Money. Doing it Right this Time.

[El_Machinae]

All?

 

[Cutlass]

What determines the value of your work and the value of your purchases, though?

There has to be a measure of belief in there somewhere I think.

If people don't believe that my work has value and I don't believe that the purchases that I could make (assuming someone thought my work had value so that I had credit to spend) have value, doesn't the whole deck of cards collapse about my ears?

Credit, we can remember, comes from credere to believe. (I believe).

The value of anything is what someone will pay for it. Supply and demand. If no one valued your labor, no one would pay for it, and you wouldn't have a job.

 

[onejayhawk]

Well, I dunno. You might as well all be talking in Chinese for all the sense I can make of it.

There's a nation to copy. Maximize wealth in the fewest people possible.

J

 

[El_Machinae]

Slight confusion time.
https://research.stlouisfed.org/fred2/series/MBCURRCIR
This is the money printed by the Fed, and it's about 1/10th the total money supply, so that makes sense.

But this part confuses me.
https://research.stlouisfed.org/fred2/series/TREAST
How can the Fed have a trillion dollars more in T-Bills than they've issued in currency?

edit:They're using the maturity value, maybe?

 

[Cutlass]

Not being an accountant or banker, I can't read the balance sheet well enough to definitively answer all the details. But my best understanding is that the gist of the answer to your question is that the Fed is a lot more diversified than that. And so there are a lot more lines to the equation, and you're only looking at 2 of them.

This shows you more what the Fed's actual balance sheet looks like. http://www.federalreserve.gov/releases/h41/current/h41.htm

 

[Naskra]

How can the Fed have a trillion dollars more in T-Bills than they've issued in currency?

The Fed buys digital T-bills with digital dollars. Currency is paper money & coins in their terminology.

 

[Hygro]

Most of that is not printed paper but bank reserves. There's really no connection to the amount of bank reserves the banking system holds and the amount of treasuries the Fed holds.

 

[El_Machinae]

It gets confusing.

Their reserves are essentially money taken out of circulation. Whereas the debt-paper they hold is money put into circulation.

Ostensibly, shouldn't the reserves be shown as a liability? And the debt-paper be an asset?

 

[Hygro]

The reserves are a liability of the private banks. The treasuries are assets of the central banks.