What a Strong America Requires

[mystery-ak]

July 20, 2025
What a Strong America Requires
By Jay Davidson

There are a couple of behind-the-scenes issues with the Federal Reserve that impact every citizen in profound, and often disastrous, ways.  Following are observation from the front row of Fed Reserve action.  All commercial bankers implement fed monetary policy in the same way as how a gazelle observes a lion.

Yes, The Federal Reserve must be independent to make wise monetary policy decisions regardless of the current political climate.  The “wise” decision should have been directed to meeting the one objective stated at the creation of the Federal Reserve in the early 1900s.  That directive is to protect the value (purchasing power) of the U.S. dollar.  Our entire economy and our standing in the world hinges on that statement.  This is not hyperbole, but seven decades of observation of real-world events.

To preserve the value of the dollar, the Fed Reserve must control the number of dollars in circulation, also called the money supply.  In turn, money supply controls inflation by managing the devaluation of the dollar’s purchasing power over time.

This is a balancing act.  Too many dollars in circulation decreases the value of every other dollar — i.e., it is inflationary.  Memorize this until it becomes second nature.  Too few dollars in circulation leads to a stronger dollar but shuts down business activity due to a lack of liquidity.

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[DefiantMassRINO]

Monetary policy only regulates the supply and potential availability of dollars as a means to store and exchange wealth.

The velocity of money, as well as the supply of money, can play a role.  When the velocity of money is greater, greater amounts of wealth can be transferred with a smaller supply of dollars.

Monetary policy attempts to influence the number of dollars which are acitvley circulating for the purpose of economic acitivty and exchange, liquidity.

With a decreased velocity of money, it requires a greater supply of dollars to transact economic acivity because dollars are locked away from active circulation by inefficiencies, deficiancies, opportunity cost, or lack of confidence.  This is the current state of economic activity and monetary supply.  Greater monetary supply is required to support less economic activity because of a inefficiencies with the current velocity of money.  Dollars are being sequestered, outside of active circulation, in assets or accounts, rather than being used to transact of exchange of goods and services.

What is the length of time that a dollar remains sequestered in Government accounts between the time of collection and the time at which that dollar is exchange by the Government for a value-added good or a value-added service?  Probably too long.  Transfer of wealth from the Government does not contribute to economic activity until that dollar is exchanged by a business, person, or government for a value-added good or value-added service.

Paying rent is a transefer of wealth, but not the acquisition of a value-added service or value-added good.  Valued-added services and value-added goods are outputs with less cost of inputs.  The landlord replacing incadescent lightbulbs with LED lightbulbs is a value added exchange becuase it reduces the number of input watts required to produce output lumens for a longer bulb life.  If the dollar price of watts is constant; the landlord will consume the same number of watts but at lower dollar cost over the life of the LED bulb as campared with the amount that would have been consumed by an incadescent bulb.

The opporunity of cost of replacing and incadescent bulb with another incadescent bulb is the savings foregone by not replacing it with an LED bulb.

With population growth, money supply constraint requires gains of efficiencies while maintaing equal or greater velocity of money.

It is the increased supply of dollars, coupled with a surplus of dollars not actively required by velocity of money , that allows more dollars to chase an equal or smaller number of ounces of gold.

Too many American dollars have become slow, fat, and lazy being parked on the sidelines rather than required to transact the exchange of value-added goods and value-added services.

More dollars(+1)/More GDP(+1)= stability
More dollars(+1)/Same GDP(+0) = inflation
More dollars(+1)/Less GDP(-1) = hyperinflation

Same dollars(+0)/More GDP(+1) = deflation
Same dollars (+0)/Same GDP(+0) = stability
Same dollars(+0)/Less GDP(-1) = inflation

Fewer dollars(-1)/More GDP(+1) = hyperdeflation
Fewer dollars(-1)/Same GDP(+0) = deflation
Fewer dollars(-1)/Less GDP(-1) = stability

To maintain dollar/value stability, the ratio of (dollar supply growth%)/(GDP growth%) needs to remain constant.

Monetary policy is deals with the money supply side of the ratio.  Fiscal policy deals with the GDP side of the ratio.  America has had a surplus of monetary policy and a shortage of value-added fiscal policy.

The original sin of US monetary policy is not maintaing parity between the money supply growth and GDP growth.

America needs to grow GDP with increased efficiencies to put the money supply back into balance with GDP.

[Hoodat]

Yes, The Federal Reserve must be independent to make wise monetary policy decisions regardless of the current political climate.  The “wise” decision should have been directed to meeting the one objective stated at the creation of the Federal Reserve in the early 1900s.  That directive is to protect the value (purchasing power) of the U.S. dollar.  Our entire economy and our standing in the world hinges on that statement.

In 2009, the Federal Reserve fully abandoned this directive.  The expansion of the money supply was no longer tied to protecting the value of the US dollar, but instead was tied to how much money the federal government needed to fund itself.  This entire article is a load of crap.

You want to protect the value of the dollar?  THEN STOP PRINTING UP MONEY TO FUND US GOVERNMENT DEFICIT SPENDING !!!

It really is that friggin' simple.  If you are looking for the Fed to save the day, then get ready for disappointment.  The Fed hasn't been on the right side of the economy for over half a century.