Ben is fighting it



That is the monetary base. It is going way up, courtesy of Ben "flood the system" Bernanke... However people are deleveraging, taking on less debt. So you have this pent up offer of money building up at the banks level, they also do not want to lend... this feels unstable to me, but what do I know.

Comments

Anonymous said…
Yeah, I'd like to know how the hell they are going to control inflation once the banks do start lending. I guess its time to look into commodity funds.
adt43wt342 said…
Commodity :) I am thinking about a stock in a derivative of oil, look for dividends, know they may go the way of the dodo. I haven't done anything yet, but I liked it when dividends were 6, now the dividends are 9-15. I haven't got a clue where it is going.

I think of the monetary risk as a volume. Volume of "liquid", seems appropriate for "liquidity" :). So some liquid has evaporated from the boiling pot. That is the capital consumed in the financial crisis.

The various programs commit a large volume of liquidity but only some of it finds its way in the system (debt is taken, infrastructure projects are undertaken).

Because only a fraction of what is committed is actually used, once the banks start lending the govt will need to retract on its commit.

The point is to achieve dV=0, meaning that the change in volume is zero. That the capital evaporated gets replaced through public channels. If the change in monetary volume is zero then there is no monetary contribution to price instability. In other words, if prices change it is mostly offer and demand, not monetary volumes.

If there is no fine-grained control over the money inflow then you risk inflation as the committed volume becomes actual.
jackr said…
Is there somewhere I can buy stock in "the private pockets of the financiers who hired Bernanke and Paulson"?
Anonymous said…

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