Originally stated by Cato
contribute how much?? you mean accounting conditions??
Nuro: No, by conditions i mean expansion of the money supply. When money is pumped into the system some of it goes into stocks creating a boom of unsustainable economic activity. The rest of the money goes directly into assets creating asset bubbles usually in the real estate sector.
CATO: where it goes depends on the exact situation. The Fed has recently pumped in trillions but it only sits in banks which explains why there is no inflation!!
NUro: The role of accounting has been merely to sustain the bubble through the period where it would have otherwise burst.
CATO: no idea what you are talking about , and it did not occur to you to explain??
Nuro: The bubble can only grow as long as people don't realize that there is a bubble. Shadowy accounting and creative financing simply conceals the true size of the bubble and allows it to grow bigger, which results in a more devastating collapse in the long run.
CATO: so you agree with me that accurate accounting would expose financial weakness and this case would have prevented the entire crisis?
Nuro: Of course with ABSOLUTE transparency there would be no crisis.
CATO: exactly what accounting is supposed to accomplish!!
Nuro: But this would have to be the kind of transparency where you can literally read inside of the mind of Bernanke.
CATO: no idea what you mean andof course it do dnot occur to you to exaplin yourself????????
Since that ain't happening the next best thing is to have a sound currency. This doesn't mean direct gold backed currency but something more sound than toilet paper never the less.