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Business/Finance See other Business/Finance Articles Title: Monetary policy...it all boils down to the "money" Monetary policy...it all boils down to the "money" April 16 2012 I wanted to write about "monetary policy" and break it down into its simplest form. This may bore some of you, if that is the case please try to read this from the standpoint of "how in the world did the populace allow this to happen?". In it's purest form, monetary policy either raises or lowers interest rates to act like a car's brakes or accelerator pedal. The raising or lowering of rates will cause banks to either lower their aggregate lending or increase it, which in turn will either lower or increase the money supply. Together with fiscal policy, presumably, our "leaders" can steer the car and avoid accidents. Simple stuff. Today however, it has morphed into anything but simple. In fact, monetary policy is THE only policy tool left to our puppeteer masters. The fact that fiscal policy has run a $16 Trillion, 50+++ year amok, monetary policy must be relied upon to fix this too, good luck. The Fed, our central bank that steps on the gas, the brakes and turns the steering wheel has painted itself into a corner where THE only policy response (other than fictitious jawboning) is how far they depress the accelerator. The have ZERO options available to them. The already constructed debt pyramid guarantees this. They cannot worry about "prices, inflation, unemployment" nor anything else, no, they must ensure that the debt pyramid stands and does not collapse of it's own weight. Why? Again, very simple, it is all of this debt that stands as collateral or backing for the Dollar, which in turn stands as the "reserves" backing of all other currencies. The "Dollar" (which is already viewed in a very dim light by foreigners) and US Treasury securities are "perceived" as the safe havens of the world. This "perception" is THE only thing separating us from the world we live in and literally going back in time 400 years to where "barter" was a way of living. It is quite strange because the only thing that prolongs the end (a viable Dollar) is exactly that which will (is killing) kill the Dollar (massive new additional supply to prop up old supply). As you know, the situation is SO bad that in order to prop up the U.S. Treasury market, the Fed had to purchase 61% of all new issuance in 2011. Think about it, THIS is what is flocked to as a "safe haven"! In reality, the Dollar and U.S. Treasuries are THE most over owned, over valued, most plentiful in supply and recently under demanded asset in all of history. It is THE biggest and most dangerous bubble of all time. In fact, if you understand "QE to infinity", then you understand that the "Dollar standard" is more dangerous to everyone on the planet than nuclear arsenals. Yes I know, nuclear arsenals are very, very dangerous, but just because they exist does not mean that they will be used, the Dollar on the other hand has a "timer" that has already been tripped and WILL go off and destroy the world's capital base. It is not "if" and has not been for several years, now it is only "when". When the Dollar "goes", it will basically be a situation where everyone defaults on everyone else. If you are a student of history, when one country "stiffs" another, war is often the result so to view the problem and results solely from an economic viewpoint may not be correct. I know that this was boring to many but it is important to understand that the ONLY policy response left is exactly the policy response which will strip the Dollar naked for everyone to see as ultimately worthless. I know, it is easy to say "we should have done something years ago" and yes we should have. We didn't. We didn't because that would have involved some pain, it would have involved some actual work, it would have involved facing reality. Mankind as any other animal will provide for themselves in the easiest fashion available. If "something can be gained for nothing" then let's go for it, right? Well, the problem is that something can never be gotten for nothing, ever, unless through fraud or theft. As the title implies, ALL of our problems boil down to one thing, "the money". You can say that fiscal policy is the problem or monetary policy, you could say that about many things. Inflation, unemployment, wars, collapsing home prices, crime, fraud, or nearly any other "problem", but these are all symptoms of the main problem! This main problem is that "the money" is bad, it is fraudulent. An economy cannot and will not ever function properly if the currency used is not "honest". The "money" must be one that cannot be "changed" in supply or value at another human's whim. That which is used to settle transactions must be easily and readily measureable yet very difficult for a man, men or government(s) to alter as far as "value" is concerned. In other words, who wants to play a game when the rules (currency values) are changed constantly while you are playing? No one, that's who, except for those few who can change or benefit from the change in rules! Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: christine (#0)
American masses are NOT stupid and it is not we that have been operating this government. The extreme course for ending this nightmare is quite apparent. The national debt cannot ever be repaid and will NEVER BE REPAID. Using that as a starting point, bankruptcy must be declared, currency must be replaced in total. Too harsh???? Well then perhaps the alternative is more acceptable, World War THREE is staring us in the face. This corrupt government WILL CONTINUE TO OPERATE ON BORROWED MONEY UNTIL THE WAR ENDS IT ALL.
Noone, that's who, "NOT" ! "APRIL 15th is really APRIL FOOL'S DAY"
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