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.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (13157)	7/30/1998 11:59:00 PM
From: Jon Koplik	Read Replies (2) \| Respond to of 152472

Maurice - if some of us money supply people show up at the next Qualcomm annual meeting, we can all go together to a restaurant after the meeting is over, and then talk about the Federal Reserve and monetary aggregates (in voices that are just a little bit too loud) until everyone else at the restaurant starts giving us that "what's your problem?" look (and then all leave, without ordering any dessert). And then later, we will all be (politely) "asked to leave" by the owner of the restaurant. Jon.

To: Maurice Winn who wrote (13157)	7/31/1998 10:49:00 AM
From: bananawind	Read Replies (1) \| Respond to of 152472

Maurice, OTMoneyOT ...what the charts don't say, is how fast the money is moving That's what the academics call money velocity, and you are right about its importance. Velocity can vary on a cyclical basis (Japan, nobody wants to borrow, just want to stuff the mattress) even though we may be experiencing a long-term secular increase (coins to notes to wire transfer to e-commerce). The Fed may be able to control supply, but there's little they can do about velocity. I think that is why they gave up trying to target specific growth rates in the M's like they did in the 70's and early 80's. If you think the market hangs on Greenspan's every word now, you should have seen how hung up on the monthly M's it was back then. Really seems better now with them just trying to target inflation. Problem is inflation is so hard to measure because of technical innovation, productivity, and substitution effects, among others. Government stats are next to worthless. Anyway, no worries if Q.Com fails to hit $80 today. This quarter we begin the march toward 10% after-tax margins and $10 billion sales. Target date is now 2001 latest, earlier if W-CDMA-VW royalties become reality. $80 or $63 today won't make much difference at that time and will probably be very hard to read on Q.Com's log chart. So relax, take a sail, sip some sherry, play golf, and have a good weekend. -Jim if you know you are at A, and will eventually get to C, why worry about B?

To: Maurice Winn who wrote (13157)	7/31/1998 3:00:00 PM
From: JMD	Read Replies (2) \| Respond to of 152472

****off topic + BORING = MONEY SUPPLY******* Maurice, in an uncharacteristically low key response, Jim [Florid] Frost neatly summed up one of the major reasons that the sum total of all the dough sloshing around the system [even assuming you could get everybody to agree on what 'dough' is and what cubby-hole each of the various types of dough fits into, which you can't] is less important than the speed at which it sloshes: which the economic gurus refer to as the velocity of dough. Jim also pointed to another key variable which may be more important than quantity and velocity combined: the productivity with which dough is employed. In the '80's, the U.S. was thought to be going in the crapper and would soon be in bondage to the Japanese because the latter were saving their bim-bims off whereas the Yanks were spending it faster than sailors on weekend passes. The Japanese, opined the learned ones, were kicking our fanny in Capital Formation. (Investment capital, by definition, can only be created through Savings which is what's left over after you subtract Consumption from GDP. (are we having fun yet?) We Consumed; the Japnese Saved, ergo Sayonara to America's economy or something like that. Turns out however that Japanese savings got shoveled into either (a) their futons, as Jim points out, or the Postal Savings System which is virtually the equivalent, i.e., it didn't do anybody anygood cause it wasn't used to build factories and employ people and so forth or (b) it was used to build things, but mostly bridges that had $50 tolls which nobody drove/drives on and other UNPRODUCTIVE stuff. Meanwhile, the crazy Yanks were putting their meager Savings /Investment Capital into Silicon Valley and elsewhere and borrowing the rest from the Japanese who had beaucoup Yen to lend us. Our money tree as a result grew like a son-of-a-gun, while the loaned Yen got repatriated at absurdly low rates of interest further exacerbated by the exchange rate which effective meant that they loaned us a buck and we fully repaid them with, oh, say $.60 or so. This was not, as the saying goes, a terrific deal for the Japanese. It was in fact one of the greatest wealth transfers in modern economic history and damned if very few folks even talk about it. Okay, there's one more little tidbit to polish off this learned drivel and it directly answers your question about money getting re-lent over and over and in some mysterious fashion a dollar gets impregnated and gives multiple birth. It's true! This one goes under the moniker of the Multiplier Effect and derives from the way the Fed handles the money supply with the Money Center Banks. The scam on this one is kinda complicated at the technical level, but suffice to say that each bank gets a form of Super Dollar from the Fed which allows them to lend X Dollars for each Super Dollar: they just create money. It's the damndest thing. But it works cause not everybody takes out their dough from the bank at one time--they're content to leave a percent of it on deposit. So at any given time I've got a $100K line of credit and you've got a $100k line of credit so we got $200k to putz around with and buy cell phones and stuff. But the bank doesn't have the $200k! We all just think they do, and as long as we think THEY do, WE do. So in the unlikely event that we both marched in and tapped our full lines simultaneously, the banks would give it to us from somebody else's untapped lines and we would never know that those dudes were playing a shell game. Now if Chairman Alan decides things are getting a little too warm in the kitchen, he can rain on the parade in a variety of ways, but the most powerful is by adjusting the amount of Super Dollars he alots to the Big Frigging Money Center Banks [technical term] who then in turn will be able to create less capital out of thin air. So now we come full circle and admit that the amount of dough sloshing around in the system is important but only also in relation to its velocity and productivity. Also it is extremely important not to screw with the Chairman, because he be the man who controls the shell game. :] Surfer Mike