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Strategies & Market Trends : The coming US dollar crisis
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stsimon
To: Real Man who wrote (59079)10/17/2016 11:55:14 PM
From: Elroy Jetson1 Recommendation  Read Replies (2) of 71449
 
When you focus on how much money is "created" while ignoring the money which is being destroyed, you'll never understand what's going on.

If I print $13 trillion Dollars and put them in a warehouse, it's a lot of money but that's obviously not inflationary because it's not going anyplace.

If I foreclose on a couple trillion Dollars of mortgages, that money just got extinguished so is very deflationary. If I replace those extinguished mortgages with a couple trillion Dollars lent to hedge funds who buy stocks or foreclosed homes, or lend to businesses - the net result is zero. Not inflationary and not deflationary.

Most of our money right now is sitting in banks earning very little because the bank has not lent-out most of our money. If money were not lent to investment banks to buy securities the market would be in huge retreat due to people like myself who withdrew money.

When you're the Fed how do you know how much it too much and how much is too little? Simply measure prices and adjust your input or withdrawals to stabilize prices.

In the 1930s the Fed didn't do this so home prices declined by 95%, banks failed, businesses could not service their debt as the price of their products declined by 50% or 90%. Was that really a superior outcome?
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