{"id":41866,"date":"2018-12-21T07:07:57","date_gmt":"2018-12-21T12:07:57","guid":{"rendered":"https:\/\/olduvai.ca\/?p=41866"},"modified":"2018-12-21T07:07:57","modified_gmt":"2018-12-21T12:07:57","slug":"the-fed-relies-indirectly-on-the-banks-cannot-stimulate-the-economy-directly","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=41866","title":{"rendered":"The Fed Relies Indirectly on the Banks & Cannot Stimulate the Economy Directly"},"content":{"rendered":"
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The Fed Relies Indirectly on the Banks & Cannot Stimulate the Economy Directly<\/a><\/h3>\n<\/div>\n
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QUESTION:\u00a0<\/strong>Hello,
\nSince the Fed \u2018created\u2019 \u2018money\u2019 after 2008 that was then deposited back at the Fed by the recipient banks ( say,75% of it), it is not easy to see why the Fed is to blame for the credit explosion since 2008- nor for the very slow ( like a paralytic centipede) hike in Fed Funds that seems already as I write to be seen as a problem.
\nSurely it is the banks who truly created the money ( out of nothing as usual) by financing the purchase of EXISTING assets at ever-rising prices (and also consumer spending) rather than new business expansion?
\nIn other words, the fault is at the bottom to be laid at the door of the banks. They created the wrong kind of credit bubble ( not that any such is ever a good idea).
\nWhat say you, Sir?
\nMany thanks
\nB.<\/p>\n

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ANSWER:<\/strong> There is a deeper problem that nobody addresses. The entire Keynesian philosophy of increasing the money supply was based upon the practice whereby private money was being created during each crash since 1857. It worked perfectly. Here is a Depression Scrip for $1 to supplement the money supply during a crisis. There was nothing wrong with this concept.<\/p>\n

\"\"<\/a>The original design of the Federal Reserve in 1913 was PERFECT!!!!!!<\/strong> It \u201cstimulated\u201d by purchasing corporate short-term paper which created an elastic money supply. The paper naturally matured and thus the money supply contracted. When Congress usurped the Fed in World War I and ordered it\u00a0to buy only government bonds to fund the war, they NEVER<\/strong> returned the Fed to its original design.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Fed Relies Indirectly on the Banks & Cannot Stimulate the Economy Directly QUESTION:\u00a0Hello, Since the Fed \u2018created\u2019 \u2018money\u2019 after 2008 that was then deposited back at the Fed by the recipient banks ( say,75% of it), it is not easy to see why the Fed is to blame for the credit explosion since 2008- […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5496,63,303,5479,536,3731,6333,1234,3650],"class_list":["post-41866","post","type-post","status-publish","format-standard","hentry","category-economics","tag-armstrong-economics","tag-banks","tag-fed","tag-martin-armstrong","tag-money","tag-money-creation","tag-private-banks","tag-stimulus","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41866"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41866\/revisions"}],"predecessor-version":[{"id":41867,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41866\/revisions\/41867"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}