Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: maceng2 who wrote (2757)	6/26/2003 9:11:31 PM
From: maceng2	Read Replies (1) of 4905

OK, I think I see the point being argued.. Message 19065061 So, as an accountant, you can say with a 100% accuracy that Fanny and Freddie do not create money. That is only looking at these government backed institutions by themselves though, without interaction with the rest of the economy. In terms of balance sheets, no they do not create any extra money, not a single cent. I look at finance slightly differently though, as a process, like for example a chemical reaction inside a closed container. Therefore I am considering the interaction of Freddie and Fannie in the wider context. In that process, lots of extra money has been generated by the government and by the fractional banking system, and both Freddie and Fannie use those funds copiously as they are spread throughout the economy. Therefore I would argue that they are indirect agents in creating an increased amount of money in the system. /edit. i.e. Fanny and Freddie are a mechanism where lots of fractional banking created dollars end up being pumped into the property market. Am I making sense here? or deluding myself that I think I understand whats going on -g-

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