses that might come out of matresses and actually be put into the banking system).
Anything else would have to be generated through an increase in banking reserves.
But you know that already and are just being very very dense to try to show how very smart you are.
I will take the published statistics of the Federal Reserve for it. You apparently believe that it is all a fiction.
This chart you posted does not show that the Fed created the "2 Trillion blip up on the tail of the cart from oh about the middle of 2007 through to the present moment"
The only way the Fed can create money is by adding securities to their balance sheet. How much did they add since oh about the middle of 2007 through to the present moment?
You apparently believe that it is all a fiction.
Yes, your supposed understanding is all a fiction.
See, the thing about money with zero maturity is that it can increase without any action by the Fed. My CD matured, some of my money moved from M2 (time deposits) to M0.
Glad I could help.
BFS!
BS you dumb twit. When your CD matured, the bank that owed the money had to take some of its own M0 to pay off your M2 and turn your M2 into and M0. Total M0 is unchanged.
Zero sum, my smug ignorant little tikester.
Also, my little tikester, I don’t think you understand what your graph actually shows. Hint: it does not near term money in circulation.
Are you really as ignorant as your post implies? Banks can create money with no Fed. In fact, it is the hindrance of a reserve requirement that holds money creation in check.
Obviously you have not clue how central banking works or you would not make an idiotic well the FED does not create it, but the Fed restrains it kind of dumbass remark. Go learn some basic economics and then you will be appalled at how grossly ignorant your question is.
I don't get you your junior partner sidekick tikester child. I really don't. THE FEDERAL RESERVE TAKES CREDIT FOR GROWING THE MONEY SUPPLY. They claim they set policy, every economist says they set policy, they execute the policy through well published open market operations which they explain in gorey detail, and they publish charts and graphs showing exactly how much money they cause to be created in the banking system and every economist says that that is what they do, but you two idiots deny that they do it. Are you dense, are you obtuse, or are you calling all economists and central bankers liars. Which of the three is it? You can check more than one box.
It is admitted, here, that long term credit depends upon demand and supply for credit as well as the availability of short term money to finance long term credit and service the resulting debt paymnets (principal and interest). But the leash on money with the federal reserve is really really tight,and the supply of what the federal reserve calls short term money - which they claim they manage - has gone up by $2T. You did not create short term money by selling stocks. You became a sink for short term money, not a supply thereof. Get it!?!?!?!? You are a negative, not a positive in the short term money supply equation. When you sold your stock to acquire M0 someone else expended M0 to acquire your stocks.
Gold has been declining at a 75% annual rate since the Bear Stearns bailout. Nobody ever talks about the "robbery" involved in that, though lol.
No Bernanake is not worried about you expanding the money supply. He is fighting tooth and nail to keep you two from collapsing the credit supply by working very hard on M0 to counteract the demultiplying effect your actions are having.
The actual policy argument among serious economists, unlike you guys, is not whether Bernanke is expanding the money supply, but rather whether he should continue to reward and expand moral hazard by doing so.
The present bubble, though, is in commodities. And it is going to burst, too. Right behind it, third world economies that have been long term basket cases but have recently been charging on hot money running from the dollar.
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