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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (144415)1/17/2002 4:18:33 PM
From: Ken98  Read Replies (1) of 436258
 
<<Fed US Tsy coupon pass adds $1.073 bln in reserves>>

Plus $7B in repos. Have you ever pondered the change from physical fiat to electronic fiat? I've been noodleing that one over lately.

It seems conceivable that when there was physical fiat (dead presidents in people's dirty little hands) you could quite literally print your way out of a recession.

But now that fiat is manifested more in the electronic realm, any new fiat creation is first and foremost a new debt. For some period of time (say a couple of decades as Al did) the velocity of that credit through the economic
system was stimulative.

At some point in time, however, the food-chain of borrowers dries up and any new fiat creation just becomes an effort in trying to stuff more Twinkies down Jabba the Hutt. Or, as some around here are fond of saying, pushing on a string.

All of the Yen fiat that was created initially flowed into the other Asian economies and after 1998 flowed in US financial instruments. The recent Clownbuck flood went to the fat, dumb and happy US consumer (who is beginning to look more than a little bit like Jabba).

My ultimate questions are: Is it even possible for Jabba (the ultimate borrower) to become sated? And, if so, does that excess electronic fiat flow to some other destination? Beats me, just something that I've not ever seen much written about.
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