Journal roman_mir's Journal: Federal reserve printing more money 8
This article says it's "unusual", but there is nothing unusual about Fed printing more money.
This is the Fed's statement with my comments:
Release Date: September 21, 2011
For immediate release
Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow.
- obviously. Printing money doesn't improve the economy, if it did, there was plenty of time to show that this works by now by many countries, including USA.
Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.
- and will continue to remain elevated and it will continue to worsen with every new printed dollar.
Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased.
- and the Fed should be the last to be surprised by it with all the money printing. People are trying to pay out some of the debts and they pay more for everything, from gas to food due to inflation, so obviously they can't spend on anything more than that, and those things are not in gov't CPI numbers.
Investment in nonresidential structures is still weak, and the housing sector remains depressed.
- as it should be. It should be going down lower, that's the bubble that needs to deflate, you are not letting it with all the money printing.
However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.
- "inflation appears" to have moderated? You are the catalyst for it. As to business in equipment and software - this is the last bubble that was building up in social media stuff, people can't buy Face Book shares so they want anything that is similar, so there are plenty of opportunists there to provide them with these products. Too bad it's all transitory and is also a bubble.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.
- The Fed failed miserably for 100 years at these. Price stability by the Fed - this is a great oxymoron. Employment is not going to increase until government debt is gone, because the Fed and government won't let the interest rates to go up, where they belong, so it makes no sense to save and invest.
The Committee continues to expect some pickup in the pace of recovery over coming quarters
- blah blah blah. Worthless.
but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.
- oh please. It won't decline at all. Not unless the government will actually hire everybody who is unemployed and Fed would print the worthless currency to do that too. But by printing worthless currency the act of hiring and paying them in it is an act of enslaving that person, because the currency will buy nothing.
Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets.
- which you are causing.
The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further.
- is 11% inflation rate that is the real inflation today 'consistent' with Fed's dual mandate? Nixon engaged into wage and price controls when inflation was 4%. If inflation is counted the same way they counted it during Nixon's time, it's over 11% today. Not that wage and price controls are any good, but they knew that inflation was bad.
Commodity prices are increasing as a RESULT of inflation, they are not causing inflation, Fed is.
However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.
- what a sentence!
To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities.
- so they finally find themselves in a hole.
Nobody wants to buy the 6-30 year bonds anymore obviously, who in their right mind wants to lend money to US government? Chinese are holding t-bills, if not rolled over, those mature in 3-6 months for example and USA has to return the money.
The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.
- So because nobody is buying long term bonds, the Fed wants to exchange its t-bills for bonds, to hold the bonds, to try and control the long term interest rate, to push long term interest down.
Are they feeling the pressure of long term interest going up? It must be. As to doing this thing by the "end of June 2012"... well... this just means they are going to issue $400 Billion check to US Treasury right now, so that's just $400 Billion that is going to be created now and given to the government.
When June of 2012 comes around, they may come up with another round of purchasing, this doesn't mean they will then start getting rid of their short term t-bills right now. They will hold on to those for a year.
This is just another $400 Billion stimulus - plain and simple. Eat it and weep. Your currency is just being printed right from under your nose.
This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
- except that interest rates need to go HIGHER and NOT lower for the investments to be made.
Savings are discouraged by low interest rates. I wonder if this has anything to do with the coming elections, this next $400 Billion boost? Nooo, couldn't be?
To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.
- Ha, right here. They will keep t-bills rolling over and, get this, they are going to buy more mortgage based securities.
We all know that Fed's balance sheet is meaningless, since they are no longer returning gold for the Federal reserve notes (you know, banknotes, greenbacks, so called 'dollars', which they are not.)
The Fed's balance sheet has all of the issued Federal reserve notes as liability and all of its Treasury debt and other purchases as assets. But these are mortgage backed securities! Surely they will not be marking them to market, if they are going to sell them to the Fed! This is crazy, the Fed has changed their policy a few month ago, about how they do accounting, so all losses of the Fed are really Treasury liabilities!
You now are going to own more mortgage debt, but who is selling it to the Fed? Banks of-course! This is another round of bank bail outs!
The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.
- wooohoooo - low interest rates, so more and more inflation, more profits for banks.
The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.
- we are government, and we are here to help.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
- remember the names of these criminals. They are destroying your economy one step at a time by destroying your currency and savings.
Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.
- interesting.
So to recoup:
More currency counterfeiting.
More inflation.
More bank bailouts.
More interest rate manipulation.
This is more of the same Keynesian charlatanism - print more money, it will help, when it doesn't help, it means you didn't print enough.
This is not economics, this is a religion.
Some numbers and a plan (Score:1)
http://www.zerohedge.com/news/presenting-maturity-change-feds-soma-treasury-holdings [zerohedge.com]
"Wonder why the Fed's DV 01 is about to surpass $2 billion in a few short months? Because the downward sloping line below, which shows the average maturity of Fed holdings, is about to go up, up, up. And yes, that means that every 0.01% change in interest rates will mean a $2 billion capital loss for the Fed"
So when US interest rates rise - they will eventually unless the Fed gets extra tricky, it will be be bankrupt (liquid
Re: (Score:2)
Yeah, but bankruptcy means nothing for the Fed, it stopped being meaningful in every sense of the word once Nixon took US off the gold standard.
Why is that? Well, because they don't have to give you anything, any product, any commodity, any equity for their liability. Their liability consists of every Federal reserve note they ever issued credit for.
But so what? This balance sheet is completely fake, that liability means nothing, because they don't OWE anybody anything for it.
You give them 20 dollars and as
Re: (Score:2)
You give them 20 dollars and ask them for something, they'll ask you: do you want 2 tens, 4 fives or 20 ones?
So what? Money is worth something because people agree it has value. If people instead wanted to trade clam shells, that could be money just as well. Hell you don't even need physical currency, if you are trading services with someone else you could call your services money.
You could round up a bunch of your fell paul-ites and set up a town where you trade gold instead. Or trade whatever else makes you happy. You could establish a little community off the grid where you establish your own system o
Re: (Score:1)
You don't understand monetary systems, basic accounting or logic, what are you replying to me for, troll?
All you are doing is trolling everywhere. I am not in the mood. Go hump somebody else's leg.
Re: (Score:2)
You don't understand monetary systems
Money has value because people agree on it having value. What else is there to understand?
basic accounting
My statement had nothing to do with accounting.
logic
You have shown that you wouldn't recognize logic if it landed in your tea.
what are you replying to me for
Because I'm trying to figure out if you actually believe in anything of what you say, or if you are just a
troll
Being as you can't actually back up much of anything you say, it is becoming increasingly hard to argue for the former over the latter.
All you are doing is trolling everywhere
Strange conclusion, there. I'd ask how you came to
Re: (Score:1)
I hope you have a good day.
Re: (Score:2)
Engineering a reduction in interest rates (Score:2)
Trying to get Americans to refinance their mortgages again now, that the Fed is trying to force long term interest rates down. 10 years is down to 1.77% (lowest since 1940s), 30 year is down to 2.864% - quite low. In 2008 it came down all the way to 2.5%.
Banks are going to go BUST.
Long AND short term rates are going down, banks have no way to make money :)
How are they going to make their money, if both: federal discount window and long and short term interest goes down so much? How can banks give loans at