money locked up in banking never hits consumers

Discussion in 'Economics' started by cdcaveman, Jul 27, 2015.

  1. I've heard some one say to me that in the trickle down of money the top tier gets the best advantage as they don't feel the effects of inflation at the same rate in which people farther down the latter do.. I understand this.. but It seems at least to me that alot of the money hasn't showed up in in the inflation numbers.. I've heard someone say interbank lending and bank lending is locked up because there is no modivation to lend at the current rates and they tie their money up in investments.. is there a better way to explain this? Do i have this wrong? Can anyone clarify?
     
  2. My question is how do bloated bank reserves from fed money printing result in anything good? the fed is evidently paying higher interest on bank reserves then the market is paying for that money, such that bank reserves build, and inhibit the money from trickling down and inflating consumer pricing?
     
  3. loyek590

    loyek590

    the fed has the ability to print unlimited amounts of money, the only constraint being inflation

    what good can come from it? Well, that's debatable. Do you like the drip method or the bucket method? I don't like either.
     
  4. they print money buy bonds to hold down interest rates.. then pay interest on reserves to keep the money from hitting the market... there has to be some really bad long term effects to this... all this money is locked up in banking reserves... complete market manipulation with fiat currency... I just don't understand how you slip out from under all that as the fed? inflation saves the day? AT WHOSE COST!
     
  5. loyek590

    loyek590

    yes, the question is always, "Can you control inflation?" other than that fiats are really fun
     
  6. xandman

    xandman

    At the cost of creditors getting terrible returns on their investment. A very important difference to this era of money printing is that the US has done it without increasing the velocity of money. So, no inflation.

    As Mel Brooks once said: "It's good to be the King!"
     
  7. loyek590

    loyek590

    this "era" of money printing? It's only an "era" if it ends.

    How do you see it ending?
     
  8. yes the velocity of money isn't increasing because the money never trickles through the economy, it gets tied up in bank reserves... I don't understand how that really resolves the issue.. the value of inflation is just then held up inside these bloated bank reserves.. Its like they are holding down interest rates and the money they used to do it is being restricted from use so there isn't inflation.. this doesn't happen in a vacuum...
     
    #10     Jul 27, 2015