The m2 money supply is rising at the fastest rate since 9-11.
Source:
http://research.stlouisfed.org/fred2/data/M2.txt
The latest week (9/22) shows the second greatest gain in the entire range! The greatest gain was in the week after 9-11.
The increase in the money supply was over 2% (vs. just over 3% the week after 9-11).
2% in one week is a LOT for money supply growth. Compound that kind of growth over 52 weeks and you would have hyper inflation.
No week other than the post 9/11/2001 week and the 9/22/2008 week show even a 1% gain. The average weekly gain in M2 has been about 1/10 of 1 percent. So the latest reported week shows a gain of 20 times greater than normal.
It will be interesting to see if there is another big gain in the week of Sept 29 and also interesting to speculate where this money is going right now.
I feel confident that we are not headed toward hyper-inflation; in fact we seem to be in a somewhat deflationary period -think stocks, job losses, energy prices in the last month.
Tuesday, October 7, 2008
Saturday, October 4, 2008
Robert Reich on the socialization of risk and privatization of gain
From
http://quote.yahoo.com/expert/article/stockblogs/94661
• Former Secretary of Labor Robert Reich has some harsh words for policymakers. He says that "socialized capitalism of the sort the Fed and the Treasury are now practicing, consisting of private gains and public losses, is untenable. On the other hand, giant Wall Street investments banks as well as Fannie Mae and Freddie Mac are too big to fail." How to reconcile the two? Reich has an intriguing proposal - that "[w]hen taxpayers insure a giant entity against loss, the entities must agree that for the duration of the bailout, their top executives can't be paid more than the President of the United States; and the government gets 5% of their current valuation as shares of stock (roughly representing the benefit to their shareholders of the federal insurance) -- so that if and when the entities become profitable again, taxpayers are compensated for the risk they've taken on."
This sounds like a decent proposal to me.
We as a society need to think long and hard about this injustice (the privatization of gain and socialization of risk) should be addressed.
In prior times the centerpiece of dealing with this issue was a progressive income tax system but this has been rejected because it punishes the hardest workers, the most talented and the biggest risk takers. But our system clearly does not give it's highest rewards to those people now so we are back to square one! Who we reward in America in 2008 are those whose imprimatur is on things whether they have anything to do with gains or not - or even if they fail!
We were told that one of the biggest reasons to flatten the tax system was that a progressive tax punished those who "took the risk" yet we know now that those who claimed to be taking the risk (the CEO's and business elite) were in fact not taking the risk - as illustrated spectacularly on Friday.
Perhaps a better way would be to
a) identify real risk takers (starting with those who put their *own* money on the line) and tax gains that come from that lower.
b) If we want lower taxes on those who work hard how about a lower rate for overtime.
I'm sure there are other ideas...this is just a start.
http://quote.yahoo.com/expert/article/stockblogs/94661
• Former Secretary of Labor Robert Reich has some harsh words for policymakers. He says that "socialized capitalism of the sort the Fed and the Treasury are now practicing, consisting of private gains and public losses, is untenable. On the other hand, giant Wall Street investments banks as well as Fannie Mae and Freddie Mac are too big to fail." How to reconcile the two? Reich has an intriguing proposal - that "[w]hen taxpayers insure a giant entity against loss, the entities must agree that for the duration of the bailout, their top executives can't be paid more than the President of the United States; and the government gets 5% of their current valuation as shares of stock (roughly representing the benefit to their shareholders of the federal insurance) -- so that if and when the entities become profitable again, taxpayers are compensated for the risk they've taken on."
This sounds like a decent proposal to me.
We as a society need to think long and hard about this injustice (the privatization of gain and socialization of risk) should be addressed.
In prior times the centerpiece of dealing with this issue was a progressive income tax system but this has been rejected because it punishes the hardest workers, the most talented and the biggest risk takers. But our system clearly does not give it's highest rewards to those people now so we are back to square one! Who we reward in America in 2008 are those whose imprimatur is on things whether they have anything to do with gains or not - or even if they fail!
We were told that one of the biggest reasons to flatten the tax system was that a progressive tax punished those who "took the risk" yet we know now that those who claimed to be taking the risk (the CEO's and business elite) were in fact not taking the risk - as illustrated spectacularly on Friday.
Perhaps a better way would be to
a) identify real risk takers (starting with those who put their *own* money on the line) and tax gains that come from that lower.
b) If we want lower taxes on those who work hard how about a lower rate for overtime.
I'm sure there are other ideas...this is just a start.
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