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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (90958)	9/30/2007 6:40:24 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 306849

In the view of the monetarist policy, how would you characterize the Japanese Monetary Policy after their RE and stock market wallop after 1990? Did they try to increase the monetary "velocity" (if something like this exists) or not? How did they then buy themselves out of the bust?

To: Elroy Jetson who wrote (90958)	9/30/2007 7:18:37 PM
From: neolib	Read Replies (3) \| Respond to of 306849

It would be of great service to the nation if a reality TV series were created with the sole purpose of showing how a society creates a money supply. Plunk the "survivors" on the typical castaway island, and show how you progress from a pure barter society to hedge funds and derivatives and what the purpose and significance of each step is. I freely admit that I'm clueless on the matter, despite reading many what I consider contradictory explanations. After all, we actually have a guy running for Pres who would like the gold standard back. Is he a fruitcake or not? Got me! On our castaway island, it is pretty easy to see the following steps: 1) Immediate barter exchanges of perceived equal worth. 2) Barter exchanges with non-simultaneous exchange of goods, or partial non-simultaneous exchange of goods due to fractional value problems. 3) An IOU paper in exchange for longer term payment between two parties introducing the notion of credit. 4) The notion that the IOU paper can be exchanged with a 3'rd party. 5) The realization that you might like to trade off only a fraction of the IOU paper, or better, get the original one written up in smaller denominations of useful values that you can trade off individually. 6) The realization that IOU's from different people pose different risks, so that averaging risk and using similar looking IOU's is useful. 7) The realization that some people will simply spend all day drawing (or carving, whatever) IOU's, leading to a consensus on a common "mint" with injunctions against forgery, and some oversight of each individuals debt levels (i.e. credit ratings and lending regulations). 7) A final example of all the components of the monetary system, and how decisions are made in it. Also how the decisions made in the monetary system affect non-monetary asset prices, economic growth, etc. 7) At this point we have a monetary system, and it would be useful to then explain how instead of minting collective IOU's, a different system could be established by choosing to make some expensive "hard" currency which anyone can do (the equivalent of mining gold) but where the process of making the money is about equal to the value of the money, so that forgery is essentially controlled automatically through effort of manufacturing. Explain who this tangential significant effort to manufacture money impacts societies productivity, as well as what benefits, if any, it provides. Are there alternate means of obtaining the benefits with greater efficiency (i.e. fiscal discipline)? If anyone on this board cares to detail such a script for those of us who are less knowledgeable about monetary systems, I for one would be most appreciative.