tag:blogger.com,1999:blog-7982981413278241287.post7044315062963382376..comments2023-10-28T17:54:39.467-06:00Comments on The Golden Truth: Interest Or No Interest On Excess Reserves, That Is The QuestionDave in Denverhttp://www.blogger.com/profile/03016238915167131989noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-7982981413278241287.post-6804525149045908462012-07-26T05:20:19.825-06:002012-07-26T05:20:19.825-06:00"The ONLY way to increase the money supply is..."The ONLY way to increase the money supply is for the Fed to increase its balance sheet." True, but so long as the money is in excess reserves and not lent out, it is essentially non-existent and does not create inflation.<br /><br />"Per my analysis, it is likely that dropping IOER will serve only to fund Treasury auctions." Banks may not want to do even that, much less lend to private sector. They are no stupid and know the government is bankrupt. IMO, they'll have to be coerced into doing that (I think Jim Rickards talked about this the other day when he said the government will make a deal with banks whereby the banks will buy govt bonds in return for the bailouts).<br /><br />The FT article was really silly - who said the banking system is closed? Amazing what people write.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-33992385352687208202012-07-25T08:49:51.900-06:002012-07-25T08:49:51.900-06:00Dave say something nice about AUM/ECU...lolzDave say something nice about AUM/ECU...lolzAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-52423181911436798602012-07-25T08:42:45.699-06:002012-07-25T08:42:45.699-06:00If you read this statement by Pento and then read ...If you read this statement by Pento and then read the FT link describing why cutting IOER won't increase the money supply, then you will know why Pento is wrong: The move would be much more politically tenable than to increase the Fed’s balance sheet yet further, most likely because people don’t understand the inflationary impact it would have. Ceasing to pay interest on excess reserves would allow the Fed to lower the value of the dollar and vastly increase the amount of loan creation, without the Fed having to create one new dollar<br /><br />I have linked the FT article in my blog post. The ONLY way to increase the money supply is for the Fed to increase its balance sheet. Per my analysis, it is likely that dropping IOER will serve only to fund Treasury auctions. JesseL and I both agree on this.<br /><br />Gold/silver are coiling for a not-to-be-believed massive move higher, but not for the reasons Pento thinks. Pento was late to the game in gold and he's way behind the curve in terms of understanding the dynamics. He's right about the move, but for the wrong reasons.<br /><br />I remember emailing Pento several years ago about gold and I got an insanely useless response.Dave in Denverhttps://www.blogger.com/profile/03016238915167131989noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-33249436686538546662012-07-25T08:28:18.621-06:002012-07-25T08:28:18.621-06:00I am not sure you can describe Mormonism as a hard...I am not sure you can describe Mormonism as a hardcore Christian sect more like a masonic lodge as John Smith et al were all masons with a belief in the great combinations and hidden hand. This belief system appears to be at complete odds with Christianity and is a fit with the Fed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-62180504284843546862012-07-25T08:13:38.208-06:002012-07-25T08:13:38.208-06:00Hey Dave,
So I'm guessing you don't share...Hey Dave,<br /><br />So I'm guessing you don't share the same level of "optimism" that Pento does regarding any actions on the IOER front?<br /><br />http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/8_This_Major_Fed_Move_Is_About_To_Cause_Gold_To_Skyrocket.htmlanti-bsnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-45243249956834497242012-07-25T08:01:45.314-06:002012-07-25T08:01:45.314-06:00Thanks Dave, you hit the nail on the head. Just re...Thanks Dave, you hit the nail on the head. Just recently I was listening to Michael Pento's interview to KWN (http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2012/7/10_Michael_Pento.html) where he was arguing that the only thing the Fed needs to do is lower the interest to zero and bang, the banks will rush to lend and the $1.5 trn of excess reserves will turn into $15 trn of loans. What a piece of BS I thought. They may lend it to Government, and even this is not obvious (not until they are strongly advised to I think), but not to private sector for sure so it won't be multiplied by 10. So only $1.5 trn will leak out into wide circulation although this isn't small change either.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-32390716756320894452012-07-25T06:21:33.229-06:002012-07-25T06:21:33.229-06:00I guess if policies were put in place by the Govt ...I guess if policies were put in place by the Govt that guaranteed mortgages for everyone it could happen, but w/out that the era of no income check mortgages is gone and joblessness is too high to support another mortgage/housing boom.Dave in Denverhttps://www.blogger.com/profile/03016238915167131989noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-92133999165972146992012-07-25T04:54:30.244-06:002012-07-25T04:54:30.244-06:00Thanks, Dave. I always look forward to your discu...Thanks, Dave. I always look forward to your discussions.<br /><br />I can't help but wonder if somewhere in IOER-to-zero is another housing bubble. Your thoughts?<br /><br />PurplefrogAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-47967540332727289822012-07-24T16:24:14.365-06:002012-07-24T16:24:14.365-06:00Unless he recently switched party affiliation Bern...Unless he recently switched party affiliation Bernanke is a Republican and was first appointed by Bush the lesser.Sneedhttps://www.blogger.com/profile/01012273855309343589noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-5118098999762547852012-07-24T15:41:27.715-06:002012-07-24T15:41:27.715-06:00My liberal friend posted this article form Forbes....My liberal friend posted this article form Forbes. Thought this might get some juices flowing for you.<br /><br />http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-50682570914196797972012-07-24T15:08:42.755-06:002012-07-24T15:08:42.755-06:00If you had a comment section on your blog I could ...If you had a comment section on your blog I could leave the same message LOLDave in Denverhttps://www.blogger.com/profile/03016238915167131989noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-85092918483836450402012-07-24T15:05:20.686-06:002012-07-24T15:05:20.686-06:00Excellent comments Dave and I thank you for your v...Excellent comments Dave and I thank you for your valuable input on my own thinking.Jessehttps://www.blogger.com/profile/10098169118867085623noreply@blogger.comtag:blogger.com,1999:blog-7982981413278241287.post-84004827345267529622012-07-24T14:53:15.688-06:002012-07-24T14:53:15.688-06:00Hey, Rocky, wanna see me pull some fiat out of my ...Hey, Rocky, wanna see me pull some fiat out of my hat?<br />Oh, Bullnanke, not again!<br /><br />Whatever can't go on, won't.David in AZnoreply@blogger.com