So why does it say in big letters, FEDERAL RESERVE NOTE?
Power of the US Economy == "Full faith and credit" no collaterol
sure it does. but you didn't read it.
deficits can cause inflation.
have a nice day. it was in the 1st or 2nd paragraph since you didn't read it.
I didn't say that deficits can't cause inflation.
I said that we can increase deficits without causing inflation.
you need to go back and re-read your own post then.
I countered your claim by saying that deficits can lead to inflation.
the Fed even agree's that deficits can lead to inflation.
so if you have a problem then please take it up with the fed.
I even posted a federal reserve site that supports that same notion.
Under either scenario, deficits lead to greater money base growth, which can create inflationary pressure.
That was written in 2004, before QE greatly increased MB with virtually zero resulting inflation. I'm surprised that nobody has changed it to reflect that new evidence that they are wrong.
you need to go back and re-read your own post then.
I countered your claim by saying that deficits can lead to inflation.
the Fed even agree's that deficits can lead to inflation.
so if you have a problem then please take it up with the fed.
I even posted a federal reserve site that supports that same notion.
To be fair, they say it can result in inflationary pressure, not that it will always do so.
Because it is backed by the assets held with the federal reserve.
the federal reserve itself cannot print money. that is only allowed by the US treasury department.
So when more money is needed then the Federal reserve makes a request to the treasury to print more bills.
The treasury handles the printing of money and the payment of US debts etc ...
the federal reserve overseas the money supply and creates the money policy.
they are totally separate functions of government.
That was written in 2004, before QE greatly increased MB with virtually zero resulting inflation. I'm surprised that nobody has changed it to reflect that new evidence that they are wrong.
So what you just said is if the Federal Reserve cannot produce tangible assets to prevent default on a Federal Reserve Note, then, of course, as a CORPORATION, it can file bankruptcy. Isn't the Federal Reserve holding the bogus mortgage tranches that precipitated the 2008 crisis? You probably mean some other collaterol, eh?
I never said that deficits can never lead to inflation.
If you challenge that, find a quote.
Because QE never entered into the money system it was simply an asset swap between banks and the federal reserve.
So that is a horrible example to use. The money supply never expanded because none of it was actually released into the market.
If it had been you would have seen huge inflation rates.
Because they aren't wrong you are.
that was a shocker to mainstream economists, who predicted all sorts of trouble.
Is the "connecting mechanism" or whatever ya might call it, the level of inflation anticipated by actors in the economy? I remember from all those years ago that expectations of inflation are a if not the major predictor of inflation. Or at least that's what a lot of people thought back in the Middle Ages.
Read your fist post
This article seems to reject the fractional reserve theory of money creation and embrace MMT by, for example, rejecting the money multiplier.
No, it's a perfect example to use, because their claim was that an increase in base money (MB) can cause inflation. Every transaction by the Fed/govt. affects MB.
And anyway, QE did put some dollars into circulation; any asset purchases from non-bank entities put real dollars into private hands. Yet, no inflation.
QE didn't put any money into the system
Is the "connecting mechanism" or whatever ya might call it, the level of inflation anticipated by actors in the economy? I remember from all those years ago that expectations of inflation are a if not the major predictor of inflation. Or at least that's what a lot of people thought back in the Middle Ages.
QE didn't put any money into the system the federal reserve bought a bunch of bad debt from banks.
Again you don't know what you are talking about.
It is a horrible example because there was no expansion of the money supply the money supply stayed the same.
The holdings of the federal reserve expanded but that was it.
The US Treasury provides a US Treasury Note/bond of 8 trillion dollars and the Federal Resrve prints 8 trillion dollars of Federal Reserve Notes. It used to be a competitive market for those US Treasuries, but now the Federal Reserve is the buyer, ergo we would owe the Federal Reserve Interest on 8 Trillion Dollars because savvy buyers are suspect of the ability to honor continuously growing debt. The "full faith and credit" debt is not a good or service. Helicopter money, don't ya' know? Perhaps if one could accumulate enough of those debts, they could purchase a National Park, eh? If you can overwhelm World currency markets with huge volumes of this money, you can buy up anything of real value around the World, and control many economies and perhaps prevent the collapse of the debt. or not?
I don't put much stock in expectations.
You can read the linked article where I explain how inflation occurs
You need to brush up on monetary economics post 1971. That all ended when Bretton Woods collapsed.
Banks weren't the only ones selling assets. If you are a non-bank entity selling assets to the Fed, then you collect dollars and reserves increase.
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