Archive for October 28th, 2009

The Coming Inflation and A New Money Supply Backed By Real Estate?–Free Enterprise To The Rescue?

Posted on October 28, 2009. Filed under: Blogroll, Communications, Economics, Employment, Fiscal Policy, government spending, Health Care, Immigration, Investments, Law, liberty, Life, Links, Medicine, People, Philosophy, Politics, Quotations, Rants, Raves, Regulations, Technology, Video, Wisdom | Tags: Commodities, free enterprise, gold, Markets, monetary policy, Money Supply, Real Estate, silver, Velocity |

us_currency

US Debt Clock

http://www.usdebtclock.org/

The Pew Research Center for the People & the Press

Reasons for America’s Success

“…Although many Americans are distrustful of government, wary of the news media and disinterested in politics, they resoundingly endorse the economic and democratic systems on which the nation is grounded. When looking back on the accomplishments of the 20th century, overwhelming majorities agree that the Constitution (85%), free elections (84%), and the free enterprise system (81%) are major reasons for the success that the U.S. has enjoyed during the past 100 years. The public may be frustrated by how the system operates, but they like the design. …”

http://people-press.org/report/?pageid=282

Glenn Beck-10-28-09-A

Glenn Beck-10-28-09-B

Glenn Beck-10-28-09-C

Glenn Beck-10-28-09-D

Glenn Beck-10-28-09-E

The political elites should pay attention to what the American people believe is responsible for America’s success.

Politicians and political parties can and will be replaced when they propose plans and programs that undermine the US Constitution, free elections and free enterprise.

The progressive radical socialists will be defeated and eliminated should they attempt to overthrow these institutions and ignore the will of the American people.

“Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individuals life and the unrestricted supremacy of the government in its capacity as central board of production management.”

~Ludwig von Mises

Background Articles and Videos

Author Jonah Goldberg on Glenn Beck 2/20 – Liberal Fascism

Free Enterprise, the Economy and Monetary Policy

“…Free enterprise is the freedom of individuals and businesses to operate and compete with a minimum of government interference or regulation. It enables individuals and businesses to create, produce, transform, develop, innovate and compete in the marketplace. As they are able and willing, enterprising people produce goods and services for profit, offer their labor for wages and own the resources needed to produce and sell goods and services. In this system, no one forces people to be creative, productive or enterprising. Instead, they pursue what they believe to be best for them. By producing the goods and services that society values most highly, a free enterprise system results in the greatest efficiency, or lowest costs, of any economic system. It is the system most compatible with individual freedom and political democracy.

What Is Free Enterprise?

Free enterprise means men and women have the opportunity to own economic resources, such as land, minerals, manufacturing plants and computers, and to use those tools to create goods and services for sale.

What prompts people to take the financial and emotional risk of starting a business? The main motivator is the potential to earn a profit. People also go into business for personal reasons, such as the desire for independence and the drive to be creative.

Others have no intention of starting a business. If they choose, they can offer their labor, another economic resource, for wages and salaries. The key to free enterprise is that all these people, whether they start a business of their own or work for someone else, do so voluntarily. By allowing people to pursue their own interests, a free enterprise system can produce phenomenal results. Running shoes, walking shoes, mint toothpaste, gel toothpaste, skim milk, chocolate milk, cellular phones and BlackBerrys are just a few of the millions of products created as a result of economic freedom. …”

http://www.dallasfed.org/educate/everyday/ev5.html

Fed & Treasury total money supply

All major Fed operations (plus custodials), showing the running total of all Fed & Treasury controlled money creation or destruction actions.

fs1

http://www.nowandfutures.com/key_stats.html

The Money Supply

Money Supply Measures
The Federal Reserve publishes weekly and monthly data on two money supply measures M1 and M2. The money supply data, which the Fed reports at 4:30 p.m. every Thursday, appear in some Friday newspapers, and they are available online as well. The Fed publishes measures of large time deposits on a quarterly basis in the Flow of Funds Accounts statistical release.

The money supply measures reflect the different degrees of liquidity—or spendability—that different types of money have. The narrowest measure, M1, is restricted to the most liquid forms of money; it consists of currency in the hands of the public; travelers checks; demand deposits, and other deposits against which checks can be written. M2 includes M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.

The chart below shows the relative sizes of the two monetary aggregates. In April 2008, M1 was approximately $1.4 trillion, more than half of which consisted of currency. While as much as two-thirds of U.S. currency in circulation may be held outside the United States, all currency held by the public is included in the money supply because it can be spent on goods and services in the U.S. economy. M2 was approximately $7.7 trillion and largely consisted of savings deposits.

The Money Supply

http://www.ny.frb.org/aboutthefed/fedpoint/fed49.html

Money Supply

“…In economics, money supply or money stock, is the total amount of money available in an economy at a particular point in time.^[1] There are several ways to define “money”, but standard measures usually include currency in circulation and demand deposits.^[2]^[3]

Money supply data are recorded and published, usually by the government or the central bank of the country. Public and private-sector analysts have long monitored changes in money supply because of its possible effects on the price level, inflation and the business cycle.^[4]

That relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth. These underlie the current reliance on monetary policy as a means of controlling inflation.^[5]^[6] This causal chain is however contentious, with heterodox economists arguing that the money supply is endogenous and that the sources of inflation must be found in the distributional structure of the economy.^[7]

Money is used in final settlement of a debt and as a ready store of value. Its different functions are associated with different empirical measures of the money supply. Since most modern economic systems are regulated by governments through monetary policy, the supply of money is broken down into types of money based on how much of an effect monetary policy can have on each. Narrow measures include those more directly affected by monetary policy, whereas broader measures are less closely related to monetary-policy actions.^[6] Each measure can be classified by placing it along a spectrum between narrow and broad monetary aggregates. The different types of money are typically classified as Ms. The number of Ms usually range from M0 (narrowest) to M3 (broadest) but which Ms are actually used depends on the system. The typical layout for each of the Ms is as follows:

M0: Notes and coins (currency) in circulation and in bank vaults.^[8] In some countries, such as the United Kingdom, M0 includes bank reserves, so M0 is referred to as the monetary base, or narrow money.^[9]

MB: Equals M0 + reserves which commercial banks hold in their accounts with the central bank (minimum reserves and excess reserves). MB is referred to as the monetary base or total currency.^[10] This is the base from which other forms of money (like checking deposits, listed below) are created and is traditionally the most liquid measure of the money supply. ^[11]

M1: M1 includes funds that are readily accessible for spending. M1 consists of: (1) currency outside Federal Reserve Banks, and the vaults of depository institutions; (2) traveler’s checks of nonbank issuers; (3) demand deposits; and (4) other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts. ^[12] Bank reserves are not included in M1.

M2: Equals M1 + savings deposits, time deposits less than $100,000 and money market deposit accounts for individuals. M2 represents money and “close substitutes” for money.^[13] M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.^[14]

M3: Equals M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets.^[15] M3 is no longer published or revealed to the public by the US central bank.^[16] However, it is estimated by the web site Shadow Government Statistics. ^[17]

MZM: Money with zero maturity. This measure equals M2 plus all money market funds, minus time deposits. It measures the supply of financial assets redeemable at par on demand.

Fractional-reserve banking

Main article: Fractional-reserve banking

The different forms of money in government money supply statistics arise from the practice of fractional-reserve banking. Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics. In short, there are two types of money in a fractional-reserve banking system^[18]^[19]:

central bank money (physical currency, government money)
commercial bank money (money created through loans) – sometimes referred to as private money, or checkbook money^[20]

In the money supply statistics, central bank money is M0 while the commercial bank money is divided up into the M1-M3 components. Generally, the types of commercial bank money that tend to be valued at lower amounts are classified in the narrow category of M1 while the types of commercial bank money that tend to exist in larger amounts are categorized in M2 and M3, with M3 having the largest.

Reserves are deposits that banks have received but have not loaned out. In the USA, the Federal Reserve regulates the percentage that banks must keep in their reserves before they can make new loans. This percentage is called the minimum reserve. This means that if a person makes a deposit for $1000.00 and the bank reserve mandated by the FED is 10% then the bank must increase its reserves by $100.00 and is able to loan the remaining $900.00. The amount of money the banking system generates with each dollar of reserves is called the money multiplier, and is calculated as the reciprocal of the minimum reserve. For a reserve of 10% the money multiplier, followed by the infinite geometric series formula, is the reciprocal of 10%, which is 10. …”

http://en.wikipedia.org/wiki/Money_supply

Peter Schiff Vlog-Market Sell Off,-Homebuyer Tax Credit-Inflation & Rents

10/27/2009 Peter Schiff On Fast Money: Dollar Rally Only Temporary?

10/28/09 Jim Rogers on Bloomberg (Part 1/3)

10/28/09 Jim Rogers on Bloomberg (Part 2/3)

10/28/09 Jim Rogers on Bloomberg (Part 3/3)

Background Articles and Videos

Psychological projection

“…Psychological projection (or projection bias) is the unconscious act of denial of a person’s own attributes, thoughts, and emotions, which are ascribed to the outside world, like the weather, the government, a tool or another person or people. Projection is one of the most profound and subtle of human psychological processes, and extremely difficult to work with, because by its nature it is hidden. It is the fundamental mechanism by which we keep ourselves uninformed about ourselves. Humor has great value in any attempt to work with projection, because humor presents a forgiving posture and thereby removes the threatening nature of any inquiry into the truth.

Paleo-anthropologically speaking, this faculty probably had survival value as a self-defense mechanism when homo sapiens’ intellectual capacity to detect deception in others improved to the point that the only sure hope to deceive was for deceivers to be self-deceived and therefore behave as if they were being truthful.

One modern, radical view of projections is that they are prerequisites for normal social functioning. A person incapable of ascribing their own feelings to other people has great difficulties in understanding them. Unfortunately, human beings have done great harm laboring under the delusions of projection. This is especially true for historical cases of projection between ethnic or cultural groups, for example in Apartheid or Nazism.

In classical psychology, projection is always seen as a defense mechanism that occurs when a person’s own unacceptable or threatening feelings are repressed and then attributed to someone else.^[1]

An example of this behavior might be blaming another for self failure. The mind may avoid the discomfort of consciously admitting personal faults by keeping those feelings unconscious, and redirect their libidinal satisfaction by attaching, or “projecting,” those same faults onto another.

Projection reduces anxiety by allowing the expression of the unwanted unconscious impulses or desires without letting the conscious mind recognize them.

The theory was developed by Sigmund Freud and further refined by his daughter Anna Freud; for this reason, it is sometimes referred to as “Freudian Projection“^[2]^[3]

^…”

http://en.wikipedia.org/wiki/Psychological_projection