Try the list at the end of this article:
Most of money supply isn’t controlled by the Fed. The largest component of total money supply involves a global unregulated derivatives market that has a notional value of over one quadrillion dollars.
That’s why your first point should be questioned. The financial elite does not control money supply through the Fed. It does so through private banks.
Exactly, and the Fed is a consortium of private banks that works independently of the government.
No, that’s the result of free market capitalism, where most of money supply is created by those who are the most financially powerful, and where governments give in to them.
And how do you abolish the Fed when government, businesses, and households are dependent on low interest rates to maintain a consumer spending economy, with 70 pct of workers in the service industry, and heavy dependence on a petro-dollar backed by the military?
Yes, it does for painfully obvious reasons. Even savings and returns on investment are dependent on increasing sales, which in turn require easy credit.
Not to mention the government, businesses, and households that also relied on easy credit and a low-interest rate regime.
Robber barons, industrialists, and large corporations together with private banks existed long before the Fed and central banks came to light. So did financial speculation and cheap credit.
I don’t disagree with that, but are you expecting the same government that serves the financial elite to go against the latter? How about households that voted for one administration after another that allowed for the continued presence of the Fed, or businesses that obtained easy credit from the same financial elite?
Not just the government but households that voted for administrations that supported the Fed. Why do you think the Fed has been around for a century?
You just confirmed that in ironically describing the multiplier.
It does, as seen in your reference to M2.
It might have to do with income needed to pay for basic needs, which in turn are needed to ensure human dignity. There might be more details in Laborem Exercens and Rerum Novarum.
Definitely, not to mention endogenous money.The Fed has its own balance sheet and is currently owning over $4 Trillion, for which the taxpayers pay about 3-4% interest. It’s nice to print money for yourself so you can call yourself a successful private business, no?
I think the key is endogenous money.
Unfortunately, governments that are supposed to take care of such needs favor the financial elite, and the latter wants that arrangement to be maintained.
I think it’s because banks don’t want that to happen. That reminds me of the Libor scandal:
They should cancel themselves out, but that’s not what financiers who lose want.
Lower doesn’t necessarily mean zero.
Who will borrow at higher interest?
M2 is larger because banks are loaning out more money then they have in deposits because they are loaning out money they get from the Fed through zero interest loans. That’s not real savings.
Because banks are getting interest free loans from the Fed and loaning that out.
Again, I never said it was. I’ve said that multiple times. Do you even read my posts?
Exactly, that is my whole point. You need real savings to invest, not the printing press. That’s what causes bubbles.
What’s your point?
This again. I’ve told you many times that I know that most of the money supply is created by private banks. Why do you keep posting the same thing over and over again? Do you not read my posts? Or do you just not understand them?
The money multiplier has nothing to do with fractional reserve banking.
It’s not that simple. It depends on where the money from the bailouts come from. Did the Fed print it up or did it come from taxpayers?
How does it contradict what I said?
You obviously don’t know what real savings are. What the Fed is doing is not real savings.
It’s obvious you don’t know what the money multiplier is.
Let’s stop and think about this for a minute. You just said that private banks are lending beyond what fractional reserve banking allows. How is that possible? The only way banks can lend more money then they have in deposits is if they have a central bank giving then interest free loans to loan out. Without a central bank, these private banks would not be able to lend beyond what fractional reserve banking allows.
The source of the 2008 crash is the Fed and the federal government following Keynesian macroeconomic policies.
The money supply is controlled by the Fed.
The money supply is controlled by the Fed.
Yes, I know that.
No, that’s a bad idea. What makes you think the government will raise interest rates?
No, it is the result of Keynesian macroeconomic policy. It’s right out of the General Theory
Which wouldn’t exist if we didn’t have central banks.
That’s a good question. I highly doubt the Fed will ever be abolished but it would solve all our problems if it does.
Saving and investment do not rely on consumption. It is the other way around.
That’s funny considering you just said government should take over the Fed. What makes you think that would do any good if they won’t go against the “financial elite”.
Because people don’t understand economics.
No I didn’t.
No it doesn’t
It has become tedious because you keep posting the same thing over and over again. You either aren’t reading my posts or you don’t understand them.
All the more reason to keep government away from the money supply.
Of course they don’t want it to happen. Banks wouldn’t be able to control interest rates without a central bank. The Fed is the one who controls interest rates in the US.
That’s the point. What we need right now is real savings and investment. What we need are higher interest rates.
No one will want to buy at higher prices either. But according to microeconomics, there is a price where supply and demand reach an equilibrium where maximum sales are attained. (Hint: it’s higher than $0) Let the market determine the interest rates, not some President-appointee who now has not only set the price/cost/rate, but has done so on a long term basis. It was bad enough when the Fed could just buy the very short term bonds and employ the exit strategy of simply letting them expire. But now they have to physically sell the long-term bonds if they want to return things to a more normal state. And good luck with that.
In a free market economy it would be a zero-sum game amongst betters. Actually the house would gain but I digress.
Only a fraction of what is loaned comes from the Fed. Most of M2 consist of bank loans. The numbers are given in the article that I shared.
Consider this point–most money is created by private banks–with the one you are raising above: money loaned is from the Fed. The two points contradict each other.
But real savings involves money created by banks that, in competition, can only earn by making more loans. That’s why we end up with fractional reserve banking, which leads to the money multiplier (as seen in the size of the M2), and beyond.
Only a fraction of money is created by the Fed. Most of money is created by private banks. This is the reason why there is a money multiplier. The basis is fractional reserve banking. But M2 is many times what is expected given the money multiplier, and that’s because of endogenous money. More details in the article shared earlier.
If most of money supply is created by private banks, then why do you claim that most of money supply loaned by private banks comes from the Fed? The two arguments contradict each other.
Anything created is either backed by a loan that someone wants to make in a bank or passed on to an unwitting public. In this case, it’s the latter.
One more time: the money multiplier describes the act in which loans eventually become deposits. With fractional reserve banking, the money is thus loaned and re-loaned, until total money stock is higher than reserve balances. That’s why M2 is many times larger, and why much of it consist of private bank loans, not money injected by the Fed into the system.
Savings depends on consumption because what is saved comes from what is earned. One earns by selling. What is sold is consumed.
The definition of that is given in the article that I shared. Please give your definition of the term.
Read the article shared for details:
The source is private banks which control the Fed and which the government serves. That source involves only a fraction of over a quadrillion dollars (notional value) in global unregulated derivatives, which in turn exist in a global economy dominated by private corporations that are controlled by the financial elite, not governments or central banks.
Most of money supply is not controlled by the Fed but created by private banks. That’s why M2 is not only ten times larger than reserve balances but many times larger. The data is given in the article shared earlier.
Obviously not, unless there are enough physical assets in the world that can back a global unregulated derivatives market with a notional value of over a quadrillion dollars, which is twenty times larger than the global economy.
Most of money supply is not controlled by the Fed but created by private banks. That’s why M2 in 2007 reached $7.25 trillion.
That’s why you cannot count on the government to act against the Fed.
I don’t. That’s why I don’t think the Fed will be abolished.
Empirical data shows otherwise. See M2 for 2007, for example.
That global derivatives market is unregulated. In short, it doesn’t involve central banks or even governments.
The only way to solve these problems is to cut down heavily on borrowing and spending across the board, and that means the gradual disappearance of a middle class lifestyle, super power status, the presence of the financial elite, banking in general, manufacturing and food production that are heavily dependent on JIT systems, cheap energy, and lots of easy credit, and military spending.
It goes both ways, as savings and returns on investment come from profits, which in turn rely on consumption.
Because the credit that the government needs comes from the Fed.
And their middle class conveniences depend on the Fed and the government, especially a military that has to keep the petro-dollar propped up.
Most of money supply has not been controlled by government for some time.
The Libor scandal does not involve the Fed setting interest rates but private banks manipulating rates.
And who will borrow at higher interest so that we will get our interest on real savings and returns on investment?
Actually anyone who extends any kind of credit (pay me later) technically expands the money supply. Of course much of this is offset at the time of full payment.