Name a non-government organization that effectively inflates the money supply

And is traded on the NASDAQ.

The Federal Reserve is ruled out by not being a stock company traded on the NASDAQ.

Hints :

1. It has a meaningful four letter trading symbol starting with a letter in the range of A-D.

2. Many people probably pass within a reasonably close proximity of its property at least once a week.

3. It is NOT a bank of any kind.

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C. Strong, ...It dosn’t

C. Strong,

...It dosn’t seem right to me. Just because the phyisical representation of money is not at that moment exchanging hands dosn’t mean that it is removed from the economy. I instead think that it can be considered a form of savings, yes, some people don’t value the change they get, but I would suspect that it is partly because of the high inflation that has beset the currency denominations we have. People don’t throw away $1 bills, but they do throw away pennies.

Money gets its exchange value not from transactions, but rather from the demand to hold it. Because money can be owned by only one person at a time, holding it impinges upon the scarcity of money. Money is not consumed in transactions, but only has its ownership transferred, and thus transactions do not impinge on the scarcity of money overall. The value of money is not simply its ability to make purchases of goods, but rather to be able to defer those purchases indefinitely.

It is only the individual whose personal supply of money is diminished by a purchase. The exchange value of money is determined by the combination of all individuals subjectively weighing every prospective purchase against the reduction in their personal perceived money supply.

If people do not account for the coins in their coin jars when assessing the subjective significance of a given purchase outlay, then those coins do not count as a part of a personal money supply, and have no effect on the economy. This can change at a whim.

If a particular specific quantity of money can be arbitrarily changed without affecting any individual's subjective willingness to part with money, then it cannot be considered as part of the 'effective supply of money', or of immediate economic significance. It would still be part of the technical supply of money.

Regards, Don

Don, I like your observation

Don, I like your observation about Coinstar and the money supply. Very nice.

My (wrong) guesses would have been American Airlines, Continental Airlines, and Delta Airlines. Their issuance of frequent flier miles could be considered an expansion of the money supply, to the degree that miles are used as a (very limited) form of currency. Although the airlines occasionally crack down on it, there are milage brokers that will exchange cash for miles and miles for cash; some miles are even freely transferable. The miles can be used to buy not just airplane rides but also hotel rooms, car rentals, and assorted merchandise.

That makes them almost as good as cash, so in my view that makes them part of the money supply, as they satisfy some small part of the total demand for cash and other liquid holdings. You could also think of them as credit where the airlines are acting as credit-issuing banks.

Alas, the stock ticker symbols don't meet your puzzle's criteria, and of course most people don't go near an airport every week.

I want to disagree with the

I want to disagree with the idea that if you put your change in the car console it is considered out of the money supply. By that defination, then the change in the till at the McDonalds is also out of the money supply until the point in which the guy or gal at the window or counter physically hands it to you, for it to then be removed again from the circulation of money when it is placed in your console.

It dosn't seem right to me. Just because the phyisical representation of money is not at that moment exchanging hands dosn't mean that it is removed from the economy. I instead think that it can be considered a form of savings, yes, some people don't value the change they get, but I would suspect that it is partly because of the high inflation that has beset the currency denominations we have. People don't throw away $1 bills, but they do throw away pennies.

I would suspect that there is a somewhat simular case in savings accounts. I think that some people don't claim them, or figure that the hassle of collecting saving accounts, most likley ones that they have inherited or forgotten for a long time, that have very low balances is not worth the balance of said account.

Further thought. What is

Further thought. What is being increased isn't the supply of money, but its utility.

Note that there are some who

Note that there are some who do not accumulate and then cash in loose change. I've worked with people who had so little appreciation for the value of a penny that they found it amusing to throw them at each other or destroy them with industrial equipment. I've also encountered, when cleaning up properties between occupants, non-trivial amounts of change tossed on the floor with all the other trash.

Also note that if I had taken these hoards of change to a Coinstar machine rather than my bank MY gross money supply would be reduced by their rakeoff even if my percieved net supply were increased.

Dave actually raises a good

Dave actually raises a good point. Even if you dismiss MV=PQ (which I do as well), there's still the question of whether someone's coin stash is or is not part of the money supply.

Everyone accumulates coins. Over time, one of two things has to happen: 1) they build up a big enough stash that they decide it's worth it to roll them and take them to the bank, or 2) their house fills to the brim with coins, they sell the house, and move somewhere else. I mean, nobody can accumulate coins indefinitely, can they?

By making coin trade-ins more convenient, Coinstar lowers the size of the stash people will accumulate before trading them in. But even without Coinstar, people will still periodically trade in all the coins they have. I think the result is that Coinstar does not increase the total liquidity.

The key is that while cashing in coins constitutes an increase in the money supply, accumulating coins constitutes a *decrease* in the money supply. When McD's gives me 23 cents back for my $4.77 happy meal and I drop the coins in my car's console, I've taken 23 cents out of circulation and reduced the money supply by 23 cents. When I dump out my console and eventually roll all my coins and take them to the bank, I've put those 23 cents (and the rest of my change) back in circulation and increased the money supply again.

Say I accumulate $10/month in coins, meaning I shrink the money supply by $10/month. Without Coinstar, I might take them in once a year, at which point the money supply goes up by $120. With Coinstar, I might take them in once a month, increasing the money supply by $10 once a month. In both cases, over the course of a year, my contribution to the money supply is a net zero. There are some timing issues, but if you aggregate over everyone the difference in timing between the Coinstar and non-Coinstar case probably disappears.

Dave, In the MV = PQ

Dave,

In the MV = PQ equation, wouldn’t it raide the V and not the M?

In Austrian Subjective Value Theory, the Theory of Exchange is completely discredited and useless.

Money that is not owned by someone who is aware of his ownership and takes it into account when weighing money against purchaseable goods and services has no economic effects.

Regards, Don

Brad, Hate to seem like a

Brad,

Hate to seem like a grinch, but isn’t Coinstar’s trading symbol CSTR?

Well, it is now. Thanks. I hardly noticed the bump from the latest warp in time/space, so I didn't check on the symbol, just going from memory, which may or may not have been a false one.

Regards, Don

Hate to seem like a grinch,

Hate to seem like a grinch, but isn't Coinstar's trading symbol CSTR?

In the MV = PQ equation,

In the MV = PQ equation, wouldn't it raide the V and not the M?

digamma, Right in one!

digamma,

Right in one! COIN.

It's not only pennies, but other coins as well.

Spending itself isn't necessarily required, but that the people now have a larger holding of money which they take in to account when deciding whether a prospective purchase is subjectively worth more at the margin than the cash needed to purchase it. The previous existence of the coins behind the couch or in an unauditted jar are not likely to have the same effect.

Regards, Don

Ooh, good thinking.

Ooh, good thinking.

Coinstar? They take pennies

Coinstar? They take pennies that would otherwise be out of circulation and turns them into bills that people then spend.

Pham, That would be a great

Pham,

That would be a great answer if dollars grew on trees, and if Dollar Tree actually sold such trees. Maybe they only sell those trees if you specifically ask the cashier for them.

Regards, Don

Ok I'll bite, I guess 'DLTR'

Ok I'll bite,

I guess 'DLTR' the Dollar Tree Stores Inc.

Do I win a prize?

Don, So if I decide to save

Don,

So if I decide to save my money for a future purchase, but bury it in my back yard, it is no longer part of the money supply?

Oh---AXP is a credit card

Oh---AXP is a credit card company. Scratch that.

I was thinking AXP, since

I was thinking AXP, since that gives me anywhere from 7-35 days float on any spending that I make, without interest (simply a flat membership rate).

My credit card company does that for free; why would I pay a membership fee for the privilege?

Phelps: Amex is also

Phelps: Amex is also essentially a bank. They issue credit.

Patinator, So if I decide to

Patinator,

So if I decide to save my money for a future purchase, but bury it in my back yard, it is no longer part of the money supply?

Neither past decisions nor physical location make any difference.

If your buried treasure is either cut in half by moles, or spontaneously doubled in place by magic, the question of whether it is a part of the effective money supply depends on whether you respond by changing a marginal purchasing decision by re-valuing your subjective marginal utility of a unit of money.

You are free to change your mind at any time as to the significance of your treasure.

Regards, Don

Patinator, So if I decide to

Patinator,

So if I decide to save my money for a future purchase, but bury it in my back yard, it is no longer part of the money supply?

Interpreting your question from another direction, another factor needs to be considered.

If you set aside money for a specific purchase, then it is indeed removed from the effective money supply.

If Jane Dow receives a salary of $2000 a month, does the full $2000 become part of the effective money supply when she receives it? It depends.

If she immediately earmarks $1500 for her end of the month rent payment, this removes it from her effective money supply. Her marginal purchase decisions will reflect the spending down towards a limit of $500, not $2000, with economic consequences for the value of money.

Regards, Don

Don, Was the original point

Don,

Was the original point that CSTR affects the effective money supply or the money supply? I agree that CSTR will increase the overall effective money supply in the form of CSTR's 10% cut. It may also increase the overall effective money supply if the holder of crisp bills decides to spend them or at least considers them in relation to their individual effective money supply. But, unless you are taking into account the money multiplier effect, how does it increase the overall money supply?

The best protection from moles are bottles - one liter Ron Ricos for short term and 5 gallon Deep Rocks for long term. I have not figured out the magic part yet.

Patinator, Was the original

Patinator,

Was the original point that CSTR affects the effective money supply or the money supply? I agree that CSTR will increase the overall effective money supply in the form of CSTR’s 10% cut. It may also increase the overall effective money supply if the holder of crisp bills decides to spend them or at least considers them in relation to their individual effective money supply. But, unless you are taking into account the money multiplier effect, how does it increase the overall money supply?

I am making no claim of an increase in the (technical) money supply. Considering only cash for simplicity, I would call the sum of all cash money the overall technical supply of money, even if sitting at the bottom of the sea. I would call the overall effective supply of money the sum of all the money quantities whose variation would result in changes in the exchange value of money. This primarily is the result of individuals being reluctant to reduce their money holdings to too small a level.

Regards, Don

I was thinking AXP, since

I was thinking AXP, since that gives me anywhere from 7-35 days float on any spending that I make, without interest (simply a flat membership rate.)

But now I see that they are NYSE, not NASDAQ.

I was going to say OPEC

I was going to say OPEC since they effectively raise prices, but you limited the choices to A-D. Now I have no clue.