Unprecedented downward trend in the money multiplier

[Libertarian_Guard]

The Fed will continue to be unsuccessful in engineering increasing growth and higher inflation with their continuation of the current program of Large Scale Asset Purchases (LSAP)

The money multiplier is the link between the monetary base (high-powered money) and the money supply (M2); it is calculated by dividing the base into M2. Today the monetary base is $3.5 trillion, and M2 stands at $10.8 trillion. The money multiplier is 3.1. In 2008, prior to the Fed's massive expansion of the monetary base, the money multiplier stood at 9.3, meaning that $1 of base supported $9.30 of M2.

If reserves created by LSAP were spreading throughout the economy in the traditional manner, the money multiplier should be more stable. However, if those reserves were essentially funding speculative activity, the money would remain with the large banks and the money multiplier would fall. This is the current condition.

The September 2013 level of 3.1 is the lowest in the entire 100-year history of the Federal Reserve. Until the last five years, the money multiplier never dropped below the old historical low of 4.5 reached in late 1940. Thus, LSAP may have produced the unintended consequence of actually reducing economic growth.


http://www.ino.com/blog/2013/10/federal-reserve-policy-failures-are-mounting/

[vacuum]

I wonder if this is linked to the capital controls going into effect? If there was hyper inflation, capital controls would screw the little guys and allow the big guys to get out in time (it would "stabilize" things).

[Ares]

I wonder if this is linked to the capital controls going into effect? If there was hyper inflation, capital controls would screw the little guys and allow the big guys to get out in time (it would "stabilize" things).

The money multiplier effect is tied directly to loans, mortgages, credit cards etc. If people aren't spending, the multiplier effect collapses. The FED can spend all day long every day, but it cannot outpace the people for the money multiplier effect because it has first dibs on "new money".

[Hypertiger]

If Hypertigers are on strike then the power is cut....if they do not exist in the required numbers...then there is no way to supply the demand for yield.

by the top...what the QE is faking.

in 2005...the slaves in the mud brick pits vanished in the USA....

That is certain....and they have not returned....and since 2008...20 Trillion dollars that should have been produced in the USA...has not been.

Because where does power come from?

The multiplier effect starts where?

The sun?

Or the crops...somewhere over the rainbow.

something goes into a black hole and comes out of the black hole into the black hole and finds something to combine with and then it begins reproducing 1 becomes 2 and then 4 and then 8 and 16.
Into trillions and then it pops out of the black hole and continues amassing power until the maximum potential is reached and then it begins collapsing back into thin air.

good thing people can multiply faster than they cease to exist better than credit....or does credit multiply faster?

new home construction in the USA is the power of Bretton woods...That vanished...and the massive atomic pile of real estate that is the critical mass...requires a constant supply of power to keep from imploding.

line signers require decades to produce.

in 2005...they did not exist...and the demand of the 1991 real estate boom...was not supplied...and that was basically the end of Bretton woods right there.

The aggregate supply of power in relation to the aggregate demand has run out.

and due to the nature of power flow...the half lifes are overpowering the doubling times

work = doubling time....play = halflifes.

taking more than you give to power playtime.

Is the same as chopping down trees faster than they regrow to sustain existence.

at the point where the demand is not met...the half lifes start and increase until they take over.

then you find out that taking a shortcut through the planet to the other side of it with an airplane...does not work no matter how much you malinvest into the attempt.

The power of positive thinking has it's limits.

If it is based on taking more power than you give forever.

That is a certainty.

sharing power equally requires you to chop down trees as fast as or slower than they regrow.

order

chopping down trees faster than they regrow always ends in chaos.

living beyond your means.

Evil chops down trees faster than they regrow to look good.

Good chops down trees as fast as or slower than they regrow to look good.

Evil of course has a bigger pile of fire wood to fool you all with.

Until the trees run out...then that is revelation of the lie masquerading as Truth.

[Hatha Sunahara]

I always thought that the multiplier is the banker's fractional reserve percentage requirement divided into 1. Or stated differently, 1 over the fractional reserve. So, if they have to keep 10% reserves, 1/10% = 10. So, if someone borrows $00, and the bankers have to keep 10% in reserve, they can lend out $90 more, and of that they have to keep $9, and they can lend out $81 more, and so on. It's a little bit more complicated that 1 over the reserve fraction, but that formula is a good approximation.

You would expect the multiplier to remain constant in the system, but what you would also expect is that if people borrow less money, the money supply will start to decline just as fast as it increases when people borrow money because of the multiplier. In other words, a bust will happen at roughly the same speed as a boom happens.

Economic growth is determined by the volume of borrowing--not by the multiplier. If people borrow more money, we have a boom that grows at the rate of the multiplier. If people stop borrowing, the bust happens at the rate of multiplier reflecting the decline in borrowing. What we are seeing now is people tapering off on their borrowing, but the multiplier stays the same. The Fed is trying to make up for that reduction in borrowing by Quantitative Easing, and the government is cooperating by spending vaster quantities of money and borrowing it from the Fed. Mathematically it all leads to the biggest bust because eventually no one will borrow any money but the government and the elite, and nothing of any value will be produced, and the value of the money will reflect that fact.

This is a complex topic, ordinarily too complex for about 90% of the population to grasp, so they ignore it and believe whatever the propaganda apparatus wants them to believe about it--mostly because they lack the critical thinking abilities needed to understand how badly they are being screwed. It is truly a waste of time to try to explain it to people who are unable to grasp it.



Hatha

[Neuro]

I suppose M2 has remained fairly constant during the last 5 years at around $11T. M1 increased to cover the defaults in M2. But the M1 injection just stays in the banks. It covers for defaulted loan payments. Banks don't want to loan so no-one can buy the defaulted property, so it just stays on the books.

This is a stale economy, it really cannot revive itself!

[vacuum]

I suppose M2 has remained fairly constant during the last 5 years at around $11T. M1 increased to cover the defaults in M2. But the M1 injection just stays in the banks. It covers for defaulted loan payments. Banks don't want to loan so no-one can buy the defaulted property, so it just stays on the books.

This is a stale economy, it really cannot revive itself!

I think a falloff in the money multiplier is indicative of potential hyperinflation. Less of our money is "real" M2 money which is based on credit/debt, a larger portion is M1 which is just printed out of nothing and has no value at all, not even a debt obligation attached to it. Hence the capital controls.

[Libertarian_Guard]

This is a complex topic, ordinarily too complex for about 90% of the population to grasp, so they ignore it and believe whatever the propaganda apparatus wants them to believe about it--mostly because they lack the critical thinking abilities needed to understand how badly they are being screwed. It is truly a waste of time to try to explain it to people who are unable to grasp it.



Hatha

True that, except you are perhaps high in estimating that 10% will comprende any of this. I think its a lot lower. The Kitty understands it, but he's off on some odd tangent involving cell division and who know what else? Is there a full moon in the sky?

[Bigjon]

True that, except you are perhaps high in estimating that 10% will comprende any of this. I think its a lot lower. The Kitty understands it, but he's off on some odd tangent involving cell division and who know what else? Is there a full moon in the sky?

The kitty may understand it now, but way back when the kitty had it all wrong. The kitty is one of the original believer's that they needed to create the interest portion of the money in order to pay the debt plus the interest.

As far as monetary reserves go someone who looked closely at Goldman Sax said they were leveraged to the tune of 350 to 1. Other too big to fail banks had similar reserve positions. That is why they failed and then rewarded themselves from the public purse.

[Hatha Sunahara]

The kitty may understand it now, but way back when the kitty had it all wrong. The kitty is one of the original believer's that they needed to create the interest portion of the money in order to pay the debt plus the interest.

As far as monetary reserves go someone who looked closely at Goldman Sax said they were leveraged to the tune of 350 to 1. Other too big to fail banks had similar reserve positions. That is why they failed and then rewarded themselves from the public purse.

If you were leveraged 350 to 1, and you managed to survive by convincing everybody that if you went down, everything would go down with you, that is, that you are 'too big to fail', and they all bought that, wouldn't you give yourself a huge reward out of your ill-gotten gains?

Goldman Sax and the other TBTFs are a cancer that has metastasized. They are going to kill America. And like cancer, the effective treatments are illegal. So, we all have to sit back and watch the country die from this disease.


Hatha

[Hypertiger]

The fractional reserve are the net producers of yield.

the real workers...the farmers miners and manufacturers.

all the rest live off them.

In the USA the net producers of power are 20% and the net consumers of power are 80%.

The net consumers of power live off the net producers of power...yield rates have been dropping in the USA for 32 years.

It's like this

at the top...1 smart rich non worker lives off the yield of a dumb poor worker...lets say 14%

another person that wants to be smart and not dumb does the same thing.

but has to split the yield...or 7%

4 smart people living off one dumb retard...3.5%

8 smart people living off one dumb retard...1.75%

16 smart people living off of one dumb retard...0.875%

that is if 16 smart rich people can survive on such yield.

now following ww2...you had the reverse...you had 8 dumb people sustaining 1 smart person...at 1.75%

then 4 dumb people sustaining 1 smart person with 3.5%

then 2 dumb people sustaining 1 smart person with 7%

and 1 dumb person sustaining 1 smart person with 14%

So 8 sustaining 1 with 1.75% in 1944

then 4 sustaining 1 with 3.75% 1956

then 2 sustaining 1 with 7% in 1975

then 1 sustaining 1 with 14% in 1981

then 1 sustaining 2 with 7% in 1990

then 1 sustaining 4 with 3.5% now.

next step down is 8 supplying 1.75%

that is if long term rates that low can sustain 8 people.

Because in 1981...when rates peaked...so did the productive employment of the USA.

it was all exported out of the USA as fast as possible out into the rest of the world....It was all planned...

mostly china.

now the big problem.

is on the way up it has to reverse.

for the past 32 years...the amount of yield the workers of the USA has supplied dropped while at the same time the compensation for less and less yield production has gone up.

the reverse...means that incomes have to drop while the yields have to rise....workers hardly working will have to work harder for less pay and people that are not working will have to work.

Its checkmate...

you all have incomes and you think that makes you productive members of society.

80% of the populations of the rich countries are all net consumers...they are the pile of debt created out of thin air that is sustained by the fractional reserve...the net producers.

and when the demand by the net consumers becomes greater than the net producers can supply.

The debt bubble that the 80% exist within...implodes.

deflates...as opposed to inflating like it has done the past 6 decades.

It is why yield or tax rates in the USA and globally have been dropping for 32 years...in search of supporting volume.

The QE is being done because the supply of yield is less than the demand for yield...and the FED is lending a fake 1 into a space where a real zero is appearing.

or the entire global banking system would implode to oblivion.

but all they have done is slowed the collapse since 2008...there is no way to stop progressing to where you all have been for the past 6 decades of boom.

to the bust.

every elected official is just a game playing lying moron...globally.

The rich have always owned the money all the poor rent from them...and the cost to pay the rent is hidden in the prices of everything.

The slaves supply all the power to the master and the master uses the power to create the servant all slave for.

money.

[gunDriller]

could be related to banks receiving the pseudo-money and then not loaning it out to the population.

instead they just loan it back to the government.


the velocity is higher when people spend & re-spend money.


of course their economic & econometric measurement techniques are completely fvcked up. they keep moving the goal-posts etc.

it's natural to wonder WTF is going on.

Joos & banksters doing their thing.

[Neuro]

I think a falloff in the money multiplier is indicative of potential hyperinflation. Less of our money is "real" M2 money which is based on credit/debt, a larger portion is M1 which is just printed out of nothing and has no value at all, not even a debt obligation attached to it. Hence the capital controls.
Good point! Yes hyperinflation has always before happened with M1, and possibly we here see the reason why it haven't happened yet. $3-4 Trillion isn't enough probably, considering it is tied up in zombie banks, and still USD is the primary world reserve currency. FRB is printing more than a trillion a year now and world is turning against USD...

[mick silver]

all i can say is that when we go to the store the prices are alway higher week to week . at the lumber store the price of a 2by4 has almost double in price in a year now . i know guys who have lots of funds that are just setting back an watching , there not building shit . and they guys have the paper

[EE_]

all i can say is that when we go to the store the prices are alway higher week to week . at the lumber store the price of a 2by4 has almost double in price in a year now . i know guys who have lots of funds that are just setting back an watching , there not building shit . and they guys have the paper

Building has drastically slowed, wages have stalled, but building materials keep going up.
Like the Chinese parents said that just gave birth to a black baby boy..."I tink we name him Sum Ting Wong"

[iOWNme]

Goldman Sax and the other TBTFs are a cancer that has metastasized. They are going to kill America. And like cancer, the effective treatments are illegal.
Hatha


And like ALL cancers, they will eventually KILL THEMSELVES.



The next question should be "Are we going to create ANOTHER very small minimal cancer, in order to make sure we never get cancer again"?

99.999999999999999% of the population will think it would be a wise and safe idea to do so....

[Ares]

And like ALL cancers, they will eventually KILL THEMSELVES.



The next question should be "Are we going to create ANOTHER very small minimal cancer, in order to make sure we never get cancer again"?

99.999999999999999% of the population will think it would be a wise and safe idea to do so....

Unfortunately human beings have been breed and educated to think they "need" government. Government is cancer, it ALWAYS ALWAYS ALWAYS kills the host. Once people rise up to remove said cancer, they go and setup a new one. "But this time it'll be different". :rolleyes:

[Hypertiger]

A mortgage at 6.448% over 25 years

Supplies a yield or profit to the bank of

100,038.73 on a mortgage of created out of thin air credit of 100,000 Dollars

like a mortgage is created for 100,000 Dollars at 6.448% over 25

The bank uses that as an asset backing the creation of 100,000 Dollars of new credit out of thin air that is a liability.

The credit that is exponentially decaying.

Since as you pay off the loan of created out of thin air money.

It causes the asset...The mortgage backing the liability and all the created out of thin air money.

To vanish back into thin air where it came from...The payment of 666.67$

has two parts...the principle and the interest portion.

The principal is deflationary...the interest is inflationary

The principal payment...is subtracted from the amount of the mortgage...and it returns back into thin air where it came from....and the credit/ money supply shrinks by that amount...or $136.42

with the bank adding 530.25 yield or profit to their account.

after 25 years you supply the bank with 100,000 dollars profit or yield.

and you get a house paid off...


now when the demand for yield is higher

like lets say 14%

100,000 dollars at 14% becomes 252,162.95

250% more money...hyperinflationary.

you need less volume to supply the demand for yield.

While 100,000 dollars at 1% becomes

13,033.53

Almost 90% less...or hyperdeflationary

6.448% over 25 years...is the zero point...above and the money supply long term wants to hyperinflate

below and the money supply wants to hyperdeflate.

Like a wave...

The problem was back in 2005...in the USA the supply of people willing and able to sign on the dotted line of mortgages...

vanished.

It takes 20 years to produce a potential line signers...Along with 20 years of resources consumed to sustain their fabrication.

I know how banking works...better then the people that work at banks

there was a real estate boom in the USA that began in 1991 and grew exponentially by 11% per year for 14 years until 2005...where the demand of the boom...became greater than the supply of power from the population of the USA.

and the invisible domino fell...and until 2008...with the controlled demolition of Lehman.

http://www.youtube.com/watch?v=y97rBdSYbkg

like this effect...it is exponential decay...when the multiplier effect stops...the domino effect takes over.

the new home buyers...are gone...and they were the power supply to the 1944 Bretton woods global trade system

what do the banks do with all the profit of credit they get from inflating their balance sheets with credit they create out of thin air and get you all to rent?

The primary dealers...are hired by the FED to buy the bonds they buy from the US Treasury with the profits from all of you.

The US Treasury issues...30 Billion Dollars of new Treasuries to sell...and exchange for US Dollars...in the form of Federal reserve banknotes or IOU's.

Which is weird...since the IOUS...they are borrowing...are for US Dollars...which is what the US Government has to supply to...anyone that demands US dollars for Federal reserve notes.

Anyways.

How does the FED by the bonds?

The FED lends the US government credit...using the bonds...as collateral backing the inflation of credit.

But then the FED sells the bonds to the primary dealers...for credit...all the credit the banks obtained as profit from their credit operations.

and the FED uses the credit they obtain from the sale of the bonds they used as collateral backing the loan of federal reserve notes...to pay off the loan of credit to the US Government.

and it returns back into thin air...

and the money supply shrinks.

The reason the economy has slowed in the USA and it along with the rest of the world has been deflating.

is because the QE is just making up the difference from the loss of millions and millions of US consumers.

new real estate construction...mortgage creation.

is the whore that bankers rape for fun and profit...that is the multiplier effect that powers everything else.

In 2005...it was game over....

all the FED is doing is sustaining the primary dealer operation...The loans of credit it is supplying to the primary dealers are sustaining the banks...keeping them operational...that is it.

The top...they can not do anything...they live off you all below...if you all below can not supply the demand for yield...then it's over.

new home construction...there is the wholesale cost...that is all financed...all the workers and materials...demands the credit supply to expand.

like lets say it costs $100,000 to build a house and you can sell it for $150,000...for a 50,000 profit.

the 100,000 of new credit created...is dumped into the economy at the bottom...and it multiplies up.

the QE is at the top.

it does not multiply down...it does not even make it down.

It's suck up and trickle down.

you may think 85 Billion dollars a month is a lot...but it does not even come close to replacing millions of people...

that is all the FED is ultimately doing...supplying a fake one where a real zero is appearing in the algorithm.

there is a limited amount of time that is running out that this can be sustained.

[7th trump]

A mortgage at 6.448% over 25 years

Supplies a yield or profit to the bank of

100,038.73 on a mortgage of created out of thin air credit of 100,000 Dollars

like a mortgage is created for 100,000 Dollars at 6.448% over 25

The bank uses that as an asset backing the creation of 100,000 Dollars of new credit out of thin air that is a liability.

The credit that is exponentially decaying.

Since as you pay off the loan of created out of thin air money.

It causes the asset...The mortgage backing the liability and all the created out of thin air money.

To vanish back into thin air where it came from...The payment of 666.67$

has two parts...the principle and the interest portion.

The principal is deflationary...the interest is inflationary

The principal payment...is subtracted from the amount of the mortgage...and it returns back into thin air where it came from....and the credit/ money supply shrinks by that amount...or $136.42

with the bank adding 530.25 yield or profit to their account.

after 25 years you supply the bank with 100,000 dollars profit or yield.

and you get a house paid off...


now when the demand for yield is higher

like lets say 14%

100,000 dollars at 14% becomes 252,162.95

250% more money...hyperinflationary.

you need less volume to supply the demand for yield.

While 100,000 dollars at 1% becomes

13,033.53

Almost 90% less...or hyperdeflationary

6.448% over 25 years...is the zero point...above and the money supply long term wants to hyperinflate

below and the money supply wants to hyperdeflate.

Like a wave...

The problem was back in 2005...in the USA the supply of people willing and able to sign on the dotted line of mortgages...

vanished.

It takes 20 years to produce a potential line signers...Along with 20 years of resources consumed to sustain their fabrication.

I know how banking works...better then the people that work at banks

there was a real estate boom in the USA that began in 1991 and grew exponentially by 11% per year for 14 years until 2005...where the demand of the boom...became greater than the supply of power from the population of the USA.

and the invisible domino fell...and until 2008...with the controlled demolition of Lehman.

http://www.youtube.com/watch?v=y97rBdSYbkg

like this effect...it is exponential decay...when the multiplier effect stops...the domino effect takes over.

the new home buyers...are gone...and they were the power supply to the 1944 Bretton woods global trade system

what do the banks do with all the profit of credit they get from inflating their balance sheets with credit they create out of thin air and get you all to rent?

The primary dealers...are hired by the FED to buy the bonds they buy from the US Treasury with the profits from all of you.

The US Treasury issues...30 Billion Dollars of new Treasuries to sell...and exchange for US Dollars...in the form of Federal reserve banknotes or IOU's.

Which is weird...since the IOUS...they are borrowing...are for US Dollars...which is what the US Government has to supply to...anyone that demands US dollars for Federal reserve notes.

Anyways.

How does the FED by the bonds?

The FED lends the US government credit...using the bonds...as collateral backing the inflation of credit.

But then the FED sells the bonds to the primary dealers...for credit...all the credit the banks obtained as profit from their credit operations.

and the FED uses the credit they obtain from the sale of the bonds they used as collateral backing the loan of federal reserve notes...to pay off the loan of credit to the US Government.

and it returns back into thin air...

and the money supply shrinks.

The reason the economy has slowed in the USA and it along with the rest of the world has been deflating.

is because the QE is just making up the difference from the loss of millions and millions of US consumers.

new real estate construction...mortgage creation.

is the whore that bankers rape for fun and profit...that is the multiplier effect that powers everything else.

In 2005...it was game over....

all the FED is doing is sustaining the primary dealer operation...The loans of credit it is supplying to the primary dealers are sustaining the banks...keeping them operational...that is it.

The top...they can not do anything...they live off you all below...if you all below can not supply the demand for yield...then it's over.

new home construction...there is the wholesale cost...that is all financed...all the workers and materials...demands the credit supply to expand.

like lets say it costs $100,000 to build a house and you can sell it for $150,000...for a 50,000 profit.

the 100,000 of new credit created...is dumped into the economy at the bottom...and it multiplies up.

the QE is at the top.

it does not multiply down...it does not even make it down.

It's suck up and trickle down.

you may think 85 Billion dollars a month is a lot...but it does not even come close to replacing millions of people...

that is all the FED is ultimately doing...supplying a fake one where a real zero is appearing in the algorithm.

there is a limited amount of time that is running out that this can be sustained.

I call bullshit!
The problem today is the good paying jobs are all oversea's.
Without a source for the productive to maintain a decent living, the money dries down to that level.
What you are seeing is a reset, where the jobs have gone bye bye and the existing mortgages cant be sustained from lower pay. Banks fail when the money supply (loans) default.
Once it starts its hard to stop....unless the jobs come back.
Look at China....its booming because the jobs are over there.
The banking problem we are seeing is created because of lack of good paying jobs to create weekly middle class fiat paychecks to service the loans.
Hypertiger is an idiot!

[Bigjon]

I call bullshit!
The problem today is the good paying jobs are all oversea's.
Without a source for the productive to maintain a decent living, the money dries down to that level.
What you are seeing is a reset, where the jobs have gone bye bye and the existing mortgages cant be sustained from lower pay. Banks fail when the money supply (loans) default.
Once it starts its hard to stop....unless the jobs come back.
Look at China....its booming because the jobs are over there.
The banking problem we are seeing is created because of lack of good paying jobs to create weekly middle class fiat paychecks to service the loans.
Hypertiger is an idiot!

I always thought he was an idiot, but this time I have to agree with the kitty, he is just describing the mechanics of the system in a very concise manner.

And you are right too, the export of jobs by the Jews, has reduced American's to penury.

[Libertarian_Guard]

Deflation deferred is not the "growth" these con men are selling. When this charade ends watch asset values revert to their true levels. Stocks will get a 50% haircut. Real estate? Look at any list of asking prices, then remove the first digit - that is what cash buyers will pay in the washout.

The good news is that an entire generation will learn a lesson about debt and central planning and economies everywhere can experience real growth again.

http://www.ino.com/blog/2013/10/deflationary-forces-stymie-the-feds-economic-rescue-efforts/