I am posing this question to you as a Canadian economist. Does the Canadian system differ from the American in this regard? I keep reading from COMER that some three percent of money is government money. The government of the United States does not spend even a penny into circulation that isn't covered by tax collections or bond sales.
Now I do know that some of the bonds are purchased by the Fed indirectly through the so-called "open market." The Fed is not legally permitted to purchase directly from the Treasury. I suppose that does "accommodate" a portion of the federal government deficit and represents about three percent of new money creation. During 1995 the Fed added about $20 billion to banking system reserves though net open market purchases. Assuming that represents three percent of money creation for the year, the banking system as a whole would have had to have added about $670 in demand deposits to the economy. The actual numbers can be verified from the official statistics. If this is more or less true, then shifting that $20 billion from Wall Street to consumers as dividends should represent only a ripple on the surface of the pond. But could have a big impact in terms of effective demand. ____________________________________________________________ Get advanced SPAM filtering on Webmail or POP Mail ... Get Lycos Mail! http://login.mail.lycos.com/r/referral?aid=27005 --^---------------------------------------------------------------- This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html --^----------------------------------------------------------------
