krogias

We note with some amusement all of the talk about cash "on the sidelines" as if it's ready to pour into the stock market at the drop of a hat and take us to new highs. Nobody wants to admit that this is the cash that doesn't really exist. That fact was recognized by the market last year and earlier this year but has been obscured by a massive campaign of deception, propaganda and guarantees from Washington and Wall Street. Because the current mutant economic system depends on citizens digging themselves ever deeper into debt slavery, anything which causes them to save instead of borrow and spend is seen as the enemy and this includes the truth. Much of the "cash" is in banks and money market mutual funds, both of which invest in debt that has become extremely dubious. The truth is that none of the "assets" (loans) that are backing the "cash" have gotten better and most have gotten significantly worse over the last 3-4 months. Credit card ...

This sounds like an academic distinction but it is not. Especially at times like these, knowing the difference is key to understanding the behavior of financial systems. What is Money? Let's start with a textbook definition of money and proceed from there. Most definitions include two parts, some add a third. According to them, money is: a medium of exchange a store of value a standard of value or unit of account (widely but not universally accepted) If you look closely at the first two definitions, you will see that money exists in the minds of those who use it. This is partially true for the third definition as well. ( note: For all of you monetary theory geeks, please relax. These are deliberate simplifications designed to make the ideas accessible to a general audience, not a detailed exposition of precise financial models .) I can exchange my money for stuff. I can exchange my money for stuff later. I can exchange my money for a predictable amount of stuff later. Let...