I asked a rhetorical question you moron. No need the spread your wisdom on us. Don't you see that everyone, save a few, is rather amused by your persistence in proving how ignorant, selfish and down right stupid you are? No one is the keeper of the absolute truth, so stop trying.
Multiplier? Yes. Capitalism? You mean where foreigners run the economy for profit? Thats not capitalism. Thats Corporate Fascism. Economist? More than you, apparently! The FED is a tool. Agree, there. If we had an angel running the FED, it would be perfect. Expand money supply identical to GDP growth = rates steady, risk steady, growth steady, very little oscillation. "Business cycle" relegated to history books. What you don't understand is that "tool" was InCorporated for Private Profit. Hint: the "Federal Reserve" isn't really Federal. Private Profit and Public Benefit represent a massive conflict of interest, insofar as monopolies are concerned, wouldn't you agree Capa? Seriously, go read Andrew Jackson, Thomas Jefferson, James Madison, George Washington. They all talked, warned and fought against the banking scam. You think this is "conspiracy nonsense"? Open a history book. Read what the Founders wrote over 200 years ago. Its very real. Monopoly of credit issuance = Control of Nations and its People.
You got it 100%. Inflation Money Systems promote consumption. Whereas, deflationary money systems promote savings and investment. Fractional Reserve banking was institutionalized with the FED to de-criminalize what the Goldsmiths and Wildcat Bankers were doing Centuries prior - spending more "credit notes" than they had gold on deposit in their vault. . Essentially, CREATING MONEY AND USING THAT MONEY TO BUY UP HARD ASSETS FOR THEMSELVES. Is is really so fucking hard for people to open a history book. This is econ 101 type shit they teach in university. The Con Game hasn't changed. Instead of gold demand notes, its now "Federal Reserve" notes And now they're just printing and debasing the overall money supply by spending the value of YOUR dollars before you can.
Deflation promotes investment? How so? Explain. Are you against the stock market? Are you against the bond market? In a certain way they operate in the same fashion as you describe. Companies create these financial instruments out of paper and exchange them for YOUR money and buy things for themselves. If a company issues new stock or a senior tranche of preferred debt and dilutes your holdings, tough luck. Since this occurs frequently I take it you are all for the abolishment of stocks and bonds? Throughout your posts, you rant and criticize but show little understanding of the benefits of the current system and propose no constructive or viable alternative. So far in this discussion I hear nothing but a loud empty can.
Trading support and resistance intra-day for an institution doesn't qualify your opinion as credible on anything close to economics. Intra-day moves have virtually nothing to do with economics (save news) and liken themselves more to a gigantic, fluid, self-fulfilling prophecy. I should know. I day-trade currencies. The money it takes to move whatever contract you trade 20 ticks is a mere piss in the lake compared to the money it takes to move the DOW from 7,000 to 14,000. Oceans of money have to be created and leveraged to get that kind of price change. And thats exactly what happens. Interest rates need to drop, fractional reserve lending compounds and leverage compounds further. This creation of money is the "air" that pumps up the Macro Bubbles witnessed throughout history. Explaining it all away with supply and demand is just simple-minded reductionism. And beyond ignorant considering every school of economic thought agrees excessive credit causes bubbles. But what do those PHD's know anyway? :O)
You don't even know what money supply is. Do you? FED rates at Nasdaq top were 6%+ Considering our entire asset-base (equities, stocks, bonds, commodities) is totally over-priced via artificially low interest rates, 6-8% is about all our markets can handle until they dump. Look what happened in 2006. Fed rates were up to ~5% and what did the DOW do? Almost tanked, thanks to the Plunge Protection Team. Thats how weak and devalued our dollar is. Inflation has been priced into everything. If we ever see a return to real interest rates around 6-8%. This whole thing is going to go down harder than the titanic. Cheap money built the new economy and the only thing that can sustain it is cheaper money. Until the FED's got nothing left but 50 basis points and we do Japan or tank regardless. ASSET INFLATION.
You couldn't be more ignorant, "Mate". Fundamental traders make a killing and will continue to do so. Because they understand a Bigger Picture smaller minds can't grasp. google Jim Rogers. He's been long commodities, short dollar, and short US investment and commercial banks since the '05. I suppose a moving-average cross over trader like you would chalk that up to "dumb luck", huh?? You want to close your eyes to a larger world you don't understand, by all means. Past doesn't predict the future? Only when a trader has no grasp of economics.
Deflation promotes savings. And savings is investment. In a deflationary system, money appreciates over time so people have more incentive to save and invest their dollars in dollar-returning assets as opposed to physical goods that quickly loose value. This transfers private wealth to capital markets for productive use while maintaining the value of currency throughout. In inflationary systems, money depreciates over time. So the preference is towards immediate consumption to convert depreciating dollars into hard assets before the value of currency is lost. Inflate at 4% a year - compounded - and HALF the Country's saved wealth is wiped out from inflation. People know this and splurge accordingly. The difference in either system is: 1) the origination of capital 2) the value of the currency. Under the current system (inflationary), the FED steals value from dollar holders surreptitiously via the inflation tax and passes on that newly printed money in the form of low interest rates for use in capital markets. Not only is the act non-consensual, but debases and robs dollar-holders and savers of their wealth. It is Criminal to confiscate 50% of the Nations savings every 10 years so Bankers and Corporate America (primarily) can enjoy low rates. Under a deflationary system, there is no Federal Reserve to steal wealth, create booms and busts, and set artificial rates. Under a deflationary system (read: hard money), private wealth is diverted to capital markets via open participation (buyers and sellers) who allocate capital, risk and rates of return (interest rates), accordingly. This way, the value and integrity of the dollar is not only preserved but appreciates over time. And then its the Free Market - not the FED - who determines when, how and how much private wealth flows to capital markets to maintain equilibrium. There is no expansion of money supply by unGodly amounts under a hard money (deflationary) system. Therefore, all this crap we're currently experiencing wouldn't happen. Mortgages at 1% and banks leveraged 30-to-1 in a hard money (non fractional reserve) system, can't and wouldn't exist. The first step is understand that money is instrumental to the Massive Long Term bubbles (and crashes) that play out. Had this Bubble ended in a Real Market Crash where your Parents (and mine, and everyone elses), actually lost their 401K and entire lifes savings, you'd be singing a very different tune about the "virtues" of fiat money systems and fractional reserve lending. Cause then half the Country would be insolvent and literally fucked from the excesses created by FED Banks, who control the FED. Why do you insist pushing half-baked notions about what I believe or don't? Its your lack of understanding here thats the problem. Not mine. Undiluted bond or stock purchases make no difference to the total money supply. When a company issues a bond, and I buy it, money is transferred. Money supply does not change so currency value is not lost. Dilution is similar to what the FED does. Yes. But investors are consensual participants in that transaction, aren't they? They know when they buy common or subordinated debt, they might get diluted. Thats consensual risk. Inflation is not consensual. If the American Public knew the Federal Reserve robbed their savings to the tune of 50%, per decade, do you think there'd be a FED around tomorrow? HELL NO. You know what Henry Ford (Yes, father of the Model-T) said about our Fractional Reserve Banking System? "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. " No understanding? I feel like I'm talking to Simple Jack, here.