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Politics : Ask Michael Burke

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To: Mike M2 who wrote (124023)8/11/2010 3:41:27 PM
From: rich evans1 Recommendation  Read Replies (3) of 132070
 
I do not see deflation or recession based on the latest Fed statements. A slowdown in growth is not recession but a weak recovery. And the Fed said they were going to take the proceeds from MBS and maybe more to buy Government Treasuries. This is printing of money and called Seigniorage. This will increase the money supply. The MBS buying did not increase the money supply, only the monetary base. Since the banks did not loan, their was no money multiplier to increase money supply from the MBS buying. Now there will be as the government will certainly spend all the money they can.
Rich
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