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Whizo the point is what the CPI or the PCE is really used for. Its most important use is to inform monetary policy as a very gross and imprefect measure of the monetary effect of inflation. For that purpose, as I said above the Fed uses the Core PCE. The idea that it is supposed to measure...

Cutting to the chase...in a fiat money system where money is not collaterized the idea of base moeny and credit merge. Notions of money supply become dominated by the amount of private credit outstanding and the amount of private credit outstanding modulates in a dynamic relationship with the...

MSWilliams, the issue in defining inflation is how the definition can distinguish with a general price change in all goods and services over time that is caused by monetary policy as distinct from changes in goods and services that is caused by changes in supply and demand. This is...

Most people don't notice but the current level of Fed earnings that are turned over to the Treasury ($85B in 2012) is equal to the Sequestration issue. It is greater than the revenue projected from the last tax increase. If you compare this Fed revenue to other sources of revenue you will see...

I don't look at U.K. economic statistics so I can't comment on your assertion about demand for debt in the U.K. What statistic do you look at to determin demand for debt? I look at the 'H' series reports for the U.S., the aggregate banking reports and the Fed Balance Sheet (published by...

I will look at your stuff later, but I want to be very clear and simple here now, Central Banks do not, can not, create demand for private credit. We have seen them reduce interest rates to Zero in the U.S. and still private credit continues to contract. We have seen our CB increase its...

I'll get to your issues in due course...I have been away from these pages because I have been busy. I will tell you that Central Banks do not, can not, create credit demand. If they could they would, they have been trying to do that for almost six years now but they only have governments as...

I don't know how anyone can confuse a credit crunch with a bank run. A bank run is when a bank's depositors or counter parties want to withdraw their funds or dealings with a bank. They do this because they fear the bank will not be able to borrow money to fund withdrawals becuase they fear...

Morganist, the article was well written but to my sensibilities it was misleading in that it allowed the reader to think that the Capital Reserve requirement is directly related to liquidity. It is a common mistake for those who comment on banking to confuse the deposit reserves with capital...

The linked blog article fails to make the proper distinction between reserves required for bank liquidity and Capital reserves that relate to fractional banking; how much a bank can loan. Reserves for liquidity (to have adequate present cash to meet withdrawal requests under normal...

The basic level of comprehension and attention of the general public as mirrored by the established media is at the 'comic book' level of reality....you need a 'crisis with a name' or no one will pay attention; it is on the level of war propaganda...we had 'Chemical Ali' as the villain last war...

The rest of the world is not devoid of imagination...it really operates at the level of the individual anyway. The rest of the world, except the U.S., has been able to see what works and make adjustments. Certainly, if the U.S. moved to become the most attractive place to invest capital in...

We could eliminate that Corporate Tax and raise the tax on dividends to the regular income rates...to attract capital to labor in the U.S. without losing any revenue...actually increasing revenue...and pass a flat regular income tax....then all the tax lawyers made obsolete could get to work on...

Scataphagos, sorry about the spelling, I write quick, spelling not my strong suit, no offense intended. Issue of mind reading...I don't pretend to read your mind; I wrote what I thought was 'implied' as a consequence of your luddite formulation. I got it from your words, from what you wrote...

Scraptaphagos, they are going to have to learn to do something else; they may need help and they should get it. As I have advised before in different threads here, there is no shortage of new ideas that would create new jobs, there is only a misapplication of capital and a repression of...

Clacy, what is more important for growth, the number of people or the number of innovators and entrepeneurs? What is the relationship between capital and the number of workers; and how does that effect growth? If U.S. fiscal and economic policy shifted to encouraging innovation and...

achilles28,...and yet manufacturing output in the U.S. expanded during that time...and the the U.S. is still the largest manufacturing economy in the world. I have a friend who runs a $100M manufacturing company with three regional factories...his total employment is 150 for all three. He...

Trefoil, I don't think you understand that when I am talking about the demand for credit being fiscally driven, I am implying a fiscal context that favors production. It is the Keynesian aggregate demand theory mistake that has created a fiscal context that treats consumption and production as...

Billyjoerob, the point is that dollars are created by the Fed as the demand debt of the U.S. government. Dollars are used in exchange for value because of law and the credibility of the Government. That credibility is measured by the governments long term debt. The dollar, non-interest...

Trefoil, demand for credit is created by perception that ROI is possible. You are right that credit formation is demand driven, but it is not the kind of aggregate demand that keynesians focus on...it is demand for credit to take risk...this essentially a supply creation system...taking risk...