Then central banks resorted to quantitative easing (QE), a polite term for the creation of money.
At any rate, the case gives an excellent description of one of the types of corporate cash concentration system that inspired the creation of money market funds.
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Through the Fed and the big bankers, the politicians have through essentially unlimited borrowing and the creation of money out of thin air, the ability to do anything their little hearts desire.
While the creation of money for the sake of it (Fed purchases of Treasuries and mortgages forcing cash onto bank balance sheets) is an economic somnolent on its own for boosting that which restrains our economic evolution, it also weighs negatively on the value of the dollar.
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Seeking the creation of money for the sake of it whereby economic growth can laughably be fostered in a laboratory of central planners in possession of a money printing press, their economic plan is one where money is devalued, and with the devaluation, consumption once again grows.
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Something has been holding interest rates near zero for the past 17 months, but it has not been the creation of new money by the Fed.
As I explained in a book I co-authored some time ago, in an environment like this bankers have grown up as abacus bankers, record keepers of money flows who derive income from seigniorage, from the passive creation of money through interest bearing-loans and government-backed securities rather than from true banking, and from active risk management.
At no time in history has it lost its appeal as a store of value and, in fact, it represented the universal money until nation governments and warfare made the creation of paper money a necessity.
In contrast, private banks for the third month running were largely out of the money creation business, the result being a three-month rate of decline in uncovered money substitutes of 14.6%.
But the creation of extra money in one country ought also, other things being equal, to drive down its price in terms of other currencies.
The economists' slang for this kind of policy is the creation of "helicopter" money, because it is seen as the equivalent of dropping money on all of us from out of a helicopter ( see this column by Simon Jenkins for more on this).
History demonstrates that the soundness of the token is directly proportional to the difficulty of its creation, as this helps ensure stability of the money supply.
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The enormous amounts of liquidity that led to the housing and commodities bubbles of recent years cannot be blamed on thrifty Chinese but on the excess money creation of Greenspan and Bernanke.
In the euro area, the introduction of the single currency and the creation of an integrated financial market will change both the definition of the money supply and its relationship to inflation.
Although the devaluation of sterling we've seen in the last few years - caused by a near-zero official interest rate and the massive money creation of quantitative easing - has probably been healthy, especially for exporters, more extreme degradation of the currency would bring risks.
Ultimately, however, you would expect the dilutive effects of money creation to be a negative for the dollar.
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Yet the bankers, together with the central banks, want Europe the fabricate money just like the Federal Reserve in the U.S. A money creation machine is the dream of all bankers.
Why aren't bond investors reacting with more alarm to the process of money creation?
Leaving aside the monetization of debt, using taxes or savings to handle a large fiscal deficit reduces the amount of money available to private investment and therefore curtails the creation of new businesses and limits much-needed increases in productivity.
We saw the massive transformations of a society move to the suburbs, the exodus of money and investment in the inner city, the creation of jobs, the lack of transportation in the suburbs, and we didn't account for the changing demographics in the city.
And about a third of this package comes in the form of tax cuts -- the most progressive in our history -- not only spurring job creation but putting money in the pockets of 95 percent of all hardworking families.
However, it then takes an ever-increasing amount of new money creation, on the part of the central bank, to pull the economy away from falling asset prices.
Obviously the impact on job creation will -- 70 percent of the money will be spent by September 30, 2010.
But it is also worth remembering that central banks are not the only source of money creation: commercial banks are normally much more important.
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Third, economic growth lessens the impact of excess money creation.
No doubt, as we discussed HERE , the implication of a vibrant return of private banking institutions to the money creation business would be in a word explosive.
The net result of the ACA is a rising tide of innovation and venture creation that has the opportunity to save lives, save money, help transform our health system for the better and create many jobs.
While some Democrats on the committee used the hearings to air their gripes on the Bush administration's creation of a financial database to track money transfers by terrorists, the issue isn't expected to derail the nomination.
And some may also ask whether a business that makes money through the creation of ever more debts has already reached the limit of its social usefulness.
While inflation may fundamentally result from too great a creation of money, the proximate or immediate cause of its actual development is much more a function of expectations of what will happen next.
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