FILE: 252N09.HTML
FALL 2005
REVIEW BOND MARKET/FISCAL POLICY
THIS WEEK: MONEY SUPPLY CH 13
WE HAVE LOOKED AT MAIN STREET, THIS IS THE
FINANCIAL MARKETS (WALL STREET) DIMENSION
THE PLAYERS
TREASURY/JOHN
SNOW
FINANCES
FEDERAL GOVERNMENT
KEEPS
CHECKS FROM BOUNCING
MANAGES
THE DEBT AND THE DEFICIT
FEDERAL
RESERVE/ALAN GREENSPAN
MONETARY
POLICY
FUNCTIONS OF MONEY
MEDIUM
OF EXCHANGE
STORE
OF VALUE
STANDARD
OF VALUE
WHAT IS MONEY?
ANYTHING
THAT PERFORMS THE FUNCTIONS OF MONEY
YAPPING
ABOUT MONEY
CLASSES
OF MONEY IMPORTANT
FULL BODIED MONEY
REPRESENTATIVE FULL BODIED MONEY
FIRST US PAPER MONEY 1690
NOT WORTH A CONTINENTAL
40 CONTINENTALS = 1 SPANISH DOLLAR
TOBACCO WITH BITE
NAILS, PUTTING MONEY IN THE HOUSE
FIAT MONEY VS TAXATION
CURRENT U.S. MONEY SUPPLY/
M1 V M2 V M3/DEFINITIONS
MONEY SUPPLY DATA
NOTE TO SELF: UPDATE NUMBERS
TUESDAY
http://www.federalreserve.gov/../releases/h6/Current/h6.htm
CASH IN
CIRCULATION 0.72 T
M1/M2/M3 RAW DATA: 1.3T
V 6.6T V 10.0 T (20OCT2005 DATA)
CURRENT
GROWTH RATES (FROM 3 MONTH DATA)
(3.1) 4.4 9.4
CURRENT
GROWTH RATES (FROM 12 MONTH DATA)
0.3 3.9 6.6
MONETARY BASE O.78 T
http://www.federalreserve.gov/releases/h3/Current/
CURRENT GROWTH RATE 3.0 (FROM 3 MONTH DATA)
CURRENT GROWTH RATE 3.4 (FROM 12 MONTH DATA)
MONEY CREATION
RESERVE REQUIREMENT
RESERVE ASSETS
http://www.federalreserve.gov/releases/h3/Current/
45.7 B TOTAL RESERVES
45.4
B NON-BORROWED RESERVES
0.7 B BORROWED RESERVES
2.0 B EXCESS
RESERVES
MONETARY BASE:
RAW MATERIAL, NOT MONEY
NOT A MEASURE OF THE MONEY SUPPLY
CURRENTLY 778 BILLION
90+ PCT OF MONETARY BASE IN CURRENCY AS OF OCT04
BUT ONLY 30 PCT IN U.S.
LOAN CREATION CAPACITY
MONEY CREATION CAPACITY
NO FED CONTROL
MONEY CREATION LIMITED TO EXCESS RESERVES ************************************ MONEY CREATION CAPACITY ** ** = EXCESS RESERVES ** ** = LOAN CREATION CAPACITY ** ************************************
EFFECT OF DEPOSIT CD VS SAVING VS DD ON M1, M2, M3 ON BASE MONEY MULTIPLIERNOTE TO SELF: INSERT NEW DATA
M1 = 1.3 T BASE = 0.78 T MONEY MULTIPLIER (SEP 2005) 1.667 THE DAY THE BANK OF NY LOST $23.6 B (1985)
HOW TO BREAK A BANK WITHOUT
GOING TO JAIL
PRIME RATE
MARGIN
PERFORMING LOAN
NON‑PERFORMING LOAN
NO PRINCIPAL OR INTEREST
LESS THAN 2.0% OF U.S. LOANS ARE
NON‑PERFORMING(1999)
DEFAULT
UNDER U.S. LAW, A LOAN IS IN DEFAULT
WHEN PAYMENTS ARE 3 MONTHS BEHIND
BANK FAILURES
OVER 95 PERCENT DUE TO BAD LOANS
LESS THAN 5% FOR ILLEGAL OR UNETHICAL ACTIVITY
SUPERVISORY GOODWILL FROM A TAKEOVER
NO LONGER AUTHORIZED AS A CAPITAL ASSET NEXT: THE FEDERAL RESERVE SYSTEM TOOLS OF MONETARY POLICY OPEN MARKET OPERATIONS DISCOUNT RATE RESERVE REQUIREMENT MORAL AUTHORITY OBJECTIVES OF MONETARY POLICY NATURAL RATE OF OUTPUT NATURAL RATE OF UNEMPLOYMENT NO INFLATION NO DEFLATION EXCHANGE RATE MANAGEMENT