The unemployment rate has fallen a full percentage point over the last 4 mo

[mrsleeve]

Yeah for inflation while wages stay the same

Opec will still be getting the same thing value wise , its just going to seem like way more for us

[gwb72tii]

it would be fine if wages were staying the same
actually not fine, less worse

rwh, you may know this stat
isn't money velocity at a 50yr low, or close?

[rwh11385]

it would be fine if wages were staying the same
actually not fine, less worse

rwh, you may know this stat
isn't money velocity at a 50yr low, or close?

Are you too old to use google, or just too lazy?

[gwb72tii]

so much for being civil

[nando]

and a follow up question
what does the fed see coming that has scared the shit out of them so much that bernanke would embark on the most massive printing of money in history?

the fiscal cliff

Ben doesn't think that congress can accomplish anything. They've already proven that they can't. It's basically a phsycological game, to get the people to feel a bit better about the economy, so that if the fiscal cliff comes (likely), maybe the damage won't be so bad if people don't freak out.

LOL at the wiemar republic comment. really? you think they'll print to 1000% inflation? we haven't even broke 3% in the last several years. also, Europe won't do anything to fix their broken system. The Fed seems to be the only entity willing and able to do a damn thing.

[gwb72tii]

you can't force people to use the money the fed prints, and that is the problem
and here is the answer to the question i asked rwh, who answered in his usual fashion
money velocity is at a 50 year low. there is plenty of money (liquidity) but nobody wants to do anything with it.

[Morrison]

And here's a follow up question: Which income level segment of our population absolutely excels at spending money? I mean, they're damn good too, like a 1 to 1 ratio of income to spending.

[nando]

you can't force people to use the money the fed prints, and that is the problem
and here is the answer to the question i asked rwh, who answered in his usual fashion
money velocity is at a 50 year low. there is plenty of money (liquidity) but nobody wants to do anything with it.

I think the Fed knows that bond buying may have limited effect in the economy. That's why I said, it's mostly psycological, the hope is to blunt the impact of the fiscal cliff. And with congress unable to accomplish a single thing fiscally in the last 2-3 years, they've sort of forced the Fed's hand.

[Kershaw]

And here's a follow up question: Which income level segment of our population absolutely excels at spending money? I mean, they're damn good too, like a 1 to 1 ratio of income to spending.

Poor people.

[gwb72tii]

I think the Fed knows that bond buying may have limited effect in the economy. That's why I said, it's mostly psycological, the hope is to blunt the impact of the fiscal cliff. And with congress unable to accomplish a single thing fiscally in the last 2-3 years, they've sort of forced the Fed's hand.

i'd have to agree

[Morrison]

Poor people.

That is corrrect.

[gwb72tii]

^^^
so what then, i ask you two, is the fed doing that will help the poor? measured by family wealth, the top 20% own close to 93% of all stocks/bonds.
bernanke somehow believes, absent any data, that the wealth affect will empower people to spend more, even though it hasn't.
but if it were true, it enriches the very people that don't spend every dollar they make (according to kershaw), which widens the rich/not rich gap further and does nothing for the economy.

[nando]

^^^
it enriches the very people that don't spend every dollar they make (according to kershaw), which widens the rich/not rich gap further and does nothing for the economy.

I agree.

it seems to be a signal to buy equities. at least that's how I interpret it. Still waiting for a buying opp.. been saving since august of last year.

[rwh11385]

so much for being civil

Sorry, I forget that you are used to others supplying all the information for you. But as an adult, you should be more than capable (in theory) to provide support on your own.

Here's a more long-term view of money stock velocity as well, to put things in perspective.





Also, the multiplier effect has been decimated by the mortgage crisis. But that's been mentioned here before (perhaps in another thread but possible here too).



Even as the money base is increased, the end resulting M3 might not be that great as desired since there isn't as much leveraging due to fewer people getting mortgages, whether from lack of financial ability, lack of desire, or lack of bank approval. Considering that many people who got houses, or too large of houses than they could afford, I don't think if banks hope people responsible and more people are thinking more conservative than they were before... I don't think you'll see this bounce back any time soon. The real estate market healing is a bit different from demand returning to the same as before all of this, as well as people putting more down and borrowing less, avoiding sometimes if possible (Dave Ramsey folks).

you can't force people to use the money the fed prints, and that is the problem
and here is the answer to the question i asked rwh, who answered in his usual fashion
money velocity is at a 50 year low. there is plenty of money (liquidity) but nobody wants to do anything with it.

Poor people will always use money, but they typically don't "bank" much. Middle-class may save and borrow, but as mentioned above - maybe not in the magnitude as before the crisis. People will use money, but enabling banks to leverage it to increase the supply is a different story.

Plenty of people I know are still borrowing (and can), but that doesn't mean everyone else is as capable or attracted to the system. A few people here scream all cash and debit still, and would rather rent and pay more than buy again. It'll take time and even when mentalities recover, they still might err on the side of conservative still.

But that low amount of money turn / leverage is why an increase in monetary base isn't having a resulting run up of inflation. If for some reason it would turn and increase towards more leverage, then there would be a dramatic inflation pressure. However, I don't think that magically overnight everyone will start borrowing again and loving banks again, so Ben can respond with bong selling if there was ever a serious inflationary threat.

Heck, the last time the core CPI was above 4% was 1992.

And has been kept nicely around 2% for the most part (core).

Yes, our money supply is limited by the leverage and velocity of it. Velocity took a dive in the collapse of the house of cards.

Yes, increasing the base has a risk of inflation if that leverage & velocity changes without allowing time to adjust the base accordingly. But it'll take time to build up the multiplier or velocity again.

^^^
so what then, i ask you two, is the fed doing that will help the poor? measured by family wealth, the top 20% own close to 93% of all stocks/bonds.
bernanke somehow believes, absent any data, that the wealth affect will empower people to spend more, even though it hasn't.
but if it were true, it enriches the very people that don't spend every dollar they make (according to kershaw), which widens the rich/not rich gap further and does nothing for the economy.

Well, you know what would probably help them spend? If they know what the shit their tax rates are going to be next year.

The problems don't center around monetary policy, nor do the real solutions. Americans should be concerned with their members of Congress and their neighbors who aren't well adapted to the job market. No amount of easy money will fix the structural unemployment issue, nor our government's inability to make an agreement or compromise on a budget or provide a certain future for people to make decisions based upon.

[gwb72tii]

Sorry, I forget that you are used to others supplying all the information for you. But as an adult, you should be more than capable (in theory) to provide support on your own.

it was a peace offering you chump
you know, trying to engage you in an adult conversation without the usual bullshit that comes with your posts.
someday you'll get over your own lack of self esteem/low self confidence and not have to demean, insult, and ridicule to make a point.