Posted on 02/14/2016 10:59:07 AM PST by Lorianne
The relationship between money supply growth and economy became truly tenuous during the housing mania of the middle 2000’s. The reason was simply that asset bubbles (inflation) are highly inefficient and so produce great imbalances in the liquidity and monetary structures that link money to economy. Banks were making money in money dealing activities based solely on the premise that the entire system could and would continue expanding on that insane baseline as if permanent; and if it were ever interrupted by recession, as 2001, then that would be a trivial and temporary deviation.
This was the outlook of not just global banking but monetary policy and orthodox economics. Thinking that consumer inflation supplied all the necessary information about the state of money as it related to economic potential, neither central banks nor economists were prepared for what hit on August 9, 2007, and everything thereafter. To monetary policy and economic theory derived from the Phillips Curve, there could not have been “too much money†and the recession should not have been very large at all. In fact, that was the scenario that every single one of their models kept suggesting deeper and deeper into it.
(Excerpt) Read more at alhambrapartners.com ...
Gibberish. I read a little, but not much, past the gross error of “asset bubbles (inflation).” Asset bubbles are sector specific and do not equate to rolling devaluation of currency economy-wide. The author is either ignorant or has an agenda, neither of which merit further reading.
If oil wasn’t a consideration then our leaders are inept. After 9/11 we should have parked a B-52 over Mecca and proclaimed that the next time an American building falls down Islam will be bowing five times a day to a sheet of glass. No war, no causalities, no need for security upgrades.. Fixed. All that was required? Guts.
“Gibberish”
I agree.
It Was Never About Oil
I now assume that anything to do with the stock market and banking is is organized crime intended to fleece the investor.
This is why I never worry about the United States.
We have tons of people who sit around all day doing nothing but thinking about money.
Oh, in other countries, they sit around thinking about how to make more money for themselves or how to build cars and stuff, but in our country we have loads of people just thinking about money.
“Caldwell! All you do all day is sit and look out the window! What are you thinking about?”
“Money.”
“Oh. Yes. I see. Well, carry on then.”
I have noticed over the years that many people understand “inflation” with prices going up
Others have an understanding of inflation more technical as a monetary phenomenon
2016 is shaping up to be very different than 2008. In 2008, you had bubbles across multiple asset and commodity classes -- driven almost entirely by loose monetary policy and outright currency-driven inflation.
It's no coincidence that the 2008 crash unfolded not long after the Fed stopped publishing M3 money supply figures in March 2006. Business associates of mine who know a lot more about these things immediately began to sell out of their real estate holdings after that, and were able to minimize their exposure during the 2008 meltdown.
Seems like when gas prices were pushing $5 the talk was that the economy sucked because oil prices were too high. Now that gas prices are near $1.60 the economy sucks because oil prices are too low. I would think the fault lies somewhere other than oil.
Exactly.
“the stock market and banking is is organized crime intended to fleece the investor.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.