Gyroscopic Investing

It makes no difference. A bank never turns away someone for a loan if the reserves don't exist. They make the loan and then go find the reserves. The only thing limiting a bank from loaning is finding credit-worthy borrowers.

Anyway, the Fed research I cited above, as well as the chart, shows that the money multiplier effect is officially dead.

I suppose you can cling to your beliefs if you want to, but the evidence just isn't there to support those beliefs. The money multiplier is a myth (says the Fed and its data).

Not saying it changes the money multiplier

I am saying increased base money results in increased money supply.

Bean wrote: Not say it changes the money multiplier

I am saying increased base money results in increased money supply.

Yes, it changes the amount of narrow money in existence, but it doesn't change the amount of broad money. Broad money is what represents our purchasing power. Narrow money is just our medium of exchange to facilitate the interbank transfer of broad money.

See: http://en.wikipedia.org/wiki/Broad_money

Wikipedia.org wrote:In economics, broad money is a measure of the money supply that includes more than just physical money such as currency and coins (also termed narrow money). It generally includes demand deposits at commercial banks, and any monies held in easily accessible accounts. Components of broad money are still very liquid, and non-cash components can usually be converted into cash very easily.

The most commonly used measure of broad money is M3, which includes currency and coins, and deposits in checking accounts, savings accounts and small time deposits, overnight repos at commercial banks, and non-institutional money market accounts. This is the main measure of the money supply, and is the economic indicator usually used to assess the amount of liquidity in the economy, as it is relatively easy to track.

However broad money can have different definitions depending on the situation of usage, usually it is constructed as required to be the most useful indicator in the situation. More generally, broad money is just a term for the least liquid money definition being considered and less a fixed definition across all situations. As such broad money may have different implications in the United States than it does in Australia, and even from academic paper to paper. The term broad money will usually be more exactly defined before a discussion, when it is not sufficient to assume a wider definition of money.

Source: http://en.wikipedia.org/wiki/Broad_money

The problem for you is that when you put money into the bank, in a savings account, the money is often held as financial assets and Treasury bonds (i.e. assets on the bank's balance sheet). When the Fed liquifies those assets, the amount of broad liquidity doesn't change.

Gumby wrote: I suppose you can cling to your beliefs if you want to, but the evidence just isn't there to support those beliefs. The money multiplier is a myth (says the Fed and its data).

Honestly, you can rotate.  Instead of attempting to continue a civil debate, you say crap like this.

I hate folks like you.  Honestly, I really do.

The Fed no longer publishes M3, and they've since replaced it with MZM. When economists measure liquidity for purchasing power in the private sector and its inflationary effect, they look at the broad money supply, not the narrow money supply.

Wikipedia.org wrote:Another measure of money, M0, is also used; unlike the other measures, it does not represent actual purchasing power by firms and households in the economy. M0 is base money, or the amount of money actually issued by the central bank of a country.

Source: http://en.wikipedia.org/wiki/Money

In other words, base money is too narrow to measure for potential inflation. You can't use it to determine the private sector's purchasing power. You have to look at broad liquidity to do that.

http://www.investopedia.com/terms/b/broadliquidity.asp

Broad liquidity already includes T-Bills, so the Fed swapping one form of broad liquidity (M0) for another form of broad liquidity (T-Bills) does not change the total amount of broad liquidity in the private sector. If broad liquidity doesn't change, then the inflationary pressure doesn't change either.

Bean wrote:I hate folks like you.  Honestly, I really do.

That's nice. I suspect the real reason you hate me is because I'm revealing facts, research, and real data that refute your beliefs. Oh well.

No need to be rude. The actual data and the research supports what I'm saying. The definitions of narrow money and broad money supports what I'm saying. I've shown you the evidence from the Fed. The money multiplier and inflation you speak of just isn't there. It wasn't there when Japan did QE a decade ago and it's not here in the US now. Inflation wasn't even there when the Fed did QE between 1932-36. There's no evidence that QE for T-Bonds or JGBs causes inflation. None. I'm not the one who is having trouble accepting reality here.

I'm sorry if I offended you in some way. Have a good night.

Gumby wrote:

Bean wrote:

Gumby wrote: I suppose you can cling to your beliefs if you want to, but the evidence just isn't there to support those beliefs. The money multiplier is a myth (says the Fed and its data).

Honestly, you can rotate.  Instead of attempting to continue a civil debate, you say crap like this.

I hate folks like you.  Honestly, I really do.

That's nice. I think you really hate me because I'm revealing facts, research, and real data that refute your beliefs. Oh well.

No need to be rude. The actual data and the research supports what I'm saying. The definitions of narrow money and broad money supports what I'm saying. I've shown you the evidence from the Fed. And the inflation you speak of just isn't there. It wasn't there when Japan did QE a decade ago and it's not here in the US now. Inflation wasn't even there when the Fed did QE between 1932-36. There's no evidence that QE for T-Bonds or JGBs causes inflation. None. I'm not the one who is having trouble accepting reality here.

I'm sorry if I offended you in some way. Have a good night.

You take partial facts and truths to make your point, but ignore counter points and the complete picture.

Give it time, it may be years and this conversation will probably be long forgotten, but you will be wrong.

Have a good night, really no point for us to talk about this anymore.  Maybe Techno or KS can keep up the good fight.

moda0306 wrote:

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more. 

Bean wrote:You take partial facts and truths to make your point, but ignore counter points and the complete picture.

I really didn't. I answered every single one of your counterpoints. Every single one. It is you that ignored the fact that narrow money is useless for predicting inflation. Economists (Monetarists, mostly) use broad money for that.

Bean wrote: Give it time, it may be years and this conversation will probably be long forgotten, but you will be wrong.

I doubt it. If that were true, there would have been inflation from QE between 1932-1936. Or there would have been inflation after a decade since QE began in Japan. And there would be signs of inflation now. There's just no evidence to support your theory. But, yes, we will see.

Bean wrote: Have a good night, really no point for us to talk about this anymore.  Maybe Techno or KS can keep up the good fight.

It's really not a "fight". I'm just explaining factual data and research. You really should be able to look at empirical evidence, data and definitions of M0 and MZM without getting so emotional. Too bad really. Oh well, have a good night!

Bean wrote:

Gumby wrote:

Bean wrote: By definition QE increases base money. So you are suggesting an increase to the monetary base is not inflationary?

Correct. It's an increase in base money, but a decrease in other financial assets of equal value. The total amount of assets doesn't change.

Base money is the money that banks hold at the Fed. It never leaves the Fed. Ever. It is only used for interbank transfers. The overwhelming majority of what people think of as "money" is really just various forms of other financial assets (private credit, commercial paper, agency debt, money market funds, Treasury bonds, etc.). The overwhelming majority of our "money" is not base money.

In fact, there is currently only $3 trillion in base money and $56 trillion in private credit instruments, $100 trillion in shadow banking (some of which includes the $56 trillion) and $16 trillion in Treasury bonds. These are all assets of the private sector that represent a sh*t load of purchasing power. The $3 trillion in base money is just used for the interbank transfers of that crap load of +$100 trillion of purchasing power.

Base money is basically only used at the end of the business day to settle the movement of that enormous amount of private sector credit between banks. If the Fed melts down a lot of those private credit assets into base money, it doesn't really accomplish all that much other than making banks scramble for ways to make up the lost income that would have been made in those various assets.

This is not entirely the truth.  Base money is also total currency in circulation.  Also the increase in base money allows for corresponding increases in the total money supply via the fractional reserve system.

I've explained this to them. I've used as basic of equations as I can. An increase to base money is very very different than temporary credit expansions from banks. it adds to the total money supply and the rest non-base is a function of the base. You need the bad economy to prevent the explosion. We can't even afford to grow. The government doesn't care. They are thugs looting the people.

Kshartle wrote:it adds to the total money supply and the rest non-base is a function of the base.

Ok, Mr. Finance  . If that's true, then why did the money multiplier dive below 1 when base money increased from QE? Hint: See the Fed paper I cited for the answer.

[align=center][/align]

And if they didn't teach you this as a finance major, any amount of money times <1 equals less money.  Too bad the evidence is never on your side KShartle

Bean wrote:

Gumby wrote:

Bean wrote: Honestly, you can rotate.  Instead of attempting to continue a civil debate, you say crap like this.

I hate folks like you.  Honestly, I really do.

That's nice. I think you really hate me because I'm revealing facts, research, and real data that refute your beliefs. Oh well.

No need to be rude. The actual data and the research supports what I'm saying. The definitions of narrow money and broad money supports what I'm saying. I've shown you the evidence from the Fed. And the inflation you speak of just isn't there. It wasn't there when Japan did QE a decade ago and it's not here in the US now. Inflation wasn't even there when the Fed did QE between 1932-36. There's no evidence that QE for T-Bonds or JGBs causes inflation. None. I'm not the one who is having trouble accepting reality here.

I'm sorry if I offended you in some way. Have a good night.

You take partial facts and truths to make your point, but ignore counter points and the complete picture.

Give it time, it may be years and this conversation will probably be long forgotten, but you will be wrong.

Have a good night, really no point for us to talk about this anymore.  Maybe Techno or KS can keep up the good fight.

The fight about whether increasing the money supply increases the money supply thereby devaluing all money......whoa....that's a tall task.

I can't slay this dragon in a thousand lifetimes 

The discussion of whether or not we can have property and defend it is more fruitful.

Kshartle wrote:

moda0306 wrote:

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more.

Ok then, Kshartle, how do you define what our rights truly are?  I was just trying to point out that they are 1) not really natural from a biological/ecological perspective, and that 2) they're a man-made moral assertion.

So what's the assertion then?  One that always seemed to resonate was the idea of individual sovereignty.  It's based on the moral assertion that human beings are intrinsically valuable.  Property rights, I always thought, were an extension of that assertion.

I'm not saying rights don't exist, but moreso that they exist in a lot more nebulous plane than a car or a tree.  It's a moral idea.  But if it's TOO flexible, you can say you have the right to be free from force, and I can say I have the right to force you, and we don't get anywhere.  I am trying to drill down to exactly what our moral framework is to find out where we are fundamentally disagreeing.

Kshartle wrote:

Bean wrote:

Gumby wrote: That's nice. I think you really hate me because I'm revealing facts, research, and real data that refute your beliefs. Oh well.

No need to be rude. The actual data and the research supports what I'm saying. The definitions of narrow money and broad money supports what I'm saying. I've shown you the evidence from the Fed. And the inflation you speak of just isn't there. It wasn't there when Japan did QE a decade ago and it's not here in the US now. Inflation wasn't even there when the Fed did QE between 1932-36. There's no evidence that QE for T-Bonds or JGBs causes inflation. None. I'm not the one who is having trouble accepting reality here.

I'm sorry if I offended you in some way. Have a good night.

You take partial facts and truths to make your point, but ignore counter points and the complete picture.

Give it time, it may be years and this conversation will probably be long forgotten, but you will be wrong.

Have a good night, really no point for us to talk about this anymore.  Maybe Techno or KS can keep up the good fight.

The fight about whether increasing the money supply increases the money supply thereby devaluing all money......whoa....that's a tall task.

I can't slay this dragon in a thousand lifetimes 

The discussion of whether or not we can have property and defend it is more fruitful.

Except it doesn't increase the money supply, it changes one form of money for another.  And even if it did, reserves don't give banks much more flexibility at all, and even if they did, they can be removed by the fed, and will be if inflation gets heated up, and the market knows this.

Gumby wrote:

Kshartle wrote:it adds to the total money supply and the rest non-base is a function of the base.

Ok, Mr. Finance  . If that's true, then why did the money multiplier dive below 1 when base money increased. Hint: See the Fed paper I cited for the answer.

[align=center][/align]

As inflation picks up it will fall further. There will be no way to loan money. The inflation is lowering the rates. The government is taking on almost the sole responsibility to keep expanding the money supply. The private sector won't help because the people with all the money don't want to be left holding the bag or get paid bag with devalued dollars. Eventually no loans will be made and base money will really start going. It already is going up 12% per year. They are going to go higher think. Stopping will crash it. Hopefully they do.

But now you are contradicting yourself. If no loans will be made, where is the multiplier of base money you just spoke of? Sounds like it doesn't exist (which is what I've been saying).

moda0306 wrote:

Kshartle wrote:

moda0306 wrote:

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more.

Ok then, Kshartle, how do you define what our rights truly are?  I was just trying to point out that they are 1) not really natural from a biological/ecological perspective, and that 2) they're a man-made moral assertion.

So what's the assertion then?  One that always seemed to resonate was the idea of individual sovereignty.  It's based on the moral assertion that human beings are intrinsically valuable.  Property rights, I always thought, were an extension of that assertion.

I'm not saying rights don't exist, but moreso that they exist in a lot more nebulous plane than a car or a tree.  It's a moral idea.  But if it's TOO flexible, you can say you have the right to be free from force, and I can say I have the right to force you, and we don't get anywhere.  I am trying to drill down to exactly what our moral framework is to find out where we are fundamentally disagreeing.

Just started this, http://mises.org/journals/scholar/RHCritique6.PDF

The natural right to self-ownership, and the right to homestead that with which one mixes his labor, are the twin axioms upon which all libertarian social thought supposedly rests, according to Murray Rothbard and Hans-Hermann Hoppe. This paper contends that while Austrian economists have made unique and valuable contributions to economics in many areas, the ethical defense of property rights espoused by some Austrians is lacking.2

Ultimately, this paper attempts to show that the natural rights approach to property rights is based on a set of unsupported assumptions—which some might call “faith.”? Rothbard and Hoppe are right to seek fundamental ethical norms to support private property rights (and liability rules for externality resolution), but key parts of their arguments depend on faith: a faith their readers may not share. Faith is certainly not incompatible with economics, but the statement of faith should at least be made clear rather than maintaining the pretense that there are universally accepted external standards by which an argument may be tested. Presuppositions are necessary to any argument, but presuppositions vary. Christians, for instance, presuppose the truth of biblical revelation. A revelation-based approach is neither more faith-dependent than, nor inferior to, the natural rights approach employed by Rothbard and Hoppe. For the Christian, the ethics of property and externality resolution originate not with natural rights but with biblical truth. This in no way undermines the imperative of private property, but rather places it in its proper context.

moda0306 wrote:

Kshartle wrote:

moda0306 wrote:

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more.

Ok then, Kshartle, how do you define what our rights truly are?  I was just trying to point out that they are 1) not really natural from a biological/ecological perspective, and that 2) they're a man-made moral assertion.

So what's the assertion then?  One that always seemed to resonate was the idea of individual sovereignty.  It's based on the moral assertion that human beings are intrinsically valuable.  Property rights, I always thought, were an extension of that assertion.

I'm not saying rights don't exist, but moreso that they exist in a lot more nebulous plane than a car or a tree.  It's a moral idea.  But if it's TOO flexible, you can say you have the right to be free from force, and I can say I have the right to force you, and we don't get anywhere.  I am trying to drill down to exactly what our moral framework is to find out where we are fundamentally disagreeing.

No. For something to be a natural right, it must be possible for everyone to have it. Thus, the right to be left alone can exist, because that does not conflict with others' equal rights to be left alone. However, it should be obvious that it is not possible that everyone could have a hypothetical "right to force others", as that leads directly to the war of all against all, in which there can be no rights. Thus, there can be no such right.

Libertarian666 wrote:

moda0306 wrote:

Kshartle wrote: The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more.

Ok then, Kshartle, how do you define what our rights truly are?  I was just trying to point out that they are 1) not really natural from a biological/ecological perspective, and that 2) they're a man-made moral assertion.

So what's the assertion then?  One that always seemed to resonate was the idea of individual sovereignty.  It's based on the moral assertion that human beings are intrinsically valuable.  Property rights, I always thought, were an extension of that assertion.

I'm not saying rights don't exist, but moreso that they exist in a lot more nebulous plane than a car or a tree.  It's a moral idea.  But if it's TOO flexible, you can say you have the right to be free from force, and I can say I have the right to force you, and we don't get anywhere.  I am trying to drill down to exactly what our moral framework is to find out where we are fundamentally disagreeing.

No. For something to be a natural right, it must be possible for everyone to have it. Thus, the right to be left alone can exist, because that does not conflict with others' equal rights to be left alone. However, it should be obvious that it is not possible that everyone could have a hypothetical "right to force others", as that leads directly to the war of all against all, in which there can be no rights. Thus, there can be no such right.

This whole argument comes down to the fact that Kshartle and Techno are trying to convert a normative statement into a positive statement.

A positive statement is a statement about "what is" and that contains no indication of approval or disapproval. Notice that a positive statement can be wrong. "The moon is made of green cheese" is incorrect, but it is a positive statement because it is a statement about what exists.

A normative statement expresses a judgment about whether a situation is desirable or undesirable. "The world would be a better place if the moon were made of green cheese" is a normative statement because it expresses a judgment about what ought to be. Notice that there is no way of disproving this statement. If you disagree with it, you have no sure way of convincing someone who believes the statement that he is wrong.

The positive-normative distinction is useful because it helps people with very different views about what is desirable to communicate with each other. Libertarians and socialists, Christians and atheists may have very different ideas about what is desirable. When they disagree, they can try to learn whether their disagreement stems from different normative views or from different positive views. If their disagreement is on normative grounds, they know that their disagreement lies outside the realm of economics, so economic theory and evidence will not bring them together. However, if their disagreement is on positive grounds, then further discussion, study, and testing may bring them closer together.

So now, all we have to determine is whether the statement "people have a right to property" is positive or normative. First, I think we can agree that "rights" don't really exist outside of the minds of men. As my bear in the cave example attempted to point out, in nature your "right" to own something (a cave in this case) is only as good as your ability to defend it with force. If a bear saunters into your cave he isn't much going to care whether you think you have a right to own that cave or not. Also, the fact that different societies have different ideas about what rights people are endowed with show that rights are not real objects but rather just an idea or concept. If I put a glass of water in front of you, that is not a concept. Water is real. Unlike a right, its essential nature doesn't change depending on my culture, it is always and forever H2O.

Now, if we can agree that "rights" don't really exist outside of the minds of men and that our concepts of what a right constitutes can differ according to culture, then it would seem to me that the statement that "people have a right to property" is most definitely a normative statement. That being the case, we are free to agree or disagree with this statement and there is no amount of argument or evidence that you can provide that will prove me wrong.

And that is where force comes in, because ultimately if a normative statement is going to become a law, it must be enforced through violence. You don't have to force someone to believe that a river exists. It is quite self evident that if they continue to walk forward they will fall into that river. However, a fictitious line on the ground that says that I own what is inside this area doesn't exist. Therefore, unlike the river its existence is dependent on common beliefs and ultimately if I don't share those common beliefs, it's existence is dependent on force.

Boom. Perfect explanation, doodle.

moda0306 wrote:

Kshartle wrote:

moda0306 wrote:

Let's not forget that "rights" are a man-made moral concept.  They aren't natural from a biological perspective or ecological perspective.

The fact that something is man-made therefore not it doesn't exist is fallacious. It's just a non sequitur. Something that just does not follow.

You might not be outright saying it but it's constantly put forward as a argument here to disprove the existence of things that exist (property, intrinsic value, rights). Even though they are man made they exist, but some times just as an idea or concept so it's tricky to see their existence.

Cars are man made. But they still exist. You might be able to prove that "rights" don't really exist. I would be blown away if you did. But it can't be because they are man-made ideas. There has to be more.

Ok then, Kshartle, how do you define what our rights truly are?  I was just trying to point out that they are 1) not really natural from a biological/ecological perspective, and that 2) they're a man-made moral assertion.

So what's the assertion then?  One that always seemed to resonate was the idea of individual sovereignty.  It's based on the moral assertion that human beings are intrinsically valuable.  Property rights, I always thought, were an extension of that assertion.

I'm not saying rights don't exist, but moreso that they exist in a lot more nebulous plane than a car or a tree.  It's a moral idea.  But if it's TOO flexible, you can say you have the right to be free from force, and I can say I have the right to force you, and we don't get anywhere.  I am trying to drill down to exactly what our moral framework is to find out where we are fundamentally disagreeing.

I totally appreciate that you want to nail this down. Let's do this next week. I think I have some convincing arguments for property rights existing in nature that I have not expressed because they are a little complicated but I am excited about exploring it. It is a moral idea and man made no doubt.

TennPaGa wrote:

Pointedstick wrote: I feel like every thread with Kshartle in it turns into a variant of this extremely frustrating conversation about firearms that I suspect many of us have had:

http://youtu.be/pWa0dZMHYeE

A lot of our disagreements are frustrating, and I certainly contribute to the frustration. None seem as frustrating as the one about QE though.

Let me suggest how it sounds to me:

Some of us say "Tom ran Bill over last night. Let's discuss the implications such as, who will care for Bill's family now that he's dead and Tom's family since he'll likely go to prison".

The response we get and can never seem to get past is "Tom didn't run Bill over, Tom's car did. Tom wasn't even running, he was driving".

Ok this is what we call a distinction without a difference. It's irrelevant minutia that is getting in the way of the discussion.

The actual QE may just swap one asset for an asset of equal value. The mechanics may not result in any appreciable increase to the money supply, but this is minutia. The effect of QE is a larger money supply.

QE is an artificial increase in the demand for treasuries. It allows the government to issue the bonds at a higher price and thus a lower yield than otherwise. Since they are paying less in interest they do not have to tax more to finance their spending or cut spending. The price of their debt is higher so they produce more of it. It's the same thing in the marketplace. When demand goes up for something the price will go up and suppliers will increase production to meet the demand.

The effect of QE is more debt and more money printing. The money supply is higher with QE than it otherwise would be without it. It doesn't matter whether or not the actual asset swap event is money supply neutral. This is a distinction without a difference.

It would be great if we could ever get past this sticking point and move on.

That being said if anyone disagrees with my pitiful analysis please point where I'm wrong. I am happy to learn and correct my understanding. 

Onto property rights......

Do we all agree that we own ourselves, belong to ourselves, are responsible for ourselves and no one else has a higher claim on us than we do?

If anyone sincerely doubts that please say so and maybe say why you doubt it. Then we can try to prove it. If everyone agrees then we'll move onto property.

KShartle, you keep talking about a "larger money supply," but we don't see the data/evidence with respect to the broad money supply — which is far more important in terms of inflationary pressure.

[align=center][/align]

MZM (the broadest measure of the money supply that is published by the Fed) shows nothing extraordinary in terms of growth. No major spikes or major changes. Just a steady increase over the past decade or so. If anything, I see a major correction and then a resumption of the previous up trend.

Base money is too small, compared to the aggregate money supply that people actually use, to have a significant impact on inflation. I don't understand why you ignore MZM (broad money) when it is far more representative of purchasing power than base money (which is mainly used for interbank payments). What gives? You never address this.

Gumby wrote: KShartle, you keep talking about a "larger money supply," but we don't see the data/evidence with respect to the broad money supply — which is far more important in terms of inflationary pressure.

[align=center][/align]

MZM (the broadest measure of the money supply that is published by the Fed) shows nothing extraordinary in terms of growth. No major spikes or major changes. Just a steady increase over the past decade or so. If anything, I see a major correction and then a resumption of the previous up trend.

Base money is too small, compared to the aggregate money supply that people actually use, to have a significant impact on inflation. I don't understand why you ignore MZM (broad money) when it is far more representative of purchasing power than base money (which is mainly used for interbank payments). What gives?

Not only that, but the fed can actually reduce the base money supply at will, if it sees inflation heating up, so whatever economic predictions one thinks they could make from a growing base money supply, you have to account for it going down again.

And since inflation is the MAIN thing that the fed would use as a reason to reduce the money supply, it boggles my mind that people can look at it as such a big deal.

There are so many layers of reasons QE isn't inflationary or dangerous, and all the economic evidence is pointing to those layers existing, so I just don't get the continued misunderstanding.