So tell us, what do we do about dropping speed of money?
Posted on 05/26/2003 5:29:58 AM PDT by A. Pole
Edited on 09/20/2004 1:36:55 AM PDT by Jim Robinson. [history]
Here we are again, though, puzzling at the odd behavior of the financial markets, debating whether the dollar is too strong or too weak, and not quite realizing how heavy a price is being paid by everyone on the planet for not having a fixed standard of value.
...it is simplistic to say the market crashed because silly people bid it up in an outburst of irrational enthusiasm. The big markets in particular tend to incorporate the best information available.
People with IQ above 130 and below 70 have problems with having children. That is why they are on the margin of the bell curve and fewer in numbers.
People with IQ above 130 and below 70 have problems with having children. That is why they are on the margin of the bell curve and fewer in numbers.
Not all, but on the average they have less. For example women with high IQ tend to make careers and postpone childbirth until it is too late. Intelligent men also can be distracted by their intellect.
There is a healthy optimum which in the middle of the bell curve. That is why the bell curve is haped the way it is. The society does not need many leaders or thinkers - a few percent is enough.
So tell us, what do we do about dropping speed of money?
I guess that now money is issued (printed money is only a fraction for practical reasons) as a loan given to the banks. You would need to bypass the system and inject money into very well chosen places - like into wages for public works or exceptional temporary grants to states etc. It would be risky for the integrity of the system. But I am not good in economy, so I am not sure.
We first decrease transaction costs and second encourage various incentives to spend now rather than wait.
Any evidence of how well a burgeoning 100-IQ population can feed & shelter itself when it can't afford the necessities of life?
ok
and second encourage various incentives to spend now rather than wait.
Gee, the saving rate is pretty low. Are you arguing Americans should go further into non-productive debt?
Our savings rate is low only when you use the government's statistics. Those stats ignore 401k's, corporate pensions, real-estate holdings, and all stocks/private bonds, however.Moreover, people can spend more without resorting to "unproductive" debt. Not all debt is used on non-income-producing consumables, after all, and not all spending is debt-related.
Furthermore, getting more people to spend sooner rather than later is all that is required. On the whole they do not need to spend more, but simply spend sooner (so long as you can continue to convince new groups to so do, something that an expanding population CAN do).
You forgot the vast "wealth" America has accumulated in our glorious Social Security funds.
Not all debt is used on non-income-producing consumables, after all, and not all spending is debt-related.
The way things are currently going bonds and cash will become equivalent in the near future. I.E. money is losing its time value. Its harder to make money cheaper than that. Why don't you see this as an indicator of an excessive supply of money and credit?
Productivity.
We are seeing deflation set in because we have so much excess manufacturing capacity. It takes fewer man hours to make things each year because we use more robots, better software, better communications, better systems/methods, etc. Quality goes up (e.g. CPU chips get both faster & smaller) and production costs go down.
Deflation means that our currency buys MORE, not less. So even though interest rates are very low, our Productivity advances are outrunning such inflation pressures (including easy money/credit).
This is the conclusion Greenspan reached in 1995. I still think the markets are too heterogeneous for this problem to resolved via currency debasement. Sure productivity is up in semiconductors but has the change been as dramatic in the housing market or the energy markets?
This is ....the wrong tool.....
I would suggest that you are looking at the wrong problem. Deflation isn't the problem being combatted by dropping the foreign exchange value of the Dollar so much as the problem is that the U.S. was arbitrarily propping up the foreign exchange value of the Dollar for DECADES to help aid Japan and Europe and the Middle-East. Well, we can find another way to help Japan, while the Middle-East and old Europe can just deal with a realistically valued Dollar.
Stimulus for what -- two Starbucks on every block instead of just one? You think that maybe buying another SUV to park in the driveway or a fourth DVD player is going to help the economy? Greenspan has tried to play on both sides of the fence. He didn't allow the system to clear itself of the excesses and now there is no pent-up demand. As soon as Clinton/Rubin/Greenspan gave us the bubble, they assured that we would have to experience a deflation. The die is cast and there is nothing the monetarists can do to avoid it. Just ask Japan.
Richard W.
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