Poll: Will fabricating money from thin air save the economy?

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Will Bernanke's plan of fabricating money from thin air revive and thereby save the economy?

Yes, it is the right thing to do and it will work to save our economy.
1
7%
No, it is the wrong thing to be doing,and at some juncture it will destroy our economy.
14
93%
It really doesn't matter what Ben does.
0
No votes
I have no opinion.
0
No votes
I have no clue.
0
No votes
 
Total votes : 15

Poll: Will fabricating money from thin air save the economy?

PostBy: lsayre On: Sat Oct 05, 2013 7:22 pm

So far it actually has the appearance of working in many ways, but in the long run will fabricating $85 billion from thin air each month be a success, or will it end someday in an economic tragedy of major proportions?
lsayre
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: anthony7812 On: Sat Oct 05, 2013 8:02 pm

Being off the gold standard tossed our money into a funny bracket. I fear if we default we are in some deep pooonanny. Its like your credit report, the better your record the better valued you are, we default its like a collection on your credit report. But hey Im just an electrician not an economist.
anthony7812
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: fifthg On: Sat Oct 05, 2013 8:13 pm

Too many dollars chasing too few goods was taught in intro. economics as the cause of inflation
,but
Obama missed that class while he was toking up with his cohorts. How did he put it?complete absorption...of the pot,not the basic economics lesson,he obviously has no clue about economics.
fifthg
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: mikeandgerry On: Fri Oct 11, 2013 1:26 am

Goodness. I have been thinking and researching on this one a long time. My initial reaction is the same as everyone else.... That an expansion of the money supply through "quantitative easing" will prolong economic pain and cause the devaluation of our money.

The mechanisms have been twofold:

the bailout: large investment and commercial banks were strung out on collateralized debt obligations (mortgage bundles) that were questionably rated and placed in qualified special purpose entities (qspe's), also knows as hidden off the books in a legal way with one caveat, that if they became impaired (a fancy accounting word for losing value to a point below their acquisition price), they had to be shown on the parent companies books again. Thus, when those banks had so many mortgages going sour, their balance sheets were going to go sour overnight as they had to put those dogs on the books again. That would place their credit ratings by S&P and Moody's in the shitter and then all the counterparties holding the money side of any credit default swaps on that bank would begin a tremendous domino run around the globe. Banks would instantly become insolvent. That began to happen and took out Bear Stearns and Lehman Brothers.

To stave off the chain reaction, then TreasSec Hank Paulson and NYFedgov Tim Geithner needed to get cash and reserves into the hands of banks super fast. Normally only commercial banks are served by the Fed but because the repeal of the Glass Steagall Act blurred the banking distinctions, the government and Fed included investment banks because they were on the verge of collapse and were a critical part of the equation. Money was immediately created by the Fed buying the debts of the teetering banks and adding them to the Fed balance sheet as deposited assets for member bank reserves. This became the credit facilty of every bank that needed to meet debt obligations. It forestalled chain reactions that could have halted global trade due to insolvency.

The second part was economic stimulus, which also came in two forms, both of which entail government spending plans, one ostensibly to directly create jobs through spending to jumpstart the lagging economy, the other to lower lending rates to jumpstart main street business and other borrowing in the hope of business creation and expansion. To facilitate this the ARRA was passed calling for direct Fedgov spending of 787 Billion dollars. The rest was done by the FedResBank buying government bonds in QE I, QE II, QE III, and now QE Infinity to continue to expand banking reserves for lending.

The bailout worked and was mostly paid back by banks as they became solvent again. The ARRA spent the money for the most part but we never got any significant stimulus. The Fed continues to buy fedgov bonds at a rate of $85Bil per month. The potential for money supply growth remains strong because bank reserves keep building which banks could loan multiples of through demand accounts but little is being loaned out to business in comparison to the increase in reserves. Banks are using some reserves to loan money to themselves at near zero rates to invest in commodities and equities which helps bolster the markets.

To date, however, inflation (defined as a general rise in prices) remains fairly tame. What is lagging is wages which have not grown for the average worker in a decade. The effect is the same for them--less spending power--even if the explanation is different. The question is: if banks start lending robustly in an economic expansion, will inflation rear its ugly head as the multiplier effect of demand deposit lending by commercial banks takes effect?

Some argue that it must, and the damage will be a one-sided Weimar Republic style hyperinflation. Others argue that an economic expansion will increase the demand for money and thus the increase in supply will be needed to meet that demand. Yet others argue that the Fed can contract the reserves to slow any inflationary effect, and still others argue that wages will rise to cancel the effect of higher prices. In the past, wages have risen to meet prices.

I doubt very much that gold or silver will make a come back as money in a modern society. It probably is a barbarous relic. Then again, it's value isn't going to zero any time soon either. Money is, as always, a medium of exchange, that presumably, holds and stores its value, and is enduring. Our money has failed in holding its value and as an electronic entry, it doesn't seem too enduring to me, but then again, I am an old fart now!

What modern money has done well is to be an EXTREMELY good medium of exchange, locally, regionally, nationally, and globally. The effect is to drive economic activity efficiently as possible to benefit as many as possible. To that end it has been good. Government has tried to compensate for the effect of a poor store of value through well managed economies and government social welfare programs.

So, recapping, from what I have actually SEEN, the effect of "fabricating money from thin air" HAS helped create a better economy IN THE LONG RUN. (Actually, we are creating liquidity when and where liquidity is needed, not just fabricating money for the sake of fabricating money.) It has smoothed out economic peaks and troughs, reduced economic pain, reduced economic uncertainty and risk, and generally fattened our middle. That's what I see when I take a step back and a hard look.

It pains me to admit it. I have prepared for the worst. I don't like being pushed down the path too hard. I don't like putting my trust in the government or in others. I don't like seeing my bank balance in my savings account become irrelevant over the decades. I don't like the value of frugality becoming a quaint relic of a bygone era. But these are the signs of changing times.
mikeandgerry
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: franco b On: Fri Oct 11, 2013 2:59 pm

It seems to me the gist of this argument rests on the statement that "thievery is OK as long as it can be made legal either before or after the fact". Without the fraud there would have been no crises.
franco b
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: Rigar On: Fri Oct 11, 2013 3:11 pm

... the rating agencies we're committing the fraud.
... the banks were not doing due diligence
.... they were trading a poisoned equity-
... risk free thanks to the government


... and did I catch " inflation at the moment is fairly tame" ???
...thats GOTTA BE a typo :?:
Rigar
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: lsayre On: Fri Oct 11, 2013 7:00 pm

The DOW at 15,237 is a direct consequence of QE money from thin air going where it is needed the most and doing the maximum benefit for all of mankind. Interest rates at totally artificial near zero levels are another consequence (and one that is destroying the wealth of the nations retirees). QE money is clearly blowing massive bubbles in the stock market, the bond market, the housing market, and (perhaps the one to be feared the most) the derivatives market. One or more of these bubbles will someday implode and then it will be like the tide going out on QE. And it's only when the tide goes out that you can tell who's been swimming naked.

My guess is that the tide will go out when the petrodollar scam dies the horrific death that it rightfully deserves. We will be thanking Nixon for taking us off the barbaric relic gold standard when that happens. If you've ever wondered why we are hated and despised by the rest of the world, the petrodollar would be at the top of my short list of answers as to why. The rabid defense of it is behind all of our warmongering.
lsayre
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: fifthg On: Fri Oct 11, 2013 8:05 pm

we haven't seen "the long run" of the obama pipe dream yet.
fifthg
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: fifthg On: Fri Oct 11, 2013 8:07 pm

I hope it's not THAT bad,grumpy!
fifthg
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: grumpy On: Fri Oct 11, 2013 8:20 pm

I guess we'll have to wait and see... don't shoot me, just putting it out there, food for thought...
grumpy
 

Re: Poll: Will fabricating money from thin air save the economy?

PostBy: lsayre On: Sat Oct 12, 2013 3:33 pm

In considering this matter one must carefully weigh and ponder the difference between honesty and deception. We must also ponder whether it is moral, ethical, and acceptable for the end to justify the means, regardless of what those means might be. For example, in the late 20's and throughout the 30's the Fascist states in Europe were seen to emerge, grow, and prosper at the same time while the other westernized states wallowed in the depths of economic despair and depression. Yet the means to this end of growth were at their very core evil. If todays means are likewise evil, should we embrace them because they give the perception of achieving ends that we think are better than our current despair? Or should we instead carefully scrutinize the means to achieve an end goal, and if so, what means should we permit our leaders to enact on our behalf? Should just, limited, and objective law, limited government, honest money, freedom, and independence be our means, or should endless streams of purely subjective and indecipherable laws that no one can understand and can thereby be bent an twisted to any end, massive government, currency that is totally dishonest to the point that it must be forced into both use and acceptance by legal tender laws, and the presumption that everyone is a potential terrorist who must be monitored and controlled be our means?

I look at the petrodollar through this lens and I find it to be an evil that has worked great for decades and that has permitted the United States to prosper without oil and then ultimately without even productive manufacturing, merely because our might forces others to accept our dollars and use them to purchase oil. No US Dollars in your possession, or if some day there is no value recognized in the US Dollar, and there is no oil for your nation as a consequence. It exists as a system whereby evil means have created great ends (but only from our national perspective, as for all others it brings hardship). Try to set up a means of exchange whereby to purchase oil in some other currency than Dollars, or through any other means of direct trade that excludes the US Dollar, and we crush the living daylights out of your nation, or at the very least depose its leadership. Something is very wrong here.

And lest one think that the peoples of the Arab nations hate us "for our greatness, our prosperity, and our freedom", the greatness and prosperity components come straight from the petrodollar and our defense of it. The freedom component is highly illusionary, though what we once had and still have of it is being eroded from within as we fight to maintain the type of Fascist government required to sustain the petrodollar. And who do you fight to sustain the petrodollar? You vilify as terrorists and then fight those who have the oil and wish to be able to sell it in currencies other than petrodollars (I.E., the Arabs). You also fight against (and likewise define as terrorists right here at home) those who see the petrodollar as an evil. So everything that is going wrong for us today points to the petrodollar. Loosing your freedom is a consequence of the petrodollar. Losing your sons on Arab soil is a consequence of the petrodollar.

The government may be overjoyed to label gold as a "barbarous relic" (which brings to question: Why are the central banks of the world sustaining great hoards of it and in general increasing their supplies of it?), but the real "barbarous relic" that our government fears is the Constitution.
lsayre
 
Stoker Coal Boiler: AHS S130 Coal Gun
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: Rwalker On: Thu Oct 17, 2013 6:31 pm

I hear this a lot at work. I get questioned as to why I do the things I do such as prepping, gold, etc.

The answer I always get is, "The US will just print more money!"

The more money we print with no backing, the less the US dollar is worth. Eventually countries we buy our goods and services from will stop accepting the US dollar for payment. Then what? I hope you have a plan because if you don't, it is going to be like Wal-Mart when the welfare cards had no limit...

Of course, we could do the right thing and become energy independent and wealthy, but that is too much like work and enough foreign pockets don't get lined.

Not a long answer like some, but my 2 cents worth anyway.
Rwalker
 
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: LoschStoker On: Mon Feb 10, 2014 11:13 pm

Search, Russia to Ban US Dollar
China Dropping the Dollar
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Re: Poll: Will fabricating money from thin air save the economy?

PostBy: labman On: Tue Feb 11, 2014 2:53 am

When you pull something out of your ass, all you end up with is *censored*. Not one of the idiots in Washington have a clue how the real world operates.
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