Gumby, after digging into TR2012-1.pdf and TR2013-1.pdf (following the links from the harvard blog commenter and Sadowski) I think it's a little more clear. Without the benefit of these docs to look at, I think your analysis was pretty good above. Can anybody figure out how Cox & Archer came up...

Tom Brown wrote:BTW, is there a way to obtain a link directly to a particular comment here?

Yes.. the link itself is the post message title (in this case, "Re: Cullen Roche interview") directly to the right of the poster's name on that post.

The point is the money dump needs to be a lot bigger than the growth in goods and services can ever hope to be Can you elaborate? That doesn't necessarily mean massive inflation in a short period of time that will demolish us. I would think if it did, we would see more evidence of it by now — it ha...

The 100+ trillion in unfunded liabilities is no problem because the government can just borrow the money and the FED can immediately print money and abosrb the bonds so no one else has to take the losses. It will do it all. Magic. It's just like the government directly printing except now there is ...

Libertarian666 wrote:Here is an article from some wild and crazy doomers at... the Wall Street Journal:

...

But what do they know?

Of course, that wasn't written by any reporter or editor at the WSJ. It was an "opinion" piece that was written by former politicians who have political agendas.

Here's a great example of Nick Edmonds using his modeling skills to criticize MM ideas about what happens with increases in the base money supply (QE essentially): "Certain monetarists would assert that, given time, there is a fixed relationship between the quantity of base money and the price...

Moda / Gumby, Is the absence of QE deflationary?  That is, if the Fed had not embarked on QE would we have been in more of a risk for deflation, or be in a more deflationary state than today? I don't think QE, on its own , helped us avoid deflation. I think QE played a role in manipulating interest...

Tom Brown wrote: Just curious, is everybody on the same page here regarding these definitions? (of M0, MB, M1, M2, etc?).

Yes, that is what I use. Good clarification.

Bean wrote: Being the N'th time this debate has happened can everyone just admit they might be wrong and that doesn't bother you since the PP is well designed for reality and belief having little correlation?

I'm totally happy to admit that. I love my Permanent Portfolio!

If M1 shrunk  down to a fraction of what it currently is, what do you think would happen to the rest of the money supply? I have no idea since it would purely depend on other factors that affect the creation/destruction of private credit and since there is no function that determines the broad mone...

Gumby.....if the base money supply dissapeared.....then what do you think would happen to the rest of it? It's a nonsensical question because the Fed requires base money to make interbank transfers. The rest of private credit would just become un-transferrable between banks. Base money is mainly ju...

No. You mentioned a multiplier effect, I did not. Oh reaaally? QE... expands M1, M2 & M3 directly , and since M2 & M3 are a function of M1 it expands them by a greater total amount than just the amount printed. I said that QE expands the base money supply. I might have said M1. Actually you...

Wrong that increasing the money supply increases inflation... obviously :). ahahahahhah......obviously. I suggest we all take a field trip to Zimbabwae to check out first hand if an increased money supply leads to higher prices (or at least higher than they otherwise would be since many other facto...

So Gumby, maybe Kshartle has something of a point here... If 1) QE (or what we probably mean as open market operations) is part of a machine that removes a spending restraint, and 2) that spending can be inflationary, then --- Open Market Operations is inflationary. [...] But deficit spending that ...

Of course not. It enables the government to deficit spend more and more and bid up the general price level. No. The government can infinitely deficit spend even if the Fed doesn't buy any bonds via QE. Everyone knows this already. The QE makes it easier because the government doesn't have to do the...

Of course not. It enables the government to deficit spend more and more and bid up the general price level. No. The government can infinitely deficit spend even if the Fed doesn't buy any bonds via QE. Tom Brown already explained this here... The "rolling over" is done from the Tsy side: ...

The auction must be included. It's success depends on the FEDs actions. Everyone knows the FED is buying so they can buy without fear, they have a willing partner who will bid up the price and take on their risk because it can create money out of thin air. Huh? Primary Dealers don't "fear"...

Thank you Tom. I guess I am missing the point. It was my understanding that the argument from the MR school is that QE is not expansive of the money supply (inflation) because it is an "asset swap". Is my understanding correct? MR would say it is expanding the money supply in one measure,...

How is this: Before QE: Government              Bank            FED   $0                        $100            $0 After QE: Government              Bank            FED   $100                    $100          $100 bond The bank should start with a $100 bond, not cash. If we are just talking about Q...

I think you might want to take Tom Brown's advice in terms of trying to explain your position with accounting . His accounting confirms what I have been saying all along . Which is what? Among other things, that (fiscal) deficit spending results in a net deposit of a Treasury Bond in the private se...

You're just being argumentative KShartle, I don't think anyone here would characterize my statements in this thread as "argumentative". And, I think you might want to take Tom Brown's advice in terms of trying to explain your position with accounting . His accounting confirms what I have ...

TennPaGa wrote: You mean "deficit spending", not "fiscal spending", correct?

Correct. Most fiscal spending tends to be deficit spending, but "deficit spending" is more accurate. I was trying to explain the difference between fiscal policy and monetary policy.

Gumby & Kshartle, I honestly think the best thing to do to resolve some of these questions is to just work it out on the balance sheets for yourselves. That's what I've done. Thanks, Tom! I already agree with Cullen and have found his explanations to be extremely helpful. Correct me if I'm wron...

You don't think the government buys apples? I was in the Army. Trust me, the government buys apples. Soldiers eat them. Most government spending goes into the private sector. Anyway, it makes no difference because this conversation is about financial assets , not apples. In your own example, there ...

Ok you mean when they extend credit? When they issue a loan (a promise to pay, a bond) to someone right? You mean a liability. There is no bond when a bank creates a loan. If I borrow $1,000 from the bank and take the money home with me I have money, the bank has the bond or note or promise for me ...