#OT# where the US currency is

I hold the other half.

Is this where you tell us how China and the Arabs are waiting to burn dollars that they never come back ? Nope look at this way, you got foreign countries of peoples that decide they have had it and decide to keep American money in the house because owning a piece of America is good for our family. If you have 100 million people world wide x $5000 that alone is five hundred billion

Regards, John

John, Good arithmatic, but that sadly that is not the case. This money is held by major governments and corporations that are not necessarily overly freindly to the US and the risk is that they decide NOT to hold it and spend it. That would bury our economy and ultimately reduce the world to world war. We, the citizens of the US are no longer controllers of our national destiny. Steve

Might be a million or so below water right now near Somalia. ;)

Wes

converted to bottom posting

On Sun, 11 Jan 2009 11:27:20 +0100, "Steve Lusardi" wrote:

------------- Note the NPR article is talking about paper currency in circulation [M0].

When you include commercial bank "money" [m1-m2-m3] the numbers are orders of magnitude larger.

• M0: currency (notes and coins) in circulation and in bank vaults, plus reserves which commercial banks hold in their accounts with the central bank (minimum reserves and excess reserves). M0 is usually called the monetary base - 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. [7] * M1: currency in circulation + checkable deposits (checking deposits, officially called demand deposits, and other deposits that work like checking deposits) + traveler's checks. M1 represents the assets that strictly conform to the definition of money: assets that can be used to pay for a good or service or to repay debt. Although checks linked to checking deposits are gradually becoming less popular, debit cards linked to these deposits are becoming more popular. Like checks, debit cards, as a means to complete a transaction through their links to checkable deposits, can also be considered as a form of money.[8] * M2: M1 + savings deposits, time deposits less than 0,000 and money market deposit accounts for individuals. M2 represents money and "close substitutes" for money. [9] M2 is a key economic indicator used to forecast inflation.[10] * M3: M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. M3 is no longer measured by the US central bank.[11]

When you include M3, the FRB alone has increased the money supply by several trillion, and this is amplified by the magic of fractional or reserve banking.

The only reason [apparently] this surge in M3 has not resulted in gross inflation, is that this huge infusion of capital only partially offsets the amount of capital/value that disappeared when the stock/bond market fell and the CDOs and other financial derivatives turned [or were discovered to be] "toxic."

As in many activities, international trade/finance, runs under the golden rule, namely when you got the gold, you make the rules.

It is well to remember that many of the more successful exporting companies, and sovereign wealth funds could individually buy the entire US automotive industry [GM, Ford, Chrysler] out of their petty cash, and have plenty of money let over.

It is also well to remember that over the last few years, many of our mundane but critical economic sectors [e.g. cement, steel/rebar] have been largely or totally acquired by foreign owners. Thus if Obama's "recovery through infrastructure improvement" plan is implemented, most to all of the corporate profits will accrue to foreign, not domestic, stockholders and corporations. It is highly unlikely that "buy American" requirements could reverse this, as either the required capacity under American ownership no longer exists, and/or the WTO will rule such provisions unlawful.

For years, we have operationally traded our more basic industries [e.g textiles, shoes, consumer electronics, cement, utility steel

-- rebar], and other assets such as land and buildings in exchange for cheap goods and services.

While this has been a disaster for most people, the Federal government has "aided and abetted" this process every step of the way because this also provides a huge pool of capital for it to borrow at low rates.

It is only now that state and local governments are overtly selling [or long term leasing] public assets such as roads and airports in an effort to raise money to keep the good times rolling (and the pols election coffers full).

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

And if you haven't heard this already, an explanation to the mortgage fiasco in plain old english (59 minutes), that helped to get us into this mess:

===

355: The Giant Pool of Money (05/09/2008)

A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money.

Act One.

This American Life producer Alex Blumberg teams up with NPR's Adam Davidson for the entire hour to tell the story?the surprisingly entertaining story?of how the U.S. got itself into a housing crisis. They talk to people who were actually working in the housing, banking, finance and mortgage industries, about what they thought during the boom times, and why the bust happened. And they explain that a lot of it has to do with the giant global pool of money... ===

You may still be able to find it here, at least it was a week or so ago (27mb):