Comments on: How Money Finds its Way Into the Economy

By: Skiper

Skiper — Thu, 17 Sep 2009 00:07:22 +0000

AudioBooks, don’t you mean 2.5 Kazillion?

By: cspanner

cspanner — Tue, 15 Sep 2009 17:33:07 +0000

While I am not one of those who believe that the Fed is a secret manipulator of our (the world) economy, I believe Mr.McFarland’s view of the roll of government, the Fed and ‘money’ is quaint, and reflects a fiction that is constantly used to mislead the public. As a ’soverign entity’, the government does not need to collect money (taxation, etc) to meet its disbursements. The purpose of the IRS (taxation) is NOT a source of revenues, but is rather to retrieve sufficient quantities of PREVIOUSLY created money to modulate domestic inflation (and ensuing economic disruption & political unrest) and to re-distribute accumulated sums & ‘re-cycle’ it back into the economy (appease the envy of the less-wealthy & avoid evolution economic entities that might eventually challenge the government’s primacy). The purpose of the tax code is NOT so much to specify the manner in which the gov’t will collect taxes as it is to subtly manipulate the economic decisions and behavior of the citizenry without having to issue overt ‘commands’ (ie, avoid the appearance of a centrally planned, totalitarian regieme). The discussion of m0-m3 ‘kinds’ and ‘flows’ of money, and the arcane transactions between the Fed and Treasury, are nothing but recast analogies from the days of the French physiocrats; they are attempts to (induce the public to) reason by analogy -always a useful way to mislead your audience but never a path to real understanding. Mr. McFarland’s ‘explanation’ is nothing but entrenched mythology and does not really explain what is really going on – in this country or (eventually) the world. In this case, if you ‘follow the money’ you are sorely misled.

By: Eugene

Eugene — Tue, 15 Sep 2009 05:52:32 +0000

This is very useful information, especially given the economic crisis! I really think that more economics needs to be taught to students at a younger age (high school?)

By: tony

tony — Thu, 10 Sep 2009 20:47:41 +0000

dont forget the credit card companies who if u look hard enough u will see are ripping u off big time. dont bother asking any govt agency for help because they are behind it. get rid of those cards folks. dont know how to else to tell u. baaaad news

By: anon1

anon1 — Sat, 29 Aug 2009 19:15:33 +0000

The original number is correct. $2,518,680,000,000 is 2.5 trillion which is correct, not $2,518,680,000 which is 2.5 billion.

By: Peter

Peter — Fri, 28 Aug 2009 22:47:11 +0000

Just a quick follow-up to Reggie’s comment. I agree completely that a complete freeze of money moving from place to place will cause a horrible implosion, but I see that coming if taxes keep increasing. As things stand right now, we’re finally seeing people paying off their debts and getting more and more out of debt and back into more sound personal money-management practices. However, if taxes go up and we are forced to pay more to provide “essential” services, the money will freeze as people stop buying anything except the essentials and work on cutting down those essentials as much as possible which will lead to less money circulating which will lead to more unemployment, more need to provide services, higher taxes, more money not circulating, etc.

I can’t remember who said this, but for all of the evils of capitalism (and there are some), when is the last time any of you got a job from a poor man?

I do appreciate the high-level overview of this article, but it was missing a lot of information and didn’t concentrate on the negative side of government increasing spending. It may help get some industries going, but sometimes I’d say it’s just as fair to let those same industries bail themselves out. The auto industry wasn’t too big to fail, nor was the housing industry. I think a point could be made that if we had let them fail something better or stronger would have taken its place. (Possibly a painful short-term, but if the businesses are failing and we reward them, what do we actually gain?)

By: chris

chris — Fri, 28 Aug 2009 19:20:25 +0000

why is the paragraph on Cash for Clunkers so outdated?

The program’s website states that Cash For Clunkers is slated to run from July-November 2009 (although this is probably unlikely), and pay over $2 billion to car buyers and that over 250,000 cars have been sold so far, though Edmunds.com notes that interest is reportedly dying down.

By: dean332

dean332 — Fri, 28 Aug 2009 15:33:58 +0000

This article is missing quite a few, very important facts about how the Fed actually increases and decreases the money supply and how those increases and decreases actually create and remove the supply of money based on the marginal propensity of the receiver to consume or save those funds.

By: David@DINKS Finance

David@DINKS Finance — Fri, 28 Aug 2009 15:26:04 +0000

I like Peter’s comment. The Federal Reserve IS the cause of inflation. I personally think it should be abolished ASAP.

“Makes me long for the day when we had leaders who believed in a balanced budget or the idea that we shouldn’t spend more than we take in.”

Right on Peter. I’m hoping that the tide will shift towards this mindset. It will be a tough battle to get politicians in who believe in this, but there is at least a few who do right now.

By: Andrew Jackson

Andrew Jackson — Fri, 28 Aug 2009 14:20:39 +0000

For a full account of how the Fed pumps money into the economy (and why), read “The Creature from Jekyll Island” by G. Edward Griffin.

http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212

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