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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 375.93

-1.8%

Nov 14 4:00 PM EST

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To: carranza2 who wrote (100363)	4/24/2013 9:46:06 PM
From: Maurice Winn	1 Recommendation Read Replies (2) of 217774

When you think about, all money is always just sitting doing nothing, apart from the few moments when it is somewhere in transit between one place and another. < There is a huge pile of money held by banks as excess reserves. It is doing nothing. It will enter the economy at some point. We'll certainly see inflation then. > One could say that the Federal Reserve has an infinite amount of money sitting doing nothing because they can create out of nowhere another string of 0s up into the $quadrillions and beyond. In that sense, all money only exists instantaneously as a definition of value at the moment of exchange. At the moment I theoretically have a big pile of $00000s sitting in some account somewhere, but until those $000s are transferred to somebody else for some exchange of value they don't really exist other than as a subset of the Federal Reserve's unlimited supplies. The Federal Reserve could, while I'm typing this, be doing a currency "split" and issuing all their friends $10 for each $1 they are holding which would leave my money in exactly the same state except that it would be worth a tenth of what it was at the beginning of the sentence [if my $ are the only ones which are not friends of the Federal Reserve]. The Gold Bugs like gold because lumps of gold exist independently of anything anybody does which does not actually result in the lumps being broken into pieces, stolen etc. They hope that its value will continue to be about what it is when they bought it [value as measured in kilograms of potatoes or other useful things]. Speculators in gold hope it will be worth more such as it would be if everyone ditched US$ and swapped to gold. All those US$ sitting in banks "unused" don't necessarily ever have to "do" something. Just as the infinite supply in the Federal Reserve computers never have to actually be created as credits to somebody. None of them need ever "enter the economy". At 0% interest, there is no particular reason why somebody should do anything with them if they expect deflation. Might as well just have a big pile of $000s in the bank. Mqurice

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