The Financial System and Money Supply

Look, they aren't adding blood here—it's just distilled water. Besides, nobody is actually short on blood anyway.

Andrew Booth29 said:Look, they aren't adding blood here—it's just distilled water. Besides, nobody is actually short on blood anyway.

But then again, the same could be said about the money too...

That’s funny, you keep circling back like a bit of recursion... 😬

I honestly don't see how one could even attempt a different response to such a mindless analogy—it’s completely disconnected from reality, isn't it? Aside from being equally flawed, of course.

Why on earth would it be stupid?

It honestly feels like you're just being defensive by leaning on flawed assumptions.

I mean, what is the whole point of money anyway?

Is it meant to just sit there gathering dust, or is it supposed to actually circulate through the economy?

Selfishness is just part of being human, I suppose...

And if we look at why things suddenly grind to a halt, isn't it because people stop spending? Is that it or what?

From where I'm standing, my analogy holds up perfectly fine. We clearly just see things through different lenses, but that doesn't give you the right to jump to conclusions when nobody truly knows for sure or can predict how things will play out. My take is that a massive drop in consumer spending is incredibly damaging to society, because at the very least, it’s the first big sign that people's quality of life and personal standards are starting to slip...

I'm actually pretty bummed that I can't track down that specific interview with that one official from the Federal Reserve who was answering all those strange and fascinating questions... there was even some talk back then about getting rid of physical cash entirely...

Andrew Booth29 said:I honestly don't see how one could even attempt a different response to such a mindless analogy—it’s completely disconnected from reality, isn't it? Aside from being equally flawed, of course.

At its core, recursion is really just circling back to where you started, which means there isn't actually any measurement taking place at all...

We have to dial back the spending—plain and simple—because we’re burning through resources way faster than we’re actually producing them. This kind of imbalance can't just carry on indefinitely. I mean, isn't that pretty obvious?
And now everyone is out there dreaming up this fantasy version of a recession where consumption stays high. But what kind of recession would that even be if you don't actually feel the squeeze?

Andrew Booth29 said:We have to dial back the spending—plain and simple—because we’re burning through resources way faster than we’re actually producing them. This kind of imbalance can't just carry on indefinitely. I mean, isn't that pretty obvious?
And now everyone is out there dreaming up this fantasy version of a recession where consumption stays high. But what kind of recession would that even be if you don't actually feel the squeeze?

Excellent? 🤣

I’m talking about the wealthy, those people sitting on massive piles of capital. Because if they suddenly stop spending, it triggers this domino effect of stagnation and minimal consumer activity...

Basically, we have to find ways to motivate the healthy parts of the economy—read: the rich—to start spending, investing, donating, and so on, because it’s pretty obvious that the momentum has to start somewhere...

My take is that everyday Americans are actually the ones who enabled certain individuals to amass such significant wealth in the first place. You could argue it from the opposite direction if you wanted to, but regardless of how you look at it, we're all caught up in some kind of symbiotic relationship with one another...

I’ve been sitting here thinking about how much everything seems to be shifting lately, almost like we're all just watching a slow-motion train wreck that everyone insists is actually a parade. It’s one of those days where you look at the news or scroll through whatever nonsense is trending on social media and realize that the collective attention span of this country has basically evaporated, leaving us all drifting in this sea of superficiality. You see people shouting into the void, convinced they’re making some grand stand, when really they’re just adding to the white noise that defines modern life. I don't know, maybe I'm just getting older and more tired of the constant churn, but there’s a certain heaviness to the way things move now, a sense that we’re all just spinning our wheels in the mud while pretending we’re winning a race. It doesn't really matter what anyone says, because the momentum is already set, and we're all just along for the ride, whether we want to be or not. kaže:
I’m talking about the ultra-wealthy, those people sitting on mountains of cash, because if they actually decide to stop spending, it triggers this massive domino effect where everything just grinds to a halt and consumer demand hits rock bottom.

Look, the reality is pretty simple: we have to figure out how to motivate the healthy ones—and by "healthy," I obviously mean the wealthy—to actually start spending, investing, or donating their capital, because let’s be honest, if the money stays stagnant, nothing moves. It is blindingly obvious that you need a catalyst somewhere to get the gears turning, and it has to start with those who have the most to give.

I mean, I honestly assume it’s just regular folks who paved the way for someone to walk away with that kind of cash in the first place. You could probably argue it from the opposite angle if you really wanted to get pedantic about it, but regardless of how you slice it, we’re all stuck in some sort of symbiosis with one another, whether we realize it or not.

Exactly. And that’s precisely why "luxury goods" play such a pivotal role in this whole equation.

Jerry Williams41 said:

I’ve been sitting here thinking about how much everything seems to be shifting lately, almost like we're all just watching a slow-motion train wreck that everyone insists is actually a parade. It’s one of those days where you look at the news or scroll through whatever nonsense is trending on social media and realize that the collective attention span of this country has basically evaporated, leaving us all drifting in this sea of superficiality. You see people shouting into the void, convinced they’re making some grand stand, when really they’re just adding to the white noise that defines modern life. I don't know, maybe I'm just getting older and more tired of the constant churn, but there’s a certain heaviness to the way things move now, a sense that we’re all just spinning our wheels in the mud while pretending we’re winning a race. It doesn't really matter what anyone says, because the momentum is already set, and we're all just along for the ride, whether we want to be or not. kaže:
I’m talking about the ultra-wealthy, those people sitting on mountains of cash, because if they actually decide to stop spending, it triggers this massive domino effect where everything just grinds to a halt and consumer demand hits rock bottom.

Look, the reality is pretty simple: we have to figure out how to motivate the healthy ones—and by "healthy," I obviously mean the wealthy—to actually start spending, investing, or donating their capital, because let’s be honest, if the money stays stagnant, nothing moves. It is blindingly obvious that you need a catalyst somewhere to get the gears turning, and it has to start with those who have the most to give.

I mean, I honestly assume it’s just regular folks who paved the way for someone to walk away with that kind of cash in the first place. You could probably argue it from the opposite angle if you really wanted to get pedantic about it, but regardless of how you slice it, we’re all stuck in some sort of symbiosis with one another, whether we realize it or not.

Exactly. And that’s precisely why "luxury goods" play such a pivotal role in this whole equation.

He missed the mark entirely again. 😁

I honestly don't get why people assume that just because there’s a balance sitting in their bank account, that money is somehow just idling away—doing nothing at all. In reality, it’s more accurate to say that money can't actually "sit" there. It’s already being put to work in someone else's hands.
Besides, the wealthy aren't exactly hoarding massive piles of cash in checking accounts. If anything, when it comes to liquidity, they’re essentially net debtors. So, regardless of whatever theories you might be hearing about, don't expect the rich to come to your rescue.

You could argue that even here in America, we’ve got, say, a million residential units sitting there with an average value of around $50,000 each. That adds up to $50 billion just like that. Even if we take a conservative approach and cut that in half—let's call it $25 billion—why on earth aren't people actually starting to spend that kind of wealth?

Where on earth are you getting the idea that there’s enough money in the account to cover everything?

Whether it’s sitting on a bank account or tucked away in a mattress—honestly, the momentum stays exactly the same...

What kind of momentum are we talking about here?

Money is the engine behind everything, and if there isn't any cash flowing through the system, the whole thing just sort of grinds to a halt...

I mean, what good is a high-tech gadget if you can't even afford the batteries to make it run?

Forget those cheap analogies. Money hasn't just vanished into thin air. In fact, there’s actually way more money circulating now than there used to be—unless you're looking at the dwindling amount of cash sitting in local bank vaults across the states. Though, even then, you can only count that money conditionally at best. At the end of the day, the sheer volume of the money supply isn't what actually makes an economy tick.

You haven't actually said anything of substance here, other than pointing out that enrollment numbers went up.

Is there any truth to the idea that consumer spending or demand has actually dropped?

And if so, did that trigger issues across various sectors of the economy?

I mean, if the money supply remains the same, then what exactly has shifted compared to how things used to be...

Why are we even talking about a crisis in the first place?

It really rubs me the wrong way when certain people act like they hold the ultimate truth, when in reality, they’re just offering one specific interpretation of events rather than describing the actual state of affairs. Because if everything were as obvious as some people claim, we probably wouldn't be facing these problems at all, or they wouldn't exist to begin with...

So, I just can't get behind someone being contrarian without them presenting a complete and holistic view of the situation.

After all, it's much easier to just say "no" than to actually explain why...

neonhound10 said:You haven't actually said anything of substance here, other than pointing out that enrollment numbers went up.

Is there any truth to the idea that consumer spending or demand has actually dropped?

And if so, did that trigger issues across various sectors of the economy?

I mean, if the money supply remains the same, then what exactly has shifted compared to how things used to be...

Why are we even talking about a crisis in the first place?

It really rubs me the wrong way when certain people act like they hold the ultimate truth, when in reality, they’re just offering one specific interpretation of events rather than describing the actual state of affairs. Because if everything were as obvious as some people claim, we probably wouldn't be facing these problems at all, or they wouldn't exist to begin with...

So, I just can't get behind someone being contrarian without them presenting a complete and holistic view of the situation.

After all, it's much easier to just say "no" than to actually explain why...

Actually, it’s all quite transparent and painfully simple. The catch is that the solution isn't politically convenient, because no government wants to give up its monopoly on printing money. To solve the issue, they try to force demand by pushing nominal interest rates to 0% and real rates into negative territory. Then they forcibly hike aggregate demand without any real foundation and label it "excessive saving," even though saving is the very basis of that consumption. It’s just a cycle of moving from one recession to the next, naturally accompanied by printing money until the presses overheat.

The fact that you aren't a fan of Andrew Booth29's style or mine is your own issue. You didn't bother to educate yourself on the topics you're debating, yet here you are supporting Keynesian measures. Even within that specific framework, you're making mistakes—not just the inherent flaws of Keynesian economics, but errors stemming from a fundamental lack of understanding of both that view and economics in general.
Then you come at us with analogies like "money is blood" or "money is batteries." What is a person supposed to say when you fail to realize that saving and investment are two sides of the same coin? Even if you stuffed cash under mattresses, the economy would adjust through falling prices, wages, and costs. You can't see that the reason the economic adjustment is broken is due to policy. Yet, when someone points out that printing money leads nowhere but a boom-bust cycle—just like it has a hundred times before—you complain about seeing the same thing over and over. No, it's always the same script: "falling consumption" and "excessive saving" must be stimulated.
How exactly do you plan to stimulate anything when you've already printed money beyond reason, interest rates are negative, and banks are sitting on reserves up to their necks? Use your head. Which government spending could possibly be economically—and I mean economically, not politically—viable right now? If something were actually profitable, someone would have invested in it already.
Worst of all, you're advocating for expansive fiscal and monetary policy in America based on this quasi-Keynesian mindset, and I'd bet you hadn't even heard of Mundell-Fleming until I brought it up a few posts ago.

"The USA Has the highest debt-to-GDP level of Any industrialized country, sitting at a staggering 227% of GDP. The government has poured money into useless infrastructure, kept interest rates pinned at practically zero for ten years, leaned heavily on massive quantitative easing, pumped in Keynesian stimulus, and—on occasion—even dumped dollars to grab more.

And what’s the payoff? Two decades of absolute stagnation. We're looking at a near-constant economic slump. The Dow Jones Industrial Average peaked at 38,900 back in 1990, yet here it sits at 10,800—a brutal 72% drop after twenty years.

Paul McCulley Wants USA to go " All in " this brings to mind a frequently cited definition of insanity.

It really does make you wonder about that old saying.

Definitions of Insanity

In One Sentence: Insanity is just repeating the exact same mistakes indefinitely while praying for a different outcome.
In Two Words: Paul McCulley
In One Word: Keynesianism
In Another Word: Monetarism

The truth is, the USA Has already goniti " All in. It IT Has tried everything under The Sun for Two decades including Keynesianism, Monetarism, and intentionally devaluing its own currency. After all that, the only real legacy is a mountain of debt totaling 227% of GDP.

It is frankly baffling how some people can look at twenty years of systemic failure and still claim to have learned absolutely nothing."

http://globaleconomicanalysis.blogsp...-economic.html

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