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(Federal Reserve)   The Federal Open Market Committee will now come to order. Developments in financial markets and the Federal Reserve's balance sheet. Status: still printing our own money. If there's no new business, this concludes The Federal Open Market Committee   (federalreserve.gov) divider line 51
    More: Spiffy, Federal Open Market Committee, Federal Reserve, committees, financial markets, balance sheets, money markets, capital good, consumer price index  
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361 clicks; posted to Politics » on 10 Oct 2013 at 10:39 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-10-10 06:55:47 AM  
And we're planning on printing it until the con falls over and sinks into the swamp, by which time, we should own all the actual wealth.
 
2013-10-10 09:12:06 AM  
I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.
 
2013-10-10 09:19:09 AM  

b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.


At least you had the good sense to look into it. I've been hearing people trotting out "hurr durr printing inflation blergh" for years now.
 
2013-10-10 09:37:08 AM  

b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.


I'm not sure that guy's analysis is any more comforting.  He's effectively saying the fed can't control the market at all, so an inflationary spike could happen at any time for no reason.

Yeah, that's SOOO much better.
 
2013-10-10 10:41:16 AM  
Because there was never inflation under the gold standard
 
2013-10-10 10:45:58 AM  
If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.
 
2013-10-10 10:49:18 AM  

Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.


"Reduce military spending by a third."

There we go :3

/...yes, yes, I know, reduced industry from military suppliers and a slowdown/layoff cascade is bad in general and HOLYshiatBALLSBAD in our current economy...
 
2013-10-10 10:50:00 AM  

Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.


No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.
 
2013-10-10 10:50:28 AM  
Money is actually only electronic bits.
The reason there isn't inflation is because the money that's being "printed" or more accurately, "published" is all going to banks at low rates. The banks are supposed to lend that money and stimulate the economy.
However, since banks are now also investment houses (thanks to the Gramm-Leach-Bliley Act, which repealed Depression-era prohibitions of just that by the Glass-Steagall Act), they banks are investing the money instead of pushing it out the door to the functional street-level physical cash economy.

Here's the punchline: It's not trickling down.
Wah-la. No inflation and no risk of it because the "money" is being hoovered up by Wall Street and the giant banks.
 
2013-10-10 10:51:20 AM  

Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.


I'm stealing that.
 
2013-10-10 10:52:05 AM  

ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.


As Former RNC Chairman Michael Steel famously said (during an NPR interview of all places), "Nuance is a 4 letter word"
 
2013-10-10 10:52:07 AM  

Lost Thought 00: Because there was never inflation under the gold standard


And inflation has never been a positive function for society.
 
2013-10-10 10:52:31 AM  

meat0918: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

I'm stealing that.


If you do, please change "even economics" to "even economists." Sigh...
 
2013-10-10 10:58:00 AM  

ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.


I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)
 
2013-10-10 11:00:28 AM  
 
2013-10-10 11:02:03 AM  

b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.


887 BILLION -- too big to jail.
 
2013-10-10 11:06:45 AM  

Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)


Didn't Marx ask the same question?
 
2013-10-10 11:07:27 AM  

HotIgneous Intruder: Money is actually only electronic bits.


www.homevideos.com

/its all a ponzi scheme
//but it's a gov-endorsed ponzi scheme
///your great-great-great-great-grandchildren will be paying it
//drug war, yadda yadda
/drug cartels offer cheaper interest rates than banks
 
2013-10-10 11:12:15 AM  
(They used to trade slaves on Wall Street; now they trade your unborn childrens' futures.)

/"Lies My Teacher Told Me"
 
2013-10-10 11:17:12 AM  

HotIgneous Intruder: No inflation and no risk of it because the "money" is being hoovered up by Wall Street and the giant banks.


Yep. The Federal Reserve calls this money excess reserves and it was entirely expected (by some economists) that the large banks would do this. Here is one: "banks don't change the basic notion of interest rates as determined by liquidity preference and loanable funds." (Paul Krugman)

That's because banks don't create demand. Right now we are in a period of very low aggregate demand and the fear that the Federal government is being forced to default on its debt is making aggregate demand lower, not greater. We are seeing investors selling their US treasury securities. What are they doing with the cash? Are they using it to buy stuff and pushing up prices (inflation)? No, they are hoarding it. M2 has gone way up.
 
2013-10-10 11:21:56 AM  

Delay: HotIgneous Intruder: No inflation and no risk of it because the "money" is being hoovered up by Wall Street and the giant banks.

Yep. The Federal Reserve calls this money excess reserves and it was entirely expected (by some economists) that the large banks would do this. Here is one: "banks don't change the basic notion of interest rates as determined by liquidity preference and loanable funds." (Paul Krugman)

That's because banks don't create demand. Right now we are in a period of very low aggregate demand and the fear that the Federal government is being forced to default on its debt is making aggregate demand lower, not greater. We are seeing investors selling their US treasury securities. What are they doing with the cash? Are they using it to buy stuff and pushing up prices (inflation)? No, they are hoarding it. M2 has gone way up.


But I've been assured by multiple Farkers with GEDs in economics that banks and businesses don't just "sit" on cash
 
2013-10-10 11:30:06 AM  

meat0918: But I've been assured by multiple Farkers with GEDs in economics that banks and businesses don't just "sit" on cash


One of those guys trots out his GED in coconut economics. It's pretty sad.

FTA: "M2 increased significantly in July and August, as the selloff in fixed-income markets that began in May, along with the associated outflows from bond funds, likely continued to support reallocations into liquid M2 assets. The monetary base continued to expand rapidly, primarily reflecting the rise in reserve balances resulting from the Federal Reserve's asset purchases."

See, here is what is really happening to QE3. The bank reserve balances are getting even larger.
 
2013-10-10 11:37:11 AM  

b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.


That explanation is actually over-ccomplex and also not entirely accurate. But it's WAY closer to the truth than the "printing money" nonsense.
 
2013-10-10 11:37:17 AM  

meat0918: Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)

Didn't Marx ask the same question?


Surely you have to explain why perpetual growth will stop before worrying about what happens afterwards. The idea that some generation will have exhausted all the good ideas for increasing productivity on existing items, or creating new products and services more valuable than those in the past seems fairly dubious, certainly for the foreseeable future (hundreds and probably thousands of years anyway). Plenty of previous generations have thought they have been the apex of civilization and knowledge and then been proven wrong, so it seems pretty arrogant to claim we now are the apex and no one coming later will be able to significantly improve on our achievements.
 
2013-10-10 11:39:15 AM  

Lsherm: b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.

I'm not sure that guy's analysis is any more comforting.  He's effectively saying the fed can't control the market at all, so an inflationary spike could happen at any time for no reason.

Yeah, that's SOOO much better.


Debt is really just putting off until the future inflation today. Long-term debt even more so. Inflationary spikes can happen at any time, yes, but if you want real horror, go to a commodities-backed system. Inflationary and deflationary spikes happened relatively frequently when we were on the gold standard. It's part of the nature of it.
 
2013-10-10 11:40:34 AM  

Bloody William: Common sense doesn't apply.


Economics is one of those fields where intuition is often wrong. That's why, despite it being an old field, its advances have been painstakingly slow.
 
2013-10-10 11:41:01 AM  

meat0918: Delay: HotIgneous Intruder: No inflation and no risk of it because the "money" is being hoovered up by Wall Street and the giant banks.

Yep. The Federal Reserve calls this money excess reserves and it was entirely expected (by some economists) that the large banks would do this. Here is one: "banks don't change the basic notion of interest rates as determined by liquidity preference and loanable funds." (Paul Krugman)

That's because banks don't create demand. Right now we are in a period of very low aggregate demand and the fear that the Federal government is being forced to default on its debt is making aggregate demand lower, not greater. We are seeing investors selling their US treasury securities. What are they doing with the cash? Are they using it to buy stuff and pushing up prices (inflation)? No, they are hoarding it. M2 has gone way up.

But I've been assured by multiple Farkers with GEDs in economics that banks and businesses don't just "sit" on cash


Granted, the bank executives spend quite a bit of it on hookers, blow, sex clubs, and mistresses. The demand they create is sector specific.
 
2013-10-10 11:43:09 AM  

xria: meat0918: Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)

Didn't Marx ask the same question?

Surely you have to explain why perpetual growth will stop before worrying about what happens afterwards. The idea that some generation will have exhausted all the good ideas for increasing productivity on existing items, or creating new products and services more valuable than those in the past seems fairly dubious, certainly for the foreseeable future (hundreds and probably thousands of years anyway). Plenty of previous generations have thought they have been the apex of civilization and knowledge and then been proven wrong, so it seems pretty arrogant to claim we now are the apex and no one coming later will be a ...


Read that again. i'm not talking progress, I'm talking growth. The idea that you will have more customers tomorrow than you did today. That you will always be able to make more money than you did last year. Unless you count inflation, it's impossible. The best companies looks toward sustainability, not growth, imo.

One person will only ever buy so much in her lifetime.
 
2013-10-10 11:44:11 AM  
Look, not looks.

/blind typing on the iPad
 
2013-10-10 11:45:24 AM  

meat0918: Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)

Didn't Marx ask the same question?


Marx asked similar questions. Marx may have been the smartest philosopher of the 19th century. The problems he pointed out with economic theory of his time ended up being largely proved right (the notable mistake of "surplus value" notwithstanding). Too bad he got the prescriptions so wrong. But the guy was undeniably a genius. Even in his early years when he tried rewriting the Roman legal traditions adopted by the West. He realized during that exercise, when he was 17, iirc, that you can't fix what was wrong by simply rewriting the laws to be more just - one had to scrap the system entire.
 
2013-10-10 11:48:46 AM  

Peki: The best companies looks toward sustainability, not growth, imo.


I wish that were true across the board.

/Some sort of kinder world, right?
 
2013-10-10 11:50:18 AM  

xria: meat0918: Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)

Didn't Marx ask the same question?

Surely you have to explain why perpetual growth will stop before worrying about what happens afterwards. The idea that some generation will have exhausted all the good ideas for increasing productivity on existing items, or creating new products and services more valuable than those in the past seems fairly dubious, certainly for the foreseeable future (hundreds and probably thousands of years anyway). Plenty of previous generations have thought they have been the apex of civilization and knowledge and then been proven wrong, so it seems pretty arrogant to claim we now are the apex and no one coming later will be a ...


You are right to suggest that it is by no means inevitable that growth will stop, but likewise it is by no means inevitable that it won't. Too many people think that growth is the only natural state, and it isn't. There can be long stretches of history in which growth stops or reverses, and it takes people who were raised on the inevitability of growth and progress by surprise. Sure, such periods are always finite and in the overall arc of history growth is the norm - but remember, in the long run, we'll all be dead.
 
2013-10-10 11:53:34 AM  

Ricardo Klement: meat0918: Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)

Didn't Marx ask the same question?

Marx asked similar questions. Marx may have been the smartest philosopher of the 19th century. The problems he pointed out with economic theory of his time ended up being largely proved right (the notable mistake of "surplus value" notwithstanding). Too bad he got the prescriptions so wrong. But the guy was undeniably a genius. Even in his early years when he tried rewriting the Roman legal traditions adopted by the West. He realized during that exercise, when he was 17, iirc, that you can't fix what was wrong by simply rewriting the laws to be more just - one had to scrap the system entire.


I've come to a similar conclusion, but scrapping the entire system isn't necessary. We "just" need to start by understanding the problems are cultural, not intellectual, not academic, and not really even legal or economic.

It's cultural. The US used to be really good at influencing culture, but when the gov't does that, it tends to invoke a knee-jerk response because zomg sochulisms! Not ALL cultural influence is a bad thing. Imagine, for example, the possible change in public opinion if the gov't put out a series of PSAs explaining what programs our tax dollars are paying for, or why have a trade deficit is important, etc. things that would help the obviously ignorant not be so ignorant. FoxNews is winning because they are the only ones doing the (TV) talking. It's not winning with younger crowd because of the internet, and we are amazingly quick to filter out the bs (why I love Fark).

But, I don't know if/when we will have the conversation on how to actively change our culture. Americans seem rather content to let social changes roll over us, regardless of the damaging results.
 
2013-10-10 11:53:41 AM  

meat0918: Delay: HotIgneous Intruder: No inflation and no risk of it because the "money" is being hoovered up by Wall Street and the giant banks.

Yep. The Federal Reserve calls this money excess reserves and it was entirely expected (by some economists) that the large banks would do this. Here is one: "banks don't change the basic notion of interest rates as determined by liquidity preference and loanable funds." (Paul Krugman)

That's because banks don't create demand. Right now we are in a period of very low aggregate demand and the fear that the Federal government is being forced to default on its debt is making aggregate demand lower, not greater. We are seeing investors selling their US treasury securities. What are they doing with the cash? Are they using it to buy stuff and pushing up prices (inflation)? No, they are hoarding it. M2 has gone way up.

But I've been assured by multiple Farkers with GEDs in economics that banks and businesses don't just "sit" on cash


They don't. Reserves, as Lasershurt's link discusses, are not the same as cash. They're swapping out their US Treasuries for Reserves at the behest of government, which are basically identical financial instruments while the interest rates are so low. Banks are indifferent to the two. For the government to trade them is doing effectively nothing. Issuing more bonds then competes with the other assets the bank is interested in holding, not with reserves.
 
2013-10-10 11:54:02 AM  

Peki: ikanreed: Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.

No nuance allowed, except the laffer curve.  You fail econ 101.

//Thinks I imagine my Econ 101 professor would have said to that.

I laugh when I think about my Econ 101 class. After class one day, I stayed to ask my prof a question. Something about the supply and demand curve, and the fact that I had senior executive for a father, bugged me. If prices are related to costs, and a business will continuously and constantly cut costs in order to increase profits, what happens when they can't cut any more? What happens when perpetual growth stops? My professor looked at me, blinked a few times, and said, "You need to consider majoring in Economics, if that's the kind of question you're bringing on the first day."

/maybe I should have listened...
//got my answer anyway in '08 (question was asked in '05)


Well, what was the answer?!?!?
 
2013-10-10 11:55:27 AM  

Delay: meat0918: But I've been assured by multiple Farkers with GEDs in economics that banks and businesses don't just "sit" on cash

One of those guys trots out his GED in coconut economics. It's pretty sad.

FTA: "M2 increased significantly in July and August, as the selloff in fixed-income markets that began in May, along with the associated outflows from bond funds, likely continued to support reallocations into liquid M2 assets. The monetary base continued to expand rapidly, primarily reflecting the rise in reserve balances resulting from the Federal Reserve's asset purchases."

See, here is what is really happening to QE3. The bank reserve balances are getting even larger.


Yes, but their treasury balances get smaller at the same rate. The reason it's not the same as printing money is that with interest rates effectively zero, reserves and treasuries as effectively identical.
 
2013-10-10 11:59:11 AM  

Peki: 've come to a similar conclusion, but scrapping the entire system isn't necessary. We "just" need to start by understanding the problems are cultural, not intellectual, not academic, and not really even legal or economic.

It's cultural. The US used to be really good at influencing culture, but when the gov't does that, it tends to invoke a knee-jerk response because zomg sochulisms! Not ALL cultural influence is a bad thing. Imagine, for example, the possible change in public opinion if the gov't put out a series of PSAs explaining what programs our tax dollars are paying for, or why have a trade deficit is important, etc. things that would help the obviously ignorant not be so ignorant. FoxNews is winning because they are the only ones doing the (TV) talking. It's not winning with younger crowd because of the internet, and we are amazingly quick to filter out the bs (why I love Fark).

But, I don't know if/when we will have the conversation on how to actively change our culture. Americans seem rather content to let social changes roll over us, regardless of the damaging results.


I wasn't intending to endorse scrapping the system. Marx's utopian view is ultimately unattainable and ignores fundamental human traits and is part of why his prescriptions are so wrong.

It's hard to convince people that trade deficits are not something you can or even want to get rid of. People are enamoured with tangibility. They want manufacturing rather than service for the same reason they want gold-backed currency rather than fiat. It's a primal urge to reject conceptuality and it takes conscious effort to overcome it in econ.
 
2013-10-10 12:05:17 PM  

Ricardo Klement: Peki: 've come to a similar conclusion, but scrapping the entire system isn't necessary. We "just" need to start by understanding the problems are cultural, not intellectual, not academic, and not really even legal or economic.

It's cultural. The US used to be really good at influencing culture, but when the gov't does that, it tends to invoke a knee-jerk response because zomg sochulisms! Not ALL cultural influence is a bad thing. Imagine, for example, the possible change in public opinion if the gov't put out a series of PSAs explaining what programs our tax dollars are paying for, or why have a trade deficit is important, etc. things that would help the obviously ignorant not be so ignorant. FoxNews is winning because they are the only ones doing the (TV) talking. It's not winning with younger crowd because of the internet, and we are amazingly quick to filter out the bs (why I love Fark).

But, I don't know if/when we will have the conversation on how to actively change our culture. Americans seem rather content to let social changes roll over us, regardless of the damaging results.

I wasn't intending to endorse scrapping the system. Marx's utopian view is ultimately unattainable and ignores fundamental human traits and is part of why his prescriptions are so wrong.

It's hard to convince people that trade deficits are not something you can or even want to get rid of. People are enamoured with tangibility. They want manufacturing rather than service for the same reason they want gold-backed currency rather than fiat. It's a primal urge to reject conceptuality and it takes conscious effort to overcome it in econ.


You need to listen a recent TEDTalk where the guy explains why we have higher IQs than our grandparents. The ability to conceptualize the hypothetical is part of it.

Also, my mom just said something really interesting. The US Constitution is set up to protect us from the tyranny of the majority or the dynasty, but not to protect us from the tyranny of the minority. We've spent the last 40 years fighting so hard for minority rights that we don't know what to do now that the minority has turned on us.
 
2013-10-10 12:08:32 PM  

Peki: The US Constitution is set up to protect us from the tyranny of the majority or the dynasty, but not to protect us from the tyranny of the minority. We've spent the last 40 years fighting so hard for minority rights that we don't know what to do now that the minority has turned on us.


That's an excellent point.
I had not even looked at it that way.
 
2013-10-10 12:18:44 PM  
Peki:   We've spent the last 40 years fighting so hard for minority rights that we don't know what to do now that the minority has turned on us.


dayandadream.com
 
2013-10-10 01:19:11 PM  

LasersHurt: b2theory: I will admit that I held the popular quasi-informed view that the fed was simply printing money and that had easy to understand inflationary consequences.

Then I read this: http://angrybearblog.com/2013/05/the-fed-is-not-printing-money-its-ret iring-bonds-and-issuing-reserves.html

I would not say that I am more informed now but I would say I know my notions were way too simplistic.

At least you had the good sense to look into it. I've been hearing people trotting out "hurr durr printing inflation blergh" for years now.


Not only that, but there's huge demand for these safe bonds.  Even though the economy is growing, there's still a liquidity crisis that the FED is directly alleviating.  Inflation would be symptom that the crisis is over and FED needs to pull back, but with them not even being able to hit their measly 2% forecasts, it's showing they're doing the right thing.

Even printing money wouldn't matter when inflation is low, unemployment is high, and investor confidence is poor.  It's medicine.

If employment picks up, inflation ticks up and confidence returns, you don't apply that medicine, less you overdose.  That was a big issue in the 70's and 80's.  It was also 30-40 years ago.

Boomers need to stop re-fighting the old problems.  Everything from monetary policy to what we're spending money in the military on... it's fighting the ghosts of the reality of the 80's.  If we don't stop soon, were going to end up like the USSR did.
 
2013-10-10 01:24:55 PM  

Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.


Oh yeah, here is a simple way to understand it.  It is a Fraud!  They know its a fraud but they are making buckets of money without doing any actual work.  Now if you knew it was fraud you would not participate in the fraud and go to a competitor that they can't compete with because the competitor sells the product without any interest tacked on.  So in order for them to continue the fraud of not creating not a damn thing but debt they need to make it so large and complicated that no one can understand so you don't understand that someone else is profiting off your labor, taxing you, and not providing the promised services your supposedly being taxed for, basically turning you into an indentured servant.
 
2013-10-10 01:26:33 PM  

ikanreed: Lost Thought 00: Because there was never inflation under the gold standard

And inflation has never been a positive function for society.


Nonsense.

Moderate inflation tends to drive demand as investors move their assets out of safe investments that might not grow at rates higher than inflation to riskier assets and investments that will.

Instead of keeping money piled in low yield bonds, they'll invest it into capital upgrades, hiring better workers, expanding into a markets they were looking at, but which didn't make as much sense when you could just bank money and wait.  That all creates demand that feeds on itself into a positive business cycle.

High inflation is bad, and mostly because of inefficiencies in prosperity (if you lose during a period of high inflation, you really lose).

But moderate inflation is actually a good tool to get the economy lubricated and getting people to spend money now to get a better return on investment, than just hiding it under their bed and waiting for better times.
 
2013-10-10 01:38:22 PM  

Ricardo Klement: I wasn't intending to endorse scrapping the system. Marx's utopian view is ultimately unattainable and ignores fundamental human traits and is part of why his prescriptions are so wrong.

It's hard to convince people that trade deficits are not something you can or even want to get rid of. People are enamoured with tangibility. They want manufacturing rather than service for the same reason they want gold-backed currency rather than fiat. It's a primal urge to reject conceptuality and it takes conscious effort to overcome it in econ.


True, but trade deficits are both good and shortsighted in the same way Marx views were.  Sure we're basically getting paid by other nations to take their cheap goods... but it tends to leave out the intangibles about what that does to people employed in this economy.

It moves us more to a service economy, and one where it's easier for companies to pay bottom dollar.  It seems to me while it has it benefits in purchasing power, it has also hollowed out our economy and put us into a spiral where companies are forced to try to outdo each other on low balling employee compensation and driving prices even further down.  Good for the top, but not so good for the bottom besides being able to purchase non-durable goods to deflect the realities of their situation.

I do get get a laugh when people complain about poor people with imported TV's, refrigerators, and iPhones though, as if low priced consumer electronics are still the barometer of wealth.  Adjusted for inflation they've never been cheaper and are out times version of the nickelodeon or vaudeville show.  Poor people acquire them because they're poor and those items are cheap way to give them some semblance of status.
 
2013-10-10 02:18:00 PM  

TyrantII: It seems to me while it has it benefits in purchasing power, it has also hollowed out our economy and put us into a spiral where companies are forced to try to outdo each other on low balling employee compensation and driving prices even further down.


Well, that's going to be a consequence of globalization. I'm not hyper-old, but I can recall a time in my life when "made in Japan" meant that a product was going to be shoddy, cheap, and probably an imitation of what Western companies were doing.

As the Japanese middle class grew, Japanese products improved. Suddenly, the cheap stuff was coming from South Korea. The cycle repeated itself. It hasn't been that many years when someone driving a Kia or Hyundai was almost asking to be laughed at.

Now it's China, at least until their middle class gets large enough to want something more than a factory job. Then we'll see Laos, Cambodia, and Vietnam step into that role, I think. North Korea if the Kims ever die off. Perhaps Sub-Saharan Africa then- at least on the coasts.

Deficits aren't ideal for half of the equation, but they're wonderful for building the other half to the point where that nation can transition to more of a service economy.

There are really only two broad sectors that create wealth- manufacturing, and agriculture. Everything else shifts wealth around- which is fine, as long as you have a little manufacturing, a little agriculture, or ideally a some of both to help boost your domestic economy.
 
2013-10-10 02:57:01 PM  

Bloody William: If you understand macroeconomics in simple terms, you're wrong. Common sense doesn't apply. Family and business budget rules do not apply. Nothing you understand in your life applies to macroeconomics. It is large, complicated, and farking insane. Even economics don't fully understand it, and can barely contextualize how parts of it work. If you have a pithy answer to the federal budget or think anything involving it is simple and can be summarized in a few words, you. Are. Wrong.


t I think that 90% of economics is fallacious trash because economists are the play by play sportscasters of money, explaining the play you just saw, and then they take that play and plug it into their fantasy league team and hold forth a "model".  They get paid for this.  I further would like to emphatically state that I do not believe that economists could hit a cow in the tits with a football, as it were.

Very few things work as they say they do in economics theory because it's mostly blowhardery and speculation that discounts every facet of disingenuous type behaviors that people engage in to get and keep money.
 
2013-10-10 04:08:14 PM  
bunner:

Very few things work as they say they do in economics theory because it's mostly blowhardery and speculation that discounts every facet of disingenuous type behaviors that people engage in to get and keep money.

Econ  101 isn't "Economics".  It's a history class and an introduction into a new way of looking at aggregate finances.  It's akin to aerospace engineers studying the Wright Brothers history, science and designs.

Unfortunately too many people hit up a few classes and come out thinking that's how economics works.  They tend to miss or not understand the classes that can still be applied, such as economics not being zero sum.

All the good stuff like game theory, behavior economics, international finance, ect are the level 400 classes and much closer to how the world and human nature really works.  The guys doing that stuff aren't the blowhard on Fox Business News or CNBC either.  Those are salesmen, and they sell talking 24/7.
 
2013-10-10 04:40:39 PM  

TyrantII: bunner:

Very few things work as they say they do in economics theory because it's mostly blowhardery and speculation that discounts every facet of disingenuous type behaviors that people engage in to get and keep money.

Econ  101 isn't "Economics".  It's a history class and an introduction into a new way of looking at aggregate finances.  It's akin to aerospace engineers studying the Wright Brothers history, science and designs.

Unfortunately too many people hit up a few classes and come out thinking that's how economics works.  They tend to miss or not understand the classes that can still be applied, such as economics not being zero sum.

All the good stuff like game theory, behavior economics, international finance, ect are the level 400 classes and much closer to how the world and human nature really works.  The guys doing that stuff aren't the blowhard on Fox Business News or CNBC either.  Those are salesmen, and they sell talking 24/7.


I'd say intermediate micro (Econ 301) is the first real foray into econ. I rather wish they'd require more calculus of students and teach them the calculus of micro rather than the unnecessarily complex algebraic approach just to spare students from having to pass Calc II. Intermediate macro sort of wraps-up the concepts of macro and gets into some of the game theory and equations to set up real econ studies.

There's a great little saying about how history progresses:

In grade school they tell you, "This is history."
In high school they tell you, "Well, it's more complex than that."
In college, they tell you, "Everything you know about history is wrong."

The same kind of thing applies to econ:

In freshman econ they tell you, "This is econ."
In the junior year, they tell you, "Well, it's more complex than that."
When you get to graduate school, they tell you, "Everything you know about econ is wrong."
 
2013-10-10 05:07:17 PM  

Ricardo Klement: TyrantII: bunner:

Very few things work as they say they do in economics theory because it's mostly blowhardery and speculation that discounts every facet of disingenuous type behaviors that people engage in to get and keep money.

Econ  101 isn't "Economics".  It's a history class and an introduction into a new way of looking at aggregate finances.  It's akin to aerospace engineers studying the Wright Brothers history, science and designs.

Unfortunately too many people hit up a few classes and come out thinking that's how economics works.  They tend to miss or not understand the classes that can still be applied, such as economics not being zero sum.

All the good stuff like game theory, behavior economics, international finance, ect are the level 400 classes and much closer to how the world and human nature really works.  The guys doing that stuff aren't the blowhard on Fox Business News or CNBC either.  Those are salesmen, and they sell talking 24/7.

I'd say intermediate micro (Econ 301) is the first real foray into econ. I rather wish they'd require more calculus of students and teach them the calculus of micro rather than the unnecessarily complex algebraic approach just to spare students from having to pass Calc II. Intermediate macro sort of wraps-up the concepts of macro and gets into some of the game theory and equations to set up real econ studies.

There's a great little saying about how history progresses:

In grade school they tell you, "This is history."
In high school they tell you, "Well, it's more complex than that."
In college, they tell you, "Everything you know about history is wrong."

The same kind of thing applies to econ:

In freshman econ they tell you, "This is econ."
In the junior year, they tell you, "Well, it's more complex than that."
When you get to graduate school, they tell you, "Everything you know about econ is wrong."


That's okay. It's similar to English:

Grade school: These are the rules of English.
High school: This is when it's necessary to break the rules of English.
College: This is how to analyze when people completely ignore the rules of English.
 
2013-10-10 06:30:40 PM  

TyrantII: bunner:

Very few things work as they say they do in economics theory because it's mostly blowhardery and speculation that discounts every facet of disingenuous type behaviors that people engage in to get and keep money.

Econ  101 isn't "Economics".  It's a history class and an introduction into a new way of looking at aggregate finances.  It's akin to aerospace engineers studying the Wright Brothers history, science and designs.

Unfortunately too many people hit up a few classes and come out thinking that's how economics works.  They tend to miss or not understand the classes that can still be applied, such as economics not being zero sum.

All the good stuff like game theory, behavior economics, international finance, ect are the level 400 classes and much closer to how the world and human nature really works.  The guys doing that stuff aren't the blowhard on Fox Business News or CNBC either.  Those are salesmen, and they sell talking 24/7.


All of which is a load of self-important, gymnastic, overwrought nacel gazing that has gotten us. precisely, here.  Your superiority posture does bespeak the discipline, though.
 
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