Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: studdog who wrote (16361)	11/19/2004 9:40:25 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

Marc Faber did not say the Money Supply (very nearly the same thing as the total amount of indebtedness) was declining. Marc Faber pointed out that the *velocity* in the growth of the money had declined. This means that the money supply is growing, but less quickly. This is a problem with monetarism. To maintain constant growth, the amount of debt must be expanded exponentially. If the amount of debt grows less quickly, asset values falter, endangering the collateral value of the debt. .

To: studdog who wrote (16361)	11/19/2004 10:16:48 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

money supply is indeed leveling off or dropping. Paul Kasriel at northern trust commented about it to me on the phone. But check out these links if you would: In particular look at the last two links from Mises Message 20782032 From Heinz on Money Supply Message 20784169 Mish

To: studdog who wrote (16361)	11/19/2004 10:20:58 PM
From: Square_Dealings	Read Replies (3) \| Respond to of 116555

I think the money supply is contracting because everyone is tapped out and cant borrow any more. The Fed pushed on the string for too long. The idea that: now we are screwed and the dollar will get stronger is twisted imo. The US has destroyed the concept of savings. After 911 the message was "the patriotic thing to do is get out there and buy buy buy". Bonds used to be purchased by people with savings and they got paid interest for use of the money. Now the banks print up bonds 100:1 for every dollar they have on deposit and loan money out to build McMansions. The dollar is like a sports car that got driven into the ground, clutch burned out, gears stripped and now the owner is worried that its lost its value. So they immediately start driving more conservatively and expect that it will increase in value. I have no idea how far the dollar will fall but it might help to restore confidence if the government would approve a new budget, the federal pension guarantee fund wasnt short 30 Bln, and Fannie Mae or Freddie Mac could actually produce a financial statement. It would also help if money markets paid more than 0.7% interest M

To: studdog who wrote (16361)	11/20/2004 12:57:25 PM
From: GraceZ	Respond to of 116555

Reports of money supply contraction, like the death of Mark Twain, are greatly exaggerated. Of the four most widely used measures, M1, M2, M3 and MZM, only MZM has dropped and then only in the last month or so. Mostly the growth of these various measures has slowed but they are all still positive on an annual basis. They've slowed to just above the rate of GDP growth. MZM is flat while M2 is growing because of the difference between the two measures. What is adding to M2 is the recent uptick in C&I lending which doesn't show up in MZM because the money from the loans, which is used for things like plant equipment and inventory, doesn't necessarily show up in a "liquid" measure like MZM. The external value (the value of the dollar against other currencies as opposed to the value of the dollar against goods and services) of the dollar is mostly a belief and confidence issue. You'd think it would hinge entirely on inflation but the expectation for inflation was much higher back in 2000-2001 when the dollar was making record highs against other currencies. People now believe the dollar will be worth less against some other currency in the future, therefore they sell it to buy some other currency. It will decline until they believe otherwise.