Wall Street Minds, Wealth Redistribution And The Fed
This tale begins in the month of July, in a small town. The weather is pleasant but with averaging one visitor a month the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.
Suddenly, a rich tourist comes to town. He enters the only hotel, lays a $100 bill on the reception counter, and asks for a meal and later goes to inspect the rooms upstairs in order to pick one. The hotel proprietor takes the hundred dollar bill and runs to pay his debt to the butcher.
The Butcher takes the 100 dollar bill, and runs to pay his debt to the rancher. The rancher takes the hundred dollar bill and runs to pay his debt to the feed supplier. The feed supplier runs off to pay his debt to the gas station for his fuel costs.
The fuel merchant owns a debt to the town prostitute who, because times were hard, offered her services on credit. With the $100 in hand, she runs over to the hotel and give the owner the $100 bill to pay down her bill for rooms she had to rent for past clients.
Now that the $100 has returned to the hotel owner he lays the $100 bill back down on the counter. The stranger now filled with a delicious meal pays for it with pocket change and decides not to rent a room and takes the $100 back and leaves town.
As the story unfolds, so far, no one earned anything. However, the whole town is now with less debt, and looks to the future with a little more optimism. That is similar to how the United States Government is doing business today shifting liabilities from one balance sheet to another.
When the wealth tourist happens to tell the newspaper service about the great little undiscovered town he happened upon and his great meal, the news story brings new tourist to the town. The hotel proprietor besieged with new rental prospects want to raise room rates. The butcher seeing business about to take off wants to raise his rates. On down the line the feeling to raise prices ensues. The rancher the feed supplier want an increase, the fuel merchant and even the prostitute who needs to charge more because of the increase in room charges.
The moral of the story is that as long as everyone is proactive paying off debts, money circulates. Bailouts haven't done anything other than pay off some liabilities transferring them from one balance sheet to another. However, when real positive news emerges and "green shoots" optimism takes hold, floods of new purchases will surge and off we go to the races. Will the dollar oversupply be too much? In order to be ahead of the crowd, get your Wall Street Journal subscription today. - 23223
Suddenly, a rich tourist comes to town. He enters the only hotel, lays a $100 bill on the reception counter, and asks for a meal and later goes to inspect the rooms upstairs in order to pick one. The hotel proprietor takes the hundred dollar bill and runs to pay his debt to the butcher.
The Butcher takes the 100 dollar bill, and runs to pay his debt to the rancher. The rancher takes the hundred dollar bill and runs to pay his debt to the feed supplier. The feed supplier runs off to pay his debt to the gas station for his fuel costs.
The fuel merchant owns a debt to the town prostitute who, because times were hard, offered her services on credit. With the $100 in hand, she runs over to the hotel and give the owner the $100 bill to pay down her bill for rooms she had to rent for past clients.
Now that the $100 has returned to the hotel owner he lays the $100 bill back down on the counter. The stranger now filled with a delicious meal pays for it with pocket change and decides not to rent a room and takes the $100 back and leaves town.
As the story unfolds, so far, no one earned anything. However, the whole town is now with less debt, and looks to the future with a little more optimism. That is similar to how the United States Government is doing business today shifting liabilities from one balance sheet to another.
When the wealth tourist happens to tell the newspaper service about the great little undiscovered town he happened upon and his great meal, the news story brings new tourist to the town. The hotel proprietor besieged with new rental prospects want to raise room rates. The butcher seeing business about to take off wants to raise his rates. On down the line the feeling to raise prices ensues. The rancher the feed supplier want an increase, the fuel merchant and even the prostitute who needs to charge more because of the increase in room charges.
The moral of the story is that as long as everyone is proactive paying off debts, money circulates. Bailouts haven't done anything other than pay off some liabilities transferring them from one balance sheet to another. However, when real positive news emerges and "green shoots" optimism takes hold, floods of new purchases will surge and off we go to the races. Will the dollar oversupply be too much? In order to be ahead of the crowd, get your Wall Street Journal subscription today. - 23223
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posted by X - Men @ 2:49 AM
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