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Is the Treasury’s Monetary Policy Effective?

I think you answered your own question. Back before the Fed system, banks printed their own money backed assets in the vault. It created an unstable money supply with runs on the bank if the banks "over printed" money or the paper was not backed adequately. The shadow banking system created their own ABS currency, everyone had it, just like the Wild West banks and with the same result. Those that didn't have it had paper associated with the institutions that were holding it.

So the AAA securities were treated as liquid money good and then overnight illiquid with uncertain final value. The Fed stepped in to fill the gaping hole in different ways. Until the hole in the money supply is filled, no inflation. There is no extra money floating around Main Street. The GDP is probably overstated.

On Dec 18 06:30 AM Andrew Butter wrote:

> Excellent Excellent Article, you have finally explained something
> that has been nagging me your almost a year, and very lucidly, thank
> you.
>
> I must have asked a twenty economists of all denominations, "but
> isn't a "liquid" security just the same as money?" And they all say...all
> the way from the Austrians to Anarchists..."No, no - you don't understand
> a thing - you moron".
>
> So consider this then, MBS and all the other variants were, two years
> ago considered "liquid".
>
> And they more or less were thanks to the house of cards constructed
> by Goldman et.al....such as the quaint "exchanges" where hardly any
> business was done (and what was done was likely rigged) except they
> were used as a convenient "benchmark" for valuation.
>
> Then suddenly all those liquid assets became illiquid, all $23 trillion
> of them.
>
> So what did that do to the supply of "money".?
>
> So the Fed pumped in $3 trillion, $5 trillion....who knows?
>
> Yet still no inflation.....I wonder why?

Why Has the Securitization Market Dried Up?

I just got a cold call from a broker that wants to build a relationship based on trust but I need to send him $10,000. It's out there if you look for it.


On May 08 11:34 AM wpdragon wrote:

> TRUST
>
> There's a lot of phony feel good chit chat out there, green shoots
> being fertilized by the CNBC bootlickers, but has this one simple
> word returned to vogue on the Street?
>
> I doubt it.
>
>