And the grocery stores I go to are the only grocery stores who can directly deal with me. Neither relationship is any sort of permanent subsidy - I go to those grocery stores because they provide me with the most convenient access to the market for groceries. The Fed goes to those dealers they provide the Fed with the most conveient access to the market for treasuries. No one is excluded from starting such a business, any more than anyone is excluded from starting a grocery store next to where I live. If you have a good enough business, you become a primary dealer.


Even if we accept your strange logic that banks as a whole have some supernatural ability to access "new money" regardless of who has it, then banks suffer just as much, because they must already control the "rest of the money" which has lost value proportionally. Either way, the above barely even parses.


So I guess everyone benefits from taxation - they are willingly involved in the process much the same way that most people willingly pay taxes or shop at Walmart.


So random sellers of the treasury benefit from monetary expansion. Again, we have established that sellers of treasuries are the early receivers of this great new money. So why not join the party?


The entire economy would suffer, but effects would be fairly random. You're randomly mixing ideas though - the fed's liquidity support and the fed's use of open market operations to set interest rates are not related, except in some fairly technical sense that you don't understand and I won't bother to explain here. I undersatnd that you're largely playing a word-association game, but it wasn't until 2008 that primary dealers received any liquidity support from the Fed. Furthermore, liquidity support from the Fed isn't some kind of subsidy - it's largely a credit-based loan program available to institutions that abide by the Fed's rules. Registered gambling houses would have neither the collateral, nor the credit to access any of this at a favorable rate, even if the program was open exclusively to them.

In short, your entire scenario is predicated on a false premise - there's no arbitrary distinction between "bank" and "registered gambling house" from the Fed's perspective. Pretty much anyone who's willing to abide by the Fed's rules already has access to the Fed's liquidity facilities. Anyone can organize their business to be a bank-holding company.


Again, to the extent that you can't predict how this new money will shape prices in the future, you similarly don't know who will benefit. Capital markets are structured so that you can bet on things like this. You can even bet on the general price level.


What? This is exactly what happens during hyperinflation. Society would anticipate and move prices well ahead of actual increase in money supply.


If you assume away aspects of reality, don't be surprised when you get conclusions that are not relevant in reality.


So sell your treasuries and get fresh new money.


So, m0 is some sort of constraint in spending power and aggregate transactions are one way of looking at spending and it can be arbitrarily bigger than m0. So exactly what kind of constraint is m0? What does it constrain, how does it constrain and what does it constrain to?

It's not about IP - you couldn't follow basic algebra or distinguish between real and nominal values (90% of your objections were due to those errors), so there was no danger of you replicating any useful aspect of the model - I'm merely saying, given my familiarity with your history of posts on monetary policy, that the probable origin of that particular method of analysis is actually my model. You had a lot of trouble understanding why I formulated a relationship between money supply and nominal value of total amount of stuff in an economy, causing some oscillation between different modes of confusion. For instance,

Btw, if anyone else is still reading this, that other thread is far more entertaining, interesting and illuminating:

http://forumserver.twoplustwo.com/11...regime-397397/

Bonus points to anyone finding my statements in that thread that I now disagree with!


But in the aggregate on average, do they tend to under-adjust? If they don't, then spenders of the new money don't get any benefit from purchasing in under-adjusted markets. If they do, then you can make money by speculating on aggregate prices. In short, the opportunity to profit from access to "new money" is always available via capital markets to everyone.

your simplying stretching everythign to try rationalize it away. primary dealer membership is fairly rigid and your assumption of it being non political and strictly business is not founded. the fed is not a purely market based institution. it is filled with bureaucrats and political appointees. they are closely tied to the treasury and banking system despite a vale of "independence".

i know you didnt want to talk about the AIG bailout or other things like that but this is the point in case. you cant deny this. it is perfectly relevant. Firms undeserving in a collateral/business sense were handed large amounts of credit. i know many people who were in the same situation and were not afforded such chance. what differentiates the two are special privilege.

what strange logic? Here is where you either dont know what you are talking about or you are trying to discredit me intentionally knowing better. Are you saying the fed injections have not increased reserves in the banking system? Have you heard of a liquidity trap? how would that concept even make sense if you dont think this.

shopping at walmart yes. paying taxes no. it is antithetical to the basis of human action displaying preference because there is force involved. all that we know is people are willing to do it under the threat of force. whether they want to pay taxes or not isnt established. most people extend themselves to circumvent taxes which indicates they dont like them. the primary dealers and banks marvel in their benefit, and dont try hard to get out of it. banks dont try avoid fed benefits. they try avoid it being known in some cases though so they dont get stigmatized and the fed helps them here too.

because it all comes down to speculation from an outsider. the fed will help people in ways they dont need to speculate. in fact once a bank has speculated incorrectly, the fed will see this and THEN aid them. anyone can try speculate, but the best speculation like i said is done by people who ALREADY own whatever the fed decides to buy. They can hold back an item till its price reaches as high as it wants. I can only bid an item as high as my capital resources go. and further cant increase my capital resources to the same extent as banks because my financing ability is not as strong and collateral is not the difference in many cases. also the collateral for bank borrowing is also a subsidy in many senses. one being for depositors as the government backs the deposits so this allows banks to borrow cheaper from the public.

i understand the difference between open market operations and things like the discount window or other credit facilities. and they are not that different.

and again, what about crap MBS which are mostly owned by the fed makes it good collateral? you are actually ridiculous, i hope you know that/

i agree you can make bets. i agree people can speculate correctly on fed action. IT IS A SEPERATE ISSUE. i have no denied it once. my only point is speculating with money is different than controlling an asset the fed happens to want. for one when you speculate with money you are limited to your resources in terms of driving a price. the limit can be taken away if you hold an asset rather. And the way the banks work is they dont need to speculate really on which assets to hold. they just buy whatever and know that at some uncertain point, the fed will help them in some part of their business. the public at large must speculate entirely in figuring that all out and acquiring the asset before the holders or other bidders can figure it out. Even still when the public speculates correctly this doesnt diminsh the benefit the banks receive, hence why it is a separate issue. they can only bid up assets the banks already control, since the fed only involves themselves in such a way.

yes but it happens from the supply side. see there is thing called isolating issues. i know its tough but i believe in you and know you can do it. The prices in hyperinflation increase from the supply side. people become unwilling to sell their products for nearly any amount of money. Its not physical money bids that drive it there. that is a reaction.

i dont know what to tell other than you are incapable of seeing something on a basis of isolating certain factors. you can assume credit like i did later. it doesnt change the overall picutre but it was important to see the underlying mechanics if each part of the process.

i dont own treasuries. if the fed decides to go into the marijuana business however.... since ive been storing and smoking all that dope crushing your dreams of me making something for myself.


i dont even view it in the same way as you. well actually i agree with the specific point you used in that thread about it constraining the nominal economy unless by passed, blah blah but thats about it. my point about m0 is just that constrains the DEMAND SIDE. It also is a constraint on much the economy can expand without being forced into a liquidation pattern during a bubble. growth in m0 is necessary to keep a bubble afloat until its ultimate end, for example. a stagnating m0 will restrict the bubble.

like i explained in this post to you a while back:

without new financing the bubble must die.

i still stand by that. you havent explained a contradiction.


prices tend to be all over the place, especially relative to future conditions which are never fully factored in. there is just varying speculation about them. if firms were so certain of where everything was going and coming, money would cease to exist. its only held as a buffer against these uncertainties.

and again, i agree speculation can happen. but refer above because no need to over repeat myself.

NOWONE IS TRYING TO MAKE EVERYONE EQUAL.

WE ARE TRYING TO MAKE OPPORTUNITY FOR ALL PEOPLE TO BECOME WEALTHY/PRODUCTIVE/INVENTIVE.

HOW HARD IS THIS TO UNDERSTAND?

NOWONE IS TALKING ABOUT REDISTRIBUTION FOR REDISTRIBUTION'S SAKE.

WHY ARE WE INVENTING THIS COMMUNIST BOOGEYMAN?

nowone?

Clearly he means "NOW, ONE IS TRYING" as in Obama, "The One".

http://bucks.blogs.nytimes.com/2010/...-expectations/

it's one thing to say $250k = struggling to get by

it's another to say $250k = rich

the thread in BFI was much more in touch with reality on this topic than this thread

Yeah, but that's because those are all rich, investing kinda dudes. They just don't understand.


Funnily enough, I listened to NPR the day after this thread really took off and there was a guy discussing this exact topic. He had written some book and interviewed a ton of wealthy people. He said that almost invariably, they would claim that they weren't rich. Income of 250K, 500K, 2 mil a year? Didn't matter. Net worth of 2 million, 10 million, 100 million? They still claimed they weren't rich. He even had one dude worth over a billion assert that he wasn't "rich.' The billion dollar guy talked about people he knew who were worth multiple billions and said now THOSE guys are rich.

All I know is my penis is well above avg.

I mean....definitely.

DUCY?

Bump per recent discussion w/Fly in the LC thread.

Mainly because there's probably more bustos in the politics forum so as a result their viewpoint with regards to quantifying something subjective such as "rich" will be different. Sure, if you define rich as not having to worry about paying your bills or being able to eat then yeah it's rich. But if that's the case, I don't think the word rich means what you think it means. But since I understand rich is relative it's pretty easy to understand why some people actually confuse 250k with actually being rich.

http://dictionary.reference.com/browse/rich
A family getting taxed for nearly half it's income and then having just 1 kid will not have "wealth" or "great possessions" after mortgage, insurance bills, saving for college education, retirement savings etc etc. They will be able to eat out sometimes during the year, have a few vacations, make a few smallish luxury purchase and that's about it. If they live in a more expensive location like NYC/LA then they would have even less disposable income. Go read the BFI thread if you're still misunderstanding this.

A family making 20K a year is below our poverty line and has a higher standard of living and more wealth than the vast majority of people on the planet and 99.99% of people who have ever lived, let's tax these rich mofos!

Who the hell cares where you define what "rich" anyway, be it 25K, 250K, or 2.5 million.

People don't deserve to have their earning stolen from them no matter what.

I love when you speak.

Fly just wants people who earn their money to fork it over to the ****tards in society. Like I am supposed to give a **** about some moron who decided to drop out of high school and can't find meaningful permanent employment, over caring for my family.

I would rather by my 2 year old a million toys before having a single tax dollar subsidized to pay for some idiot who made STUPID choices.

Well, someone's got to pay for killing all those Muslims you want to kill. That's obviously justifiable theft of my money, though.

level?

FYP

I don't want to kill them. Just don't want to kiss their asses like you do.

You did not fix my post.

I will use my money to feed, clothe, and spoil my 2 year old. If some idiot I don't know decided to have kids with no money in the bank, that is their problem. I do not care about their kid. If someone in my neighborhood who I know is having trouble feeding his kid, then yes I will help and be charitable and bring them over groceries.

Now, if I was 110% assured that some of my tax dollars would go DIRECTLY to feeding someone's 2 year old who is going hungry, well then ok yes, I am fine with that. But let's be honest, this money is going to go to rent, drugs, gambling etc... more often then not.

It is kind of like all the people who donate money to Haiti, like seriously, what idiots, like that money is going to actually get to the people who need it and not effing laundered somehow. Now if I could magically appear in Haiti with food to directly feed those people I would without a doubt buy like a grand worth of groceries and hand them out and would absolutely love doing it.

You may be interested in this new invention called an "aeroplane."

Yeah, but those money are stolen from middle class and you never cared about our kind...go fish

owning a house, having insurance, getting a college degree and buying say a big screen TV is rich to you? So what's this lifestyle look like? Work 50 hours a week, come home and watch TV, have dinner, rinse repeat for the most part? The occasional trip out to dinner or occasional vacation?

Problem with this thread is that people who are poor are just defining everything that's more than what they make as rich. Interesting though how rich has now come to simply mean "being able to live the same lifestyle and buy the same things as the people who buy them with credit, except just doing it without being in debt". But no, owning a house and saving for a retirement isn't having great wealth or an abundance of assets. wtf? That lifestyle used to be commonly viewed as simply middle class.

You can earn 250k a year, save it up by living in a van down by the river then at the end of the year put it on a bonfire and you are now approaching a point you can be considered poor whilst making a quarter mill a year.

No one living in the US making 250k could ever be considered poor.

This sounds more like someone making $50,000 a year rather than someone making $250,000. What happened to the other $200,000? OH, that's right, they use it for NICER schools, and NICER cars, and NICER vacations. These are luxuries. That's what makes them rich.

$250,000 is in the top 2% of incomes. LOL at the 'poor' being the only ones calling $250 K rich.

Let me know if it is at all possible to get on a plane for haiti with 10 bags of food, get off the plane , through customs and be able to walk a couple miles to some tent city to hand the food to these people. I think it would be an easier task to try and jump up in the air and touch the moon.