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Reply #24: I know the Fed and Treasury are two separate entities. [View All]

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caseymoz Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-28-11 06:44 PM
Response to Reply #11
24. I know the Fed and Treasury are two separate entities.

And why did you ever think that I didn't? And thought it was so serious a blunder you had to shout all caps?

And you are ill-informed about history and economics. The Wiemar Republic suffered hyperinflation when the French Occupied the German coal belt. France decided it wanted reparations paid in coal, and without coal, Germany's industry ground to a halt; meaning, if you remember the WWI blockade, they couldn't trade for food; meaning, hyperinflation was arguably not Germany's worst problem. With no industry and no food, Germans had nothing to buy and an oversupply of marks as the government guaranteed wages because, otherwise, with industry shutdown nobody was being paid. However, they ran out of products to buy very quickly.

People see the hyperinflation reported in the history books, and like yourself, they draw mistaken conclusions about money supply. It wasn't just the money supply.

While it's true that the Fed's under-the-table actions normally it could cause hyperinflation, that's only if the money reaches the general economy. But it isn't. Remember that complaint in the news that the banks weren't lending anything? Also, if the Fed filled a hole in the banks' books, that's money already circulating. They've already lent it out.

Also, if the Fed gave out that much, and we're not seeing any inflation, that means the extra cash is the only thing maintaining this economy.


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