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Reply #43: Money supply is linked to hyperinflation. [View All]

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caseymoz Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Nov-29-11 02:53 AM
Response to Reply #26
43. Money supply is linked to hyperinflation.

Isn't that what you were arguing, too? So how could you say the Wiemar Republic was not an example of money supply . . . and hyperinflation. Are you just trying to confuse things by arguing something and its opposite?

I didn't say exactly what you think I declared. I wasn't talking about the Fed giving out $8 trillion (didn't the article say $7 trillion?) at once. When I meant bailing out homeowners instead of TARP. I was talking about the treasury. There was a "gap" in the money supply, let's say M2, but I prefer the general term. That gap almost caused a collapse. Deflating economies, by definition, have a lack of inflation. Money was evaporating from the economy. Supplying the $7 trillion of TARP didn't cause hyperinflation, you notice.

In 2008-2009, they, Congress, Summers and Geithner, had a choice: They could fill it at the level of the banks, or they could fill it at the level of homeowners, and I'm talking about the treasury supplying homeowners with cash instead of supplying TARP for banks. Not transferring all (and I never said all) mortgages in to the Fed's balance sheet, post-TARP.

I'll point out also: citizens don't have an overnight window. If many of the loans were repaid the next day, well, "many" of $7 trillion could still be $3.45 trillion. From what I understood in stories that I heard at the time, it was not just at the overnight window that was being talked about, which means this is only the tip of the iceberg.

Since you didn't listen the first time, I'll repeat: the hyperinflation in Germany was caused also by extreme under-supply of products and an extreme oversupply of money. The money had nowhere to circulate to, and as the government tried to compensate for the inflation by handing out more support for idled workers, the inflation accelerated. Aggravating this, Wiemar was a pariah state, so it had no access to foreign credit, meaning they couldn't borrow to import food, nor fuel to restart it's idled factories, so it could supply goods and trade for food. It was largely the same with Zimbabwe recently. There is no way those situations compare to what we have now, or had in 2008-2009.

So, no, I'm skeptical the measures I've clarified would have led to the hyperinflation.

Now, where I referred to the Fed: their funds under-the-table enabled banks to pay for TARP over the table. I take issue with the appearance of healthy banks that conveyed, and the fact that most people bought it.

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