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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: neolib who wrote (252062)6/5/2010 10:46:12 AM
From: RetiredNow of 306849
 
Good questions. The thing is that they have more direct power to influence money supply through the printing of money. M3 is more of a symptom of broader issues, rather than something that can be impacted directly.

I'm mean look at what they've done. They've lowered rates to zero and gone nuts printing money and yet M3 is still tanking. How can they reverse that? Well, ironically, one way to reverse that would be to RAISE rates. Banks have no incentive to take risk and lend money when they get free money that they can then invest in Treasuries earning 2.5%. It's a risk free spread. Raise rates to the current Treasury rate and you'll force banks to lend. When they lend, then M3 will increase. It's not rocket science, but Bernanke doesn't seem to know his ass from a hole in the wall. So he sticks to ZIRP and QE. What a moron.
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