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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (137011)	12/5/2017 6:05:56 PM
From: Gemlaoshi	2 Recommendations Recommended By bart13 dvdw© Read Replies (1) \| Respond to of 218343

Elroy, the idea that increased GDP spending can be squeezed from hoarded cash would be like squeezing blood from a turnip. Currency is only 11% of M2 money supply ($1.5T out of $14.0T), and has been a very consistent 10-12% of M2 since 1960. That is indicative that the level of currency is not the statistical outlier. fredblog.stlouisfed.org The monetary outlier is that the velocity of M2 is at historic lows. As velocity falls, the FED is forced to increase M2 supply just to maintain the same level of purchasing power (i.e. the deflation conundrum). The FED could impose negative interest rates in an effort to force money out of savings accounts and other time deposits into increased spending, but that has little to do with "hoarded cash". The FED has no tax powers and therefore can't tax cash, gold, or other savings vehicles. That would be the job of the US Treasury and congressional tax policy. Either negative nominal interest rates or tax on savings would come at such a high political cost that a little "controlled deflation"" might be the preferred political cop-out.