[davep]

$this->bbcode_second_pass_quote('', 'T')here is not a money creation problem, we've got a money circulation problem. That's part of why the dollar is high, one of the factors.

[Sixstrings]

@Dave
What I'm thinking about is just how much money, cash on hand, american-based multinational corps have been holding onto.

If Facebook is worth a gazillion dollars, what's that really mean? To "real," brick and mortar America?

When Apple has $200 billion cash on hand, yet never spends any of it in the USA and if they spend it at all maybe it's like google and they'll just buy some other internet thing that's not really "real.." -- then what good is that, really?

Not all of them are bad. Elon Musk is one of the few billionaires that actually employs people, and buildings things actually in in the USA and not overseas. Tesla, spacex, solar city.

So that's what I'm saying, here. Get the money circulating in real ways, and not just "virtual world."

[davep]

$this->bbcode_second_pass_quote('Sixstrings', '@')Dave
What I'm thinking about is just how much money, cash on hand, american-based multinational corps have been holding onto.

If Facebook is worth a gazillion dollars, what's that really mean? To "real," brick and mortar America?

When Apple has $200 billion cash on hand, yet never spends any of it in the USA and if they spend it at all maybe it's like google and they'll just buy some other internet thing that's not really "real.." -- then what good is that, really?

Not all of them are bad. Elon Musk is one of the few billionaires that actually employs people, and buildings things actually in in the USA and not overseas. Tesla, spacex, solar city.

So that's what I'm saying, here. Get the money circulating in real ways, and not just "virtual world."

[onlooker]

Dave great succinct explanation of the details of how money creations works. I find two things Six said to be interesting. One is we should try and put more money into the workers hands as consumer spending is a large part of the overall economy and that would definitely stimulate it. Problem is corporations are greedy and do not NEED to do this just like Banks have not needed to lend out money. Second the reference of Six to the fact that the American dollar is seen as a safe haven, well I beg to differ in so much as the whole US economy and the world-wide virtual economy at this point is smoke and mirrors. Look at this correction in the China market. Six himself sees a "correction" coming for the US dollar so why would investors put their money into the dollar when is appears scheduled to devalue. In fact the whole QE tactic is certainly creating conditions for this devaluation and it seems the only reason this tactic has not created rampant inflation is because it has not worked in it's intended goal of infusing vitality in the real economy. Of course the explanation pointed out by Dave is right on in the sense that the main manner of injecting vitality would have been to distribute/lend the money out into the economy which the Banks did not do instead let it be lost into the black hole of speculation and shady investments. I see less and less of a linking between China and US as China is seeking to become more independent and seeking other markets for it's products probably in anticipation of major economic upheaval in the US.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('GregT', '[')b]Peter Schiff on U.S. Dollar Crisis: "The Dollar Bubble Is Going to Burst"

Hmmm. Schiff was certainly correct in '07. Could he be right again.........

[GregT]

$this->bbcode_second_pass_quote('onlooker', ' ')One is we should try and put more money into the workers hands as consumer spending is a large part of the overall economy and that would definitely stimulate it.

[Outcast_Searcher]

Perhaps some perspective is in order. The talking heads keep talking about slowing China growth as the concern.

For the past 20 years, China's GDP has grown at a rate between about 13% and about 6% on an annualized basis. The long term forecast shows this slowing to about 5% by 2020 and about 3% by 2030, with 3% (fairly typical for developed countries) for the longer term.

So both the history over the past couple decades and the long term forecast show a significantly decelerating growth rate as the economy matures. Nothing surprising there. And of course, these are long term averages -- the real world is much more "jiggly" as the quarterly and annual numbers show.

http://www.tradingeconomics.com/china/gdp-growth-annual

India, another huge component of the global third world economy, shows slower growth, and a slower decline in the forecast as well. Again, the big picture is similar though -- as an economy matures, its growth rate tends to slow.

http://www.tradingeconomics.com/india/gdp-growth-annual

I know market corrections are akin to doomer porn on this site, but having an attention span longer than a gnat is helpful to those actually wanting to be investors (vs. speculators).

[Outcast_Searcher]

$this->bbcode_second_pass_quote('GregT', '
')Take China out of the equation, and our economies are toast.

[onlooker]

OS, why do you think oil is so low, because economies are revving along in great shape yeah right. Duh, it is not about others taking China out of the equation it is years of growth in China reaching a natural roadblock from excessive borrowing and from lack of consumers around the world and from an over exuberant Chinese stock market. etc. Oh and who said Americans were starving certainly not muah. By the way Greg great analysis.

[GregT]

If the economy was doing fine, the talking heads wouldn't be repeatedly talking of 'recovery' for the last 7 years, now would they?

Trillions of dollars of economic 'stimulus' would not have been necessary, and interest rates would have been raised at the first opportunity.

GDP is not a true indicator of economic wellbeing. Everything from natural disasters to murder convictions are included in GDP numbers. It is no longer a measurement of 'Gross Domestic Product', but a measurement of money moving through the system. Good or bad.

With every financial 'trick in the book' already having been used, the recovery from the Great Recession has not materialized, despite the constant misinformation spewed forth by the eCONomists, and the MSM.

Believe what you like, if it makes you sleep better at night.

[onlooker]

$this->bbcode_second_pass_quote('', 'G')DP is not a true indicator of economic wellbeing. Everything from natural disasters to murder convictions are included in GDP numbers. It is no longer a measurement of 'Gross Domestic Product', but a measurement of money moving through the system. Good or bad.

[Hosj]

Stock Market is headed down again after the fake rebound this morning.

[Pops]

QE was the central bank buying bonds, not selling.

They bought bank assets and "paid" by increasing that banks reserves on deposit in the Fed Bank. One blogger said it was like when you transfer money from your savings to checking, you don't gain any money, you just have more available to spend, or in the banks case, more to loan.

The other thing that happened was the Fed started paying interest on those excess reserves. The upshot is, most of the QE didn't go anywhere because a) the market for CDOs and MBSs went kaput so the banks once again had to actually pay attention to who they were lending to; and b) they probably peed their little banker pants when the whole thing went tits up and were afraid they would actually be regulated like they should have been all along.




--
Look at it like this; there is "private money", the 90% that dave talks about, that is IOUs we get from the bank when our paycheck clears. Then there is government money, cash and bank reserves. The banking system is a for-profit, market-based money system. The idea is loans get made based on market conditions and on the Feds interest rate and regulatory policies — not on the whim and ideology and convenience of politicians.

Turns out, the great recession was brought about in large part by the whims and ideology of Allen Greenspan who held rates very low after 9/11 and who thought that the market needed no regulation; that bankers would police themselves [ETA: Clintonistas and BushCo of course felt exactly the same.] Unfortunately, the bankers found a way to disguise and pass off risk to people obviously not equipped to deal with it. Most of them got away with it.

$this->bbcode_second_pass_quote('', 'T')he maestro admitted ... that he had "made a mistake in presuming" that financial firms could regulate themselves.

[davep]

$this->bbcode_second_pass_quote('', 'R')ecurring bank crises stemming from lack of regulation don't mean the system should be scrapped and handed over to politicians and bureaucrats, it just means it needs to be better regulated. A completely political, government money system at the beck and call of politicians whose job it is to give their constituents ever more stuff —including ever lower taxes, is definitely not an answer

[onlooker]

To piggback on Dave. "Needs constant credit to maintain the money supply" and thereby puts everyone more and more into debt

[PrestonSturges]

As millions of people head into retirement with nothing, the government could quit giving money to banks and instead give it directly to seniors who will go right and spend it on cat food or whatever instead of stashing it offshore.

[onlooker]

$this->bbcode_second_pass_quote('PrestonSturges', 'A')s millions of people head into retirement with nothing, the government could quit giving money to banks and instead give it directly to seniors who will go right and spend it on cat food or whatever instead of stashing it offshore.

[JuanP]

http://www.rt.com/usa/313423-federal-re ... k-markets/

[JuanP]

http://www.rt.com/uk/313452-ftse-falls-china-crash/
http://www.rt.com/business/313435-china ... olatility/

[radon1]

Does it come to mind that banks do not invest into the "real economy" because there is nowhere to invest profitably in the "real economy".