Hi, Does anyone know what M3 is estimated to be right now? It doesn’t have to be exact. Does anyone keep track of it anymore?
and
What percent of our total money suppy are the banks collecting interest on? Is it 100%? Or is it everything but M0? If so what percent is M0? And if the government sells bonds to the Fed who buys it with a magic checkbook which then uses it as reserves in order to create Federal Reserve Notes, then can we conclude that we are paying interest on M0? What happens when the bonds used to generate new currency matures? Does that mean that those Federal Reserve Notes truely do not have interest on them anymore? But how did we get the money to pay back the bonds? I suppose that money could have been generated by a commercial bank in the form of a loan and then collected as taxes. Any help on understanding this would be appreciated. A phone call would also be appreciated at six one two - two four seven - twentyone hundred. (not sure if I should be publishing my phone number).
Maybe this answers your questions: http://en.wikipedia.org/wiki/Money_supply (it also provides statistical data and graphs)
Its about $1400 Billion, i.e. $14 trillion.
I found that here.
Try this link.
When the government sells bonds it does so with guarantees of future taxes or some form of collateral. They don’t just type up a piece of paper and get liquidity. They have to give collateral which consists of capital or capital producers.
Our government and taxpayers certainly pay interest on M0.
Not quite. They just continue to pledge more capital and capital producers to get more debt to pay off the old.
It is impossible for the govt to ever pay off it’s debt under the current monetary environment. To do so would drastically decrease the base money supply which would require unraveling the web of debt that formed from fraction reserve banking, and doing that would hurdle us into a very volatile economic situation. Also, it would never be able to achieve that objective. If it used that money it takes in from taxes to pay the debt, the system would dry up completely. Exchanges would stop occurring because the total base money supply would be sapped from the economy. There’s not enough to pay down that 10 trillion. That 10 trillion has expanded through the financial subsidiaries of the Federal Reserve and any amount paid would have to equally contract the money supply by roughly 15x to 33x of the amount of debt the govt paid to the Fed. So it would require taking roughly 150 to 330 trillion out of our total economy’s money supply. It’s impossible. And the Federal Reserve is not interested in having their fictional money paid back. They want the real property that’s the collateral for that fictional money. As collateral it is essentially theirs in allodum with the debtor having only feudal title and managing the property for them.
Forgive me if I’m wrong, but I don’t think shadowstats provides reliable data. Their CPI calculation, from what I understand, is simply the BLS’s CPI + 7%. I would doubt that they provide a reliable M3 figure.
M3 probably isn’t that important…or difficult to guesstimate. Look at the growth trends of M3 as a % of total money supply. Those trends have little reason to change, so just use current M2 figures to deduce it.
The banks are collecting interest on most likely the majority of money. I looked on FRED, the St Louis FED’s statistical database, available here. If you look at some of the larger figures, like total loans and leases, you’ll notice there are more loans than the entire money supply, according to True Money Supply. MZM is still higher, but loans appear to be well over the majority of this figure.
With 10% reserve requirements, the banks have usually kept in the 10-25% range on reserves (rarely on the high side). As the 75-90% loaned out returns to the banks in the form of deposits and is reloaned, we find most money is created by the fractional reserve banking system, receiving deposits of its own loans, and loaning a fraction of that…over and over. Given that most reserves are backed by government debt (or now vast other collateral) instead of gold, we could say that the vast majority of money is created by the government and FED. This means that somewhere at some point, there is indeed interest being collected on it. And even when not, there is inflation.
When the FED holds government securities, it earns interests on them. The government taxes to pay this interest to the FED when these debts mature. Yet, the government requires that most to all of this interest is given back to the government (I think the exact figure is that the government keeps all interest up to 6%, any interest above this is kept by the FED). Essentially, the government has a credit card with cash back bonuses.
But keep in mind that banks require their interest on loans to pay their employees and other costs, including the interest they pay to depositors. Interest is not profit. And because lots of the interest is paid back into the economy, there is no requirement that the money supply expand to pay the interest on the money supply. However, if the money supply were wildly expanding, then suddenly stopped, people would notice that they’re working quite hard for the banks. At the same time, you’d probably see a lot of banks go bankrupt, as in any credit contraction.
Also keep in mind that low interest rates via easy credit isn’t always a favored policy of the banks. At times, inflation prevents them from earning real profit on loans (the nominally larger return is actually worth less in real terms than the principle of the loan today) and credit freezes. Consider Japan in the 90’s.
Good stuff, thanks for taking the time. Do you have a site I could visit in order to read up on the things you discussed above?
To whom are you referring?