Monetary Base

A monetary base is the total amount of a currency that is either in general circulation in the hands of the public or in the commercial bank deposits held in the central bank's reserves.



Do we want the monetary base to return to actual working base ?

Can you explain this to me? Details, positives and negatives of each.

Quote: DRich

Can you explain this to me? Details, positives and negatives of each.

There is a fairly good explanation of QE in Wikipedia which includes positives and negatives.
https://en.wikipedia.org/wiki/Quantitative_easing

Roosevelt nationalizes gold by issuing an executive order requiring all gold coins, bullion and certificates to be turned over to the Fed at $20.67 per ounce. Hoarding gold in coin or bullion is punishable by a fine of up to $10,000 and/or jail time. These policies are reinforced in the Gold Reserve Act of 1934.
Over 6 years from 1940 to 1946 the cumulative value of circulating currency is increased by a factor of 448%. Understandably cash is needed to fund war effort. But by 1947 the budget returns to a tiny surplus and the deficit spending ends.

It's kind of a closed question now if Quantitative easing was necessary in 2008. My question is do we need this massive increase in monetary base a decade later, and why is there no plan to return to traditional policies now that the recession is over.

I must say that it is a little above my level of comprehension. Although I had a minor in economics in school, I never fully embraced it. It just happened that a girl I liked was in econ classes so I was basically just stalking her.

Quote: Pacomartin

A monetary base is the total amount of a currency that is either in general circulation in the hands of the public or in the commercial bank deposits held in the central bank's reserves.

Those excess reserves came into existence as QE, provided to the commercial "TBTF" banks, who had nothing better to do with the funds, then put it into CB reserves at interest.

The central bank printed trillions that were given to the TBTF banks through mechanism's, TARP etc. The banks in turn didn't have quality places to loan the funds. Since Clinton eliminated Glass Steagall, these intl banks are little different than hedge funds, so much of that QE money either sits in at the Fed as interest bearing excess reserves, or goes into the stock market. That is the reason the DOW is at 25k.

You can watch the actions of the PPT at work, usually on Fri. afternoons. The market is a house of cards, since eliminating Glass Steagall gives ultra sized banks FDIC insurance protection on customers accounts if they are lost in the stock market. "Privatized profits and socialized losses"

Quote:

Do we want the monetary base to return to actual working base ?

That depends on who we is. QE cost the tax payers billions to the benefit of tbtf banks. But at the detriment of smaller regional or state banks and credit unions who ran a typical banking enterprise, not a hedge/investment fund with depositors/taxpayers money.

Quote: petroglyph

You can watch the actions of the PPT at work, usually on Fri. afternoons.

PPT?

Quote: DRich

Although I had a minor in economics in school, I never fully embraced it. It just happened that a girl I liked was in econ classes so I was basically just stalking her.

There was a movie called "The Front (1976)"with Woody Allen and Zero Mostel. Zero Mostel was actually calle to testify before the House UnAmerican Activities committee in the 1950's. His dialogue in the movie makes fun of that testimony

Six years ago, I marched in the May Day Parade. I bought a Daily Worker subscription. But I never read it, not one word. Right from the mailbox to the garbage can. I was only trying to get laid. This communist girl, she had a big ass...

http://www.tcm.com/mediaroom/video/1359509/Front-The-Movie-Clip-Sincerity-Is-The-Key.html

Quote: Pacomartin

PPT?

https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets