Originally Posted by Shearhead_3:16 (Post 851467)

If you want people to take your websight or magazine seriously then you have to get sponsors who at least look legit and don't post their banners on websites frequented by those who tevo "Ancient Aliens".

Originally Posted by Joe Perez (Post 851391)

Given this, I simply cannot take seriously any economic advice proffered by a man who clearly lacks even the most fundamental understanding of economics.

Originally Posted by JasonC SBB

You missed the step where he said that the Fed will have to buy debt (causing inflation).

Originally Posted by Scrappy Jack

Clarify for me your definition of "inflate." In what way does the Federal Reserve buying US Treasury securities cause this inflation? What is the mechanism that gets you from A (Federal Reserve actions) to B (inflation)?

Originally Posted by JasonC SBB (Post 854429)

Fed Res increases supply of "high powered money", which ends up as extra reserves at the banks, which gets lent out, increasing the money supply, decreasing its value.

Originally Posted by JasonC SBB (Post 854433)

That's stupid, that's like concluding some gearhead is considering turboing miatas, comes here, and sees all the cat threads, and confirms his suspicions that miatas are owned by gay weirdos.

Google must have seen a correlation between "US government collapsing!" websites and interest in "grow your own vegetables!" as well as "free electricity!" crap. Before my knee surgery I looked up how long it takes to get hooked on pain meds and for weeks google thought I was trying to shake an addiction.



?? Based on what?

Originally Posted by Shearhead_3:16 (Post 854511)

Would you buy a turbo kit from a websight that your unfamiliar with that advertises & sells electric superchargers?

Originally Posted by Scrappy Jack (Post 854505)

I am not trying to be obtuse here. I want to answer your question from my perspective but you and I are operating with fundamentally different models and the language can be muddy.

"High powered money" = reserves at the Fed + cash held by the public?

Are you using "inflation" as short hand for "price inflation" as most people do or are you considering an increase in the broader money supply measures alone as inflation?

Originally Posted by JasonC SBB (Post 855093)

Inflation = increase in money supply due to HPM multiplied by money multiplier, usually followed by price increases. Yes I know the recent increase in HPM was not followed by an overall increase in money supply (M2?) because banks aren't lending (which means a reduction in the money multiplier)

Originally Posted by Carpenter and Demiralp, by way of the Federal Reserve Board (emphasis and selective quotation mine)

Casual empirical evidence points away from a standard money multiplier and away from a story in which monetary policy has a direct effect on broader monetary aggregates. The explanation lies in the institutional structure in the United States, especially after 1990. First, there is no direct link between reserves and money—as defined as M2.

Following a change in required reserves ratios in early 1990s, reserve requirements are assessed on only about one-tenth of M2. Second, there is no direct link between money—defined as M2—and bank lending.

[...]

We argue that changes in the sensitivity of bank loans may stem from the demand side, and that a better test for the lending channel is to check whether bank loans are financed by reservable deposits. Our findings suggest that this is not the case.

All of these points are a reflection of the institutional structure of the U.S. banking system and suggest that the textbook role of money is not operative. While the institutional facts alone provide compelling support for our view, we also demonstrate empirically that the relationships implied by the money multiplier do not exist in the stem from the demand side, and that a better test for the lending channel is to check whether bank loans are financed by reservable deposits. Our findings suggest that this is not the case.