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Silver Wheaton Corp. Message Board

  • bbfan1927 bbfan1927 Jan 2, 2014 7:56 PM Flag

    Fed bond buying creates 9x every bond dollar they purchase

    so- given the fact that the Fed has purchased roughly $4T in bonds, we can extrapolate that under best (or worse case depending on your point of view) if the money supply was fully functioning, there should be approx $40T in additionally liquidity- my question is- where is it?

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    • Parked at the fed earning interest.

    • Just came across this from a recent (21-DEC) article at the Breitbart site. The author is paraphrasing opinions expressed by Jim Pethokoukis among others:

      "In the past year, thanks to Fed bond-buying, the monetary base grew by 39 percent. But the broad money measure known as M2 increased by only 6 percent. So really, the claim that the Fed was ballooning the money supply is simply not true. The Fed’s money multiplier has broken down. In fact, it is not clear that QE bond buying had any effect on the money supply at all, with M2 growing at about 6 percent for years. And with the velocity, or turnover, of money also broken down, nominal GDP growth has averaged 4 percent for years."

    • bbfan,

      Interesting point. Where did you come across the 9x multiplier? Where would one find that kind of information? I'd like to do a little research over the weekend. Came across a site called Shadowstats,has a ton of info. on topics like the true money supply, true rate of inflation, employment stats, etc.

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