tag:blogger.com,1999:blog-491174673971804494.post5182966286395361941..comments2024-03-22T01:06:23.845-07:00Comments on Confessions of a College Professor: A little post on the madness of the economy...Doomhttp://www.blogger.com/profile/04528555392898760692noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-491174673971804494.post-20339730094792378092013-12-07T07:08:15.303-08:002013-12-07T07:08:15.303-08:00" ...but when you double the money base, doub..." ...but when you double the money base, double it again, and double it again, which is what has happened...there should be some serious effects, and yet there's very little evidence of the effects." <br /><br />There seem to be two different things at play. What you're referring to above is the "monetisation" of bank losses -- newly-created money that has been used to buy bad bank debt. The debt has been added as an "asset" on the government ledgers, and the newly created money the banks have is now part of their capital base (but not used to actually purchase anything). That is the reason why there's been no inflationary impact from that.<br /><br />The second -- which is a different kettle of fish altogether -- is the US government creating money to fund its own deficits. This will have an impact, slowly yet inexorably, as foreigners become ever more distrustful of these watered-down dollars and T-bills and because of the inflationary impact of such deficit financing in the US itself (the inflation numbers, incidentally, are deliberately understated).AAhttps://www.blogger.com/profile/13242448989166177843noreply@blogger.comtag:blogger.com,1999:blog-491174673971804494.post-78493602600576635802013-12-06T19:49:35.621-08:002013-12-06T19:49:35.621-08:00Weird, thought I'd responded days ago. I reall...Weird, thought I'd responded days ago. I really thought the "matrix" would dissolve a few years ago. I grant that America is/was fabulously wealthy, but when you double the money base, double it again, and double it again, which is what has happened...there should be some serious effects, and yet there's very little evidence of the effects. <br /><br />It's like stepping into the ring with Mike Tyson, getting pummeled for 4 rounds, and not even having a black eye to show for it...only extraordinary cosmetics could accomplish it, either way.Doomhttps://www.blogger.com/profile/04528555392898760692noreply@blogger.comtag:blogger.com,1999:blog-491174673971804494.post-74060969485123512852013-12-04T06:05:17.518-08:002013-12-04T06:05:17.518-08:00At some stage the machinery of deceit and manipula...At some stage the machinery of deceit and manipulation breaks down. The manic printing of paper and deficit financing can't continue indefinitely. Ten years ago I used to wonder how long the twin current account and fiscal deficits were going to continue: it was clear foreigners would eventually grow reluctant to buy the paper of a hollowed-out nation. Those foreigners did become reluctant and the USA started to buy its own paper -- i.e., it started printing and buying its own fiat money to fund its deficits. The next phase will be when foreigners refuse to accept US dollars for payment and the dollar loses its reserve status. This is happening slowly but inexorably. When that reserve status is gone, the matrix of illusion and deceit will dissolve. Right now, bad as things are (real unemployment well over 20%), there's still a long way down to go and Americans continue live in a fairytale world of illusion, of fake unemployment and inflation statistics, and of unsustainably high consumption.AAhttps://www.blogger.com/profile/13242448989166177843noreply@blogger.com