In The Fed We Trust—Part 1
The comments below are an edited and abridged synopsis of an article by Michael Lebowitz
How often do you think about what the dollar bills in your wallet or the pixel dollar signs in your bank account really are? The correct definitions of currency and money are crucial to our understanding of an economy, investing and the social fabric of a nation. It’s time, says Lebowitz, that we tackle the differences between currency and money and within that conversation break the news that deficits do matter.
Up for discussion: Maslow and currency; deficits don’t matter… or do they; inflation; interest rate management; the Fed balance sheet; and a prelude to Part 2.
“As deficits grow and government debt becomes more onerous, the amount of Fed intervention must become greater. To combat this growing problem, both political parties are downplaying deficits and pushing the Fed to do more. In part 2 we will explore emerging fiscal mindsets and what they might portend. We will then define money, and with this definition, show why the difference between currency and money is so important.”