patrick.net

€ went below 1.20. Sorry… where’s the good news again?

The good news is that American companies can now hire away more of Europe's smartest and most talented people and pay them in dollars, and, if the dollar stays strong and the nation doesn't collapse, turn them into Americans. Such highly-skilled people -- who are net payers of taxes, mind you -- are just what America needs. And, Arizona flap aside, the US is still one of the world's most accepting nations of skilled, non-welfare-scrounging immigrants.

Go, US dollar, go!

gameisrigged says

Then if they lose that, they know the government will not hesitate to bail them out again. All the while, they’re refusing to loan money - credit is harder to get than it ever was.

Plan B or C or whatever would be Uncle Ben directly lending to businesses, like the Treasury is now cutting the middlemen out of the lucrative student loan biz.

This is another page from the Japan playbook. My salary in Tokyo from 1996-99 was entirely paid for by gov't stimulus investment of high tech stuff, gov't money managed by the National Science thingy and/or major, plugged-in entities like Honda and Hitachi.

Liquidity traps are a bitch. There are no known exits. Once you blow up an economy, it stays that way until something larger happens, like 1917 or 1939.

"The significant problems we have cannot be solved at the same level of thinking with which we created them." -- attributed to Albert Einstein

Troy says

Plan B or C or whatever would be Uncle Ben directly lending to businesses, like the Treasury is now cutting the middlemen out of the lucrative student loan biz.

I don't see any evidence of that happening.

Liquidity traps are a bitch. There are no known exits. Once you blow up an economy, it stays that way until something larger happens, like 1917 or 1939.
“The significant problems we have cannot be solved at the same level of thinking with which we created them.” — attributed to Albert Einstein

I don't speak your Keynesian code language, but googling "liquidity trap" gives me the impression that it refers to a situation where consumers want to keep their money in savings, not that anyone seems to agree on the definition. What we have is a situation where people WANT to borrow money, but banks are refusing to LEND it to them. That doesn't seem to fit the definition of "liquidity trap". I found this blog entry, which seems to make a lot of sense to me:

Charles Rowley says

So the monetary problem confronting the Fed is not demand-based. It is not a liquidity trap problem at all. It is a money supply problem. It is an inability to move high-powered money through the money multiplier into the supply side of the equation. The major error, both of the Bush and the Obama administrations, was a failure to allow market process to work, to allow the big banks to go under, to use FDIC insurance to move depositors into new good banks, unencumbered by toxic assets, yearning to make money by issuing good loans to would-be entrepreneurs. The problem lies with government, with the Fed and with the FDIC who conspire to prop up failure and to impede success. Is that not always the socialist way, Mr. Krugman? Is that not exactly why the collapse of the Evil Empire exposed the failure of socialism, and the success of laissez-faire capitalism?

http://charlesrowley.wordpress.com/2010/02/15/paul-krugman-on-the-liquidity-trap/

Michinaga says

€ went below 1.20. Sorry… where’s the good news again?
The good news is that American companies can now hire away more of Europe’s smartest and most talented people and pay them in dollars, and, if the dollar stays strong and the nation doesn’t collapse, turn them into Americans. Such highly-skilled people — who are net payers of taxes, mind you — are just what America needs. And, Arizona flap aside, the US is still one of the world’s most accepting nations of skilled, non-welfare-scrounging immigrants.
Go, US dollar, go!

You will find that talented European and Asian people are hired by US companies in their own local nations as stand alone entities (subsidiaries), paid in local currency, doing business in local regions, and taxes are paid by US corporations to foreign governments for the benefit of foreign workers. I have yet to see any decision by managment be based solely on FX currency fluctuations. It is impossible to forecast future FX rates. You can gamble/hedge on FX Rates, but you cannot make business decisions in the long run.

Tenouncetrout says

Just last week Saudi swapped their Euro positions back to the Dollar.

Actually it was the Irans that sold their Euros for USD. Oddly they stated two years ago, the Euro were going to be used as principle currency for oil markets. How wrong they were.

------------------------------------------------------------------------------------------------------------
Iran Selling 45 Billion Euros of Reserves for Dollars
BLOOMBERG (Posted by: Free Iran)

Iran’s central bank began the first phase of the 45 billion-euro ($55 billion) sale of some of its reserves for dollars, the state-run Jaam-e-Jam newspaper reported, citing people it didn’t identify.

The bank is selling 15 billion euros in the first of three stages, which will be completed by Sept. 22, the newspaper reported on its website on May 31.

Iran will “substantially” decrease its oil sales in euros, the paper said. It informed Japan and other crude-oil customers of the change, Jaam-e-Jam said. The Persian Gulf country’s euro reserves are 55 percent of the total, and would be reduced to 20 to 25 percent after the sale is complete and after oil sales in euros have been reduced, the paper said.

Iran’s shift out of euros has been prompted by the single currency’s decline, said Jaam-e-Jam, which is owned by the state broadcaster. Other central banks, including those of the Persian Gulf states, also are selling their euro reserves, it said.

Experts in Iran’s central bank have suggested the country buy gold because they forecast the precious metal’s price will increase, the newspaper said.

permanent_marker says

DOW below 10,000 - a very important psychological mark.
Wondering if this is a sputter, or DOW is finally coming down to earth towards the rest of the economy

Dow 9830 is the major support level, not 10K, beyond that, support looks to be around 8800. However, the Euro broke through support... so if there is week to monitor the market on an hourly basis, it will be next week.

gameisrigged says

What we have is a situation where people WANT to borrow money, but banks are refusing to LEND it to them

Sure we all want money. The liquidity trap is nobody can service this extra debt they want to take on (because they have no money) so they don't get the money.

I am not a Keynesian in the abstract, he was wrong about paying people to dig holes, and the more I think about it the more I think California's highspeed rail is going to prove a very big waste of money and engineering effort.

The core problem the economy faces is there's not enough capitalists here. Plenty of rentiers, tho. We need to liquidate the latter (via taxes) to support the true capitalists. We also need to declare economic war on OPEC, Japan, and China, LOL. Plus the Eurozone with their weakening Euro.

This is a fantastically productive country, we've just let the distribution of wealth get all f----ed up.

thomas.wong1986 says

You will find that talented European and Asian people are hired by US companies in their own local nations as stand alone entities (subsidiaries), paid in local currency, doing business in local regions, and taxes are paid by US corporations to foreign governments for the benefit of foreign workers. I have yet to see any decision by managment be based solely on FX currency fluctuations. It is impossible to forecast future FX rates. You can gamble/hedge on FX Rates, but you cannot make business decisions in the long run.

I wasn't thinking of it from the companies' side so much as the job-hunters' side. An American who might have taken a job in Europe when it was $1.60:€1.00 might want to move himself and his skills back to the US. A European who would have never thought about working in the US and being paid in cheap dollars might be rethinking that now.

People have always gone where the money is, and migrated *away* from where the money isn't. I'd much rather see the best and brightest moving into the US than out of it.

Michinaga says

People have always gone where the money is, and migrated *away* from where the money isn’t. I’d much rather see the best and brightest moving into the US than out of it.

A laudable goal but not really achievable under US immigration policy. Although America accepts more immigrants than the entire rest of the world put together immigration policies are not oriented toward attracting the best and brightest at all. That combined that with the pretty much fraudulent H1B program makes attracting these kinds of people pretty hit or miss.

Troy says

Sure we all want money. The liquidity trap is nobody can service this extra debt they want to take on (because they have no money) so they don’t get the money

I don't know that I agree. The banks seem to be getting all the money they want, courtesy of Uncle Sam (or should I say Uncle Ben). The problem is not that they don't have money to lend; it is that they want to hoard it. I think Mr. Rowley's point was that we have created zombie banks that have no interest in lending and only want to shore up their balance sheet at taxpayer expense.

gameisrigged says

The problem is not that they don’t have money to lend

in a deflationary spiral return OF capital is more important than return ON capital.

They get a free 1% from the Fed. If this nation is going into 10 years of pain, why lend into an economic collapse?

What cost $1 in 1930 cost 85c in 1940. Bankers NOT lending in the 1930s made 15% for zero risk.

Troy says

They get a free 1% from the Fed. If this nation is going into 10 years of pain, why lend into an economic collapse?

Ding! ding! ding! Correct! The banks don't want to lend because Uncle Sam is giving them free money. Is that not what I said? I feel like you're just re-posting everything I say after running it though the Keynesian decoder ring.

No, banks don't want to lend because they get a better risk-adjusted return letting the money sit.

THIS IS THE LIQUIDITY TRAP.

The free money part has nothing to do with it. Capacity utilization:

http://research.stlouisfed.org/fred2/series/TCU

is still about what it was at the depths of the early 80s recession. The winners of the present economy: Microsoft, Apple, Google, Intel don't need to borrow money.

People who DO need to borrow money -- the losers -- don't have any productive enterprise to put it in (worth the risk).

Troy says

No, banks don’t want to lend because they get a better risk-adjusted return letting the money sit.

Where did they GET that money that they are "letting sit"?

The free money part has nothing to do with it.

No, it has EVERYTHING to do with it.

Capacity utilization:

More jargon.

gameisrigged says

Troy says

No, banks don’t want to lend because they get a better risk-adjusted return letting the money sit.

Where did they GET that money that they are “letting sit”?

The free money part has nothing to do with it.

No, it has EVERYTHING to do with it.

Capacity utilization:

More jargon.

1) The easy answer is they sold $1T in dubious AAA MBS to the Fed. Whether that's entirely true is unknown (coulda come from anywhere) but last year $1T of MBS went to the Fed and $1T of excess reserves appeared in the system.

2) The fact that the banks are getting free money is interesting, but it is just symptomatic of larger issues in the system . . .

http://www.bloomberg.com/markets/rates/index.html

People are willing to give money to the US Treasury at a 3.5% yield.

http://research.stlouisfed.org/fred2/series/GS10

You have to go back to when the pre-LBJ US was astride the world to find such a low level of inflation expectations.

3) One person's jargon is another person's explanation. The low capacity utilization right now is indicative that domestic producers do not need to borrow money to expand their produced means of production (factories, tooling, fixed capital, etc). In less jargony terms, everyone is standing around with their thumbs up their butt waiting for work to do and the last thing anybody needs to do is expand their production capacity (a common use of commercial credit)

Well, we ended -115.48 for the DOW today. Asian markets before trading in New York took major hits. The dip seems to be spreading around the globe as European markets fell too.

See, you can't have a true recovery without stable and well-paying jobs. More and more people, if they are hired, are being hired as contractors so that corporations can get around the mandate to provide health insurance. Also they can avoid paying for any other benefits for these "independent contractors" who are really integral to their company's success. The Owner Class really has found a new way to stick it to the Middle and Lower Classes who must work to make a living. Now they can avoid all responsibility for workers if they hire them as independent contractors. That's very clever.

When will people wake up in this country to realize that we are still being raped by our own Aristocracy?

SF ace says

permanent_marker says

DOW below 10,000 - a very important psychological mark.

Wondering if this is a sputter, or DOW is finally coming down to earth towards the rest of the economy

Dow 9830 is the major support level, not 10K, beyond that, support looks to be around 8800. However, the Euro broke through support… so if there is week to monitor the market on an hourly basis, it will be next week.

SF ace, can you tell us why 9830 is the major support level?

Today the dow went down to 9816 pts, and what do you think is the possible outcome by this breaking of major support level?

Just asking for your opinion. Thanks.

simchaland says

See, you can’t have a true recovery without stable and well-paying jobs. More and more people, if they are hired, are being hired as contractors so that corporations can get around the mandate to provide health insurance. Also they can avoid paying for any other benefits for these “independent contractors” who are really integral to their company’s success. The Owner Class really has found a new way to stick it to the Middle and Lower Classes who must work to make a living. Now they can avoid all responsibility for workers if they hire them as independent contractors

Contractors can cost 2 x regular employee costs. Many who are contractors DO NOT want a perm position, an often carry their own health insurance or covered by spouse employers plan. Have you ever worked in the real world?

seaside says

SF ace says
permanent_marker says
DOW below 10,000 - a very important psychological mark.
Wondering if this is a sputter, or DOW is finally coming down to earth towards the rest of the economy
Dow 9830 is the major support level, not 10K, beyond that, support looks to be around 8800. However, the Euro broke through support… so if there is week to monitor the market on an hourly basis, it will be next week.
SF ace, can you tell us why 9830 is the major support level?

I would skip the DOW and use the S&P. We are close to the support levels today at 1050 or so, based on Feb 2010 lows. We will see if what happens in Hungary stays in Hungary.

seaside says

SF ace says

permanent_marker says

DOW below 10,000 - a very important psychological mark.
Wondering if this is a sputter, or DOW is finally coming down to earth towards the rest of the economy

Dow 9830 is the major support level, not 10K, beyond that, support looks to be around 8800. However, the Euro broke through support… so if there is week to monitor the market on an hourly basis, it will be next week.

SF ace, can you tell us why 9830 is the major support level?
Today the dow went down to 9816 pts, and what do you think is the possible outcome by this breaking of major support level?
Just asking for your opinion. Thanks.

9,830 is universally thought of as support as the DOW has bounced up from this mark several times. I only used DOW as an example that DOW 10K is not the key, but Thomas is correct as S&P 1050 is the support level as well. We are sitting right on support level.

There is only two outcomes, violent up or down movement from here. Either we bounce off support or it would break though it until we reach the lower support level, or some breakthough news come along the way to change the game. The upward trend was broken about a month ago and I started to switch to bonds agressively.

Judging by how weak the last bounce was (shrinking flag) and all the Euro trouble, I suspect we may break support and the DOW/S&P may be headed down, perhaps reach 8800 or so. On the other hand, some news about Euro support may come out of nowhere and then all the fears are calmed and 400 up day is not out-of the question. It is just a game. Buy bonds to protect your money, the uptrend is broken and there is little value to being long at the moment.

thomas.wong1986 says

Contractors can cost 2 x regular employee costs. Many who are contractors DO NOT want a perm position, an often carry their own health insurance or covered by spouse employers plan. Have you ever worked in the real world?

Yes, I have and I was a contractor when I was a corporate whore. I had to carry my own very expensive health insurance which ate up any extra money I was making beyond my fellow workers who were on the payroll for the corporation. We cost less. That's why they hire us. And no, most of us didn't want to remain contractors. Only the Aristocracy/Owner class wants labor to remain on contract so they don't have to pay any benefits or unemployment insurance.

Owner's view, contractor plus: no state or fed compliance bullcrap for the owner to worry about. no unemployment issues. no discrimination issues. no budget issues. no equipment maintenance issues. just a need and a bid for cost for service.

Owner's view, contractor negative: no control.

Worker's view, contractor plus: control.

Workers's view, contractor negative: no state or fed compliance support system. no unemployment. all benies self paid. no overtime or COLA. all equipment maintained by self. only have work when there is a need for your service and you must bid lowest to get the job.

I got away from the contractor world when i started a family, just for the steady work in a steady location. Took a pay cut, stopped having to travel as much, but did have to ask permission to take a dump. It's a trade off.

It's scary that gov. is creating most of the new jobs coming out onto the market right now. We don't need bigger gov. who abuse tax dollars. Gov. does not run things effeciently! Instead, we need to shrink gov., entitlement programs such as Social Security, Medicare, Medical, etc. so that we have a lighter overhead to move on.

Yan,

The FDR stimulus plans of the 1930's were not successful because they were not big enough.

What jolted the USA out of the depression was WWII.

WWII was the Mother of All Stimulus plans, it was FDR's follow-on deficit-funded government spending on government projects and government employees stimulus, all of it was government spending, much of it was borrowed, all the new jobs that were created were for government programs like taking North Africa, D-Day, Allied Bombing in Europe, island hopping in the Pacific and the Manhattan project.

What is scary now is that the government is like in the 1930's, not doing enough.

Bap33,

I am sorry that you have to ask permission from your boss to go potty. It is reasonable to expect us to do that off the clock, because (except for some unionized "civil" servants -(are they civil? -do they serve?), we are not paid to do that.

Nonetheless, if we can time our bowel movements to occur when we are there, - off the clock like on our breaks or before/after our shifts- then we can save on toilet tissue and water at home. Here in the Bay Area there's always talk about water rationing and a major portion of the water household water consumption goes down it. Many industrial sites have nonpotable water plumbed to the toilets, so we're not wasting there, whereas such kind of hookups are rare in SFH.

sybrib says

What jolted the USA out of the depression was WWII.

Not so much the War itself, but the aftermath, yes... we were the only economy still standing while the rest of Europe and Asia was still in ruble. It was the US factories that was rebuilding the world which expanded the economy.

We gotta get back into being a top producer/exporter of goods somehow.

thomas.wong1986 says

Not so much the War itself, but the aftermatch, yes… we were the only economy still standing while the rest of Europe and Asia was still in ruble. It was the US factories that was rebuilding the world which expanded the economy.

I was going to say that, too. Plus a lot of nifty, productivity-enhancing technology was developed during the war -- radio electronics, aeronautics, computers, supply chain management, etc. Each of these fields had decades of improvement in store to unfold for us.

Also, the destruction of the captive Sterling and Franc currency blocs tilted the global playing field our way, and anticommunism gave the Powers That Be political cover to support any compliant despot or junta to the bitter end, well, until Marcos in 1986 I guess. This resulted in e-z resource access to eg. Chile, Central America (eg. United Fruit).

Oil was essentially free, too. Declining from $20 (in today's dollars) from the 50s through the first oil shock. That was a nice tailwind.

The American laborer was isolated from China, India, and other developing-world competition by the Iron Curtain, Maoist idiocy, political unrest, and (best of all) dodgy global communications. Global satellite comms and undersea cable expansion laid the groundwork for integration that began to fully blossom with the desktop PC and internet.

We gotta get back into being a top producer/exporter of goods somehow.

Nagunnahappen while US wages are an order of magnitude greater than even Foxconn's newly-upped $300/mo wage in Shenzhen. With a 50% devaluation of the dollar vs. the yuan that needs to happen this will rise to $600/mo, $3.50/hr, but of course here in the US, ~$3/hr is the basic overhead (FICA, UE, Medicare, HR, ADP) for hiring someone, before you even get to their actual wages.

China has a population that exceeds ours by over ONE BILLION people. A capitalist's dream, one billion people on the margin of starvation.

Just think if the Chinese spoke good English (ack!). [I called WellPoint yesterday and my call was taken in the Philippines by someone making $2/hr]

Deflation is baked into this cake. The more I think about it, the 90s period of prosperity was a temporary hit of goodness from the initial ramp-up of the present global trading regime, where we've been able to take the increased "productivity" of offshoring all our productive work.

The bad part of a 2X yuan appreciation against the dollar is that would double China's global buying power, going forward.

I wish someone would tell me why were not entirely f---ed. There's so much we have to turn around, and 42% of this nation are certifiable Fox-befuddled idiots who don't have any grasp of either the present reality or the history of how & why we got here.

It's all downhill from here I'm afraid.

Yep, this is true, we are facing deflation. I for one dont see inflation in the long run.

Like I said, "we gotta". And yes, there are lots of Chinese who speak English well enough.

Troy says

I was going to say that, too. Plus a lot of nifty, productivity-enhancing technology was developed during the war — radio electronics, aeronautics, computers, supply chain management, etc. Each of these fields had decades of improvement in store to unfold for us.

Subs in WW2 running above surface on diesel at nite, recharging the battery for daylight underwater... we call it Hybrid cars today! And the rest also shaped the second half of the centrury as well.

Guys,

The government's stimulus spending on the war effort is what jolted the USA out of the depression.

The stuff you mentioned, no competition from destroyed economies, no cheap labor in China to compete with, fall of sterling, etc. might've been reasons for the growth AFTER the stimulus, but they were not the jolt that ended the depression.

Like you pointed out lots of new technology development came from the government spending during the war (though the batteries-in-the-sub concept was already online in a fleet of subs before Pearl Harbor). It could happen again, big stimulus to ignite the technology development and economy. But instead of more directly investing in the economy the liberals would rather use the stimulus spending on direct payments to individuals, like medicare for all those Tea Partyers, civil servant pay and benefits.

Take a look.

http://finance.yahoo.com/banking-budgeting/article/109739/the-bad-news-bad-news-on-jobs?mod=bb-budgeting&sec=topStories&pos=5&asset=&ccode=

lower prices could mean deflation and double-dip recession

http://finance.yahoo.com/news/Lower-prices-could-mean-cnnm-4270795979.html?x=0&sec=topStories&pos=5&asset=&ccode=

Some Guy says

So you’re drawing a distinction between the Fed and the government? How quaint.

Not in the slightest. They are one and the same. It's important to understand that the $1T of excess reserves the banks are sitting on isn't "free money", nor is it the banks' money per se, it (to a great extent) is their depositors' money.

Taking Bank of America as an example, on the asset side BAC is sitting on over $800B in cash right now (!) and has already $1.6T loaned out. (Remember this $1.6T cuz I will come back to it)

On the liability side, it has $1.5T in various short-term and long-term debts (interest-bearing savings accounts of its customers). The TARP debt to the Treasury was paid off last year.

OK, back to that $1.6T "asset" it holds in loans. BAC's equity cushion is $200B (the difference between assets and liabilities), so just a 12.5% write-down on its existing loans will wipe BAC's equity out.

Now, I have no idea how accurately BAC's assets have been marked to market, nor do I particular know whether the market has another 12.5% step down in store for us.

My only point is that after the $5T debt bubble of 2002-2008, everyone is running scared, and rightly so.

Total home mortgages ended 2001 at $5.4T and had bubbled up to $10.5T in Q108. Yet prices are back to 2001 levels in many areas.

5% 30 year FHA financing and extend & pretend loan mods are the only things keeping the system together now.

Wong,

I have always thought that the grocery add is a realtime barometer of inflation/deflation. Particularly theproduce, which unlike meats are not stored in the freezer to wait for better pricing, and unlike dairy does not have government price controls.

Save Mart is advertising seedless red California grapes for 77 cents per pound. I remember in the 1990's; the typical price was $0.99 to $1.29 per pound; a "sale price" was $0.69 per pound.

Yep, deflation.

thomas.wong1986 says

sybrib says

What jolted the USA out of the depression was WWII.

Not so much the War itself, but the aftermath, yes… we were the only economy still standing while the rest of Europe and Asia was still in ruble. It was the US factories that was rebuilding the world which expanded the economy.
We gotta get back into being a top producer/exporter of goods somehow.

Not too mention the dismantling of the New Deal. After Truman got rid of FDR's new deal policies, we saw huge economic growth in the 1950's.

Truman tried to nationalize the US steel industry during the Korean War.

Goddamn, I swear 40% of this country are f---ed in the head.

Your refusal to acknowledge the government’s role, with TAXPAYER MONEY, in putting the “too big to fail” banks in the position of having excess reserves

I deny no such thing. The main change that caused these reserves is the legislation in Oct 2008 allowing the Fed to start paying interest on excess reserves.

How much TAXPAYER MONEY is involved is the confusion here, as it is unclear to me whether the Fed is printing this money or is actually debiting TAXPAYER MONEY it holds for the treasury.

The Fed is a creature of Congress and thus is part of government, but it has the ability to spend money that is not TAXPAYER MONEY. This is the part I'm trying to explain, when it doesn't spend TAXPAYER MONEY, that's inflationary, something of a good thing unless you want to see the $14T consumer debt:

http://research.stlouisfed.org/fred2/series/CMDEBT?cid=97

and $7T of commercial debt:

http://research.stlouisfed.org/fred2/series/LOANS?cid=49

do a Jenga impression.

The banks have "paid back" the bulk of the TARP money, and the Treasury is currently in the process of unwinding its Citibank position now:

http://www.foxbusiness.com/story/markets/industries/finance/treasury-sells--stake-citi--bln/

Truman did not end the New Deal, he tried to augment it with something he called the Fair Deal.

Ptipking must've learnt his US History from Sarah Palin or at some Tea Party event.

shrekgrinch says

One was labor union legislation. After the war, the laws were changed to provide more balance to between business and unions. Also, a lot of the ‘alphabet soup’ New Deal agencies/programs were dismantled.

Taft-Hartley was passed over Truman's veto. Truman's Fair Deal was an expansion on the New Deal. The rising prosperity of the country (and concomitant appearance of inflation) diluted Truman's ability to force Big Government interventionism on the people.

Congress did establish the Hoover Commission blue-ribbon panel to review existing gov't organization http://en.wikipedia.org/wiki/Hoover_Commission but there was a great degree of continuity between the FDR and Truman administrations. And AFAIK Eisenhower himself also accepted much of the surviving New Deal superstructure, though his administration was rather opposed to any expansion of it, other than the Federal highway spending initiative.

shrekgrinch says

The only real money is M0

That's the classical way of looking at it. Money multipliers and all that. It's not really true though when nobody want's it.

Treasury bills? Deposits with the Fed or Cash (m0)? They are almost same thing to the banking system at this point, and no particular preference for which to hold, and nobody is interested in borrowing excess reserves. They're just safe marks on it's balance sheet earning about 0% interest. That's what it means to be at the zero bound. Demand for "real money" has gone infinitely elastic. And now it applies not just to treasury debt, it applies to GSE debt too since it's backed by the government. The distinction between real base money and much of the universe of credit money has become blurry. The concept of base money kind of made since when gold/silver was "real money", but it doesn't much any more. Even Federal reserve notes are backed by debt, just like your account at your bank.

I agree though that m0, m1, m3, mzm, etc. just confuses things. It's all just counting of some subset of liabilities in the financial system.

Ptipking222 says

MarkinSF, if tax rate are that high, people simply stop paying the tax. They somehow avoid it legally or illegally. You can’t seriously expect someone to work or take risk when they only get 20% of any positive return on the money.

Yes I can. Based on the historical fact that people did work and take risk (economic growth was very robust), I seriously can expect someone to work or take risk when top tax rates are high. But I was not advocating or defending those high rates. I was just pointing out they are historical facts.

Ptipking222 says

i.e. taking more risk

assertion not in evidence