]> http://www.loani.org/taxonomy/term/582/0 Auto generated by aggregator2 autotaxonomy en http://www.loani.org/is_the_money_supply_contracting_or_expanding <p>FinanceFilter: Is the money supply contracting, or expanding, after netting all the Fed action, bank closures, mortgage defaults, etc? The dollar falling seems to signal a net increase of money supply, but this is inconsistent with the thesis of a credit or liquidity crunch. If the money supply is growing at a slower rate due to tighter lending practices, shouldn't the dollar be rising, even in the face of Fed-rate cutting? Do we know the net expansion or contraction of the money supply due to the combination of rate cuts and mortgage defaults? I understand that Fed rate cuts have the effect of increasing the money supply. I understand that lower rates lower the value of the dollar, because it puts more dollars into existence tomorrow than existed today, i.e. given a constant demand, the increase of supply lowers the price.</p> Finance bank cdo debt dollar fed federalreserve finance m1 m2 m3 money moneysupply mortgage Mon, 17 Mar 2008 19:39:25 +0000