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QE3 - The Fed, FOMC, Congress, and Election Year equals... ?


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QE3 - The Fed, FOMC, Congress, and Election Year equals... ?

  #131 (permalink)
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Is this capitalism?

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  #132 (permalink)
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  #133 (permalink)
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What if instead of congress giving another trillion to Fed Corp to divy up among the money men and their cartel, (being a monetarist is great when you own the central bank), what if they put that trillion directly into building an infrastructure that would allow natural gas replace crude oil as the dominant form of energy. Put people direclty to work and let them put their income into the bank to collect interest.... I know that would suck for bankers, but it would be as great a multiplier for the us economy as teh interstate highway system was... but oh no, that would be socialist, we'd all put on red hats and become commies....

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  #134 (permalink)
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Don't want to get banned for being a communist conspirator, but honestly, that trillion is not going to find it's way to the people who are on the hook for it, it's not going to create jobs.... it's just going to create slaves, welcome to your future....

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  #135 (permalink)
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syxforex View Post
What if instead of congress giving another trillion to Fed Corp to divy up among the money men and their cartel, (being a monetarist is great when you own the central bank), what if they put that trillion directly into building an infrastructure that would allow natural gas replace crude oil as the dominant form of energy.

The Federal reserve doesn't get money from congress.

It 'prints' the money out of thin air. ( More like electronically credits accounts in reality. )

Math. A gateway drug to reality.
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  #136 (permalink)
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The Fed is a private corporation. It has financial statement like any other, although I believe this is not publicly available to the american people. It has assets and liabilities on it's balance sheet like any other. When it is printing money, there are many ways to do this. The latest version is to go out to the open market and purchase MBS from banks and pension and hedge funds etc, to take them out of circulation and put them on its balance sheet. The cash goes to the sellers who now can buy up more paper, like treasuries at the next auction. While the Fed is a private corporation, the American people, the congress, are on the hook if it can't cover it's liabilities, the ultimate too big too fail but impossible to save scenario....

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  #137 (permalink)
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syxforex View Post
The Fed is a private corporation. It has financial statement like any other, although I believe this is not publicly available to the american people. It has assets and liabilities on it's balance sheet like any other. When it is printing money, there are many ways to do this. The latest version is to go out to the open market and purchase MBS from banks and pension and hedge funds etc, to take them out of circulation and put them on its balance sheet. The cash goes to the sellers who now can buy up more paper, like treasuries at the next auction. While the Fed is a private corporation, the American people, the congress, are on the hook if it can't cover it's liabilities, the ultimate too big too fail but impossible to save scenario....

The BS is available on their website, it's not a privately owned entity (a better word would be "independent"), and the flip-side of its liabilities being covered by the government is that any profits that the Fed makes are sent to the Treasury, i.e. the American people. For example, in 2011 the Fed made $77.4B in profits, $75.4B of which were sent to the Treasury (the rest covers expenses).

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  #138 (permalink)
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I would refer you to this business insider article..

10 Things That Every American Should Know About The Federal Reserve - Business Insider

#1 The Federal Reserve System Is A Privately Owned Banking Cartel

The Federal Reserve is not a government agency.

The truth is that it is a privately owned central bank. It is owned by the banks that are members of the Federal Reserve system. We do not know how much of the system each bank owns, because that has never been disclosed to the American people.



Read more: 10 Things That Every American Should Know About The Federal Reserve - Business Insider

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  #139 (permalink)
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Sept. 14 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about Federal Reserve policy and his investment strategy. Faber, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses gold prices and the property market. (Source: Bloomberg)


Bloomberg Video


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  #140 (permalink)
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Source: The Fed’s QE3: No Exit naked capitalism


Quoting 
The Fed’s launch of QE3 looks more than a tad desperate. If you believe the central premise of the Fed’s action, that propping up asset price gains would have enough effect on consumptions to lift the economy out of stall speed, it would seem logical to sit back a bit and let the recent stock market rally and the (supposed) housing market recovery do their trick. But the Fed has finally taken note of the worsening state of the job creation in an already lousy employment market and has decided it needed to Do Something More.

So the Fed is going to push the housing button harder, with $40 billion a month of mortgage backed securities purchases, along with a continuation of Operation Twist. Thi’s is less aggressive than past turns on the QE spigot; Ambrose Evans-Pritchard called it “calibrated”. The central bank depicted the commitment as open ended, but since it also promised to keep rates super low “at least through mid-2015,” Mr. Market expects the QE tap to remain on at least that long.

Now arguably, this move is a hedge against the slowdown in China, Europe, and the contractionary effect of failing to shrink the fiscal cliff. But QE weakens the dollar and gooses commodity prices (as confirmed by big moves in gold, silver, and oil on Thursday). The last thing Europe needs now is a stronger euro. With food prices already up sharply (note that while the USDA is now forecasting that the corn harvest will be only slightly below last year’s levels, rice output has also fallen) and previous rounds of QE having led to bitter complaints of its effects on commodity prices, any additional pressure on staples like food and fuel prices aren’t just unwelcome, they are politically destabilizing.

But the elephant in the room is what, if anything, these measures will achieve in terms of real economy impact. “Let them eat stocks and housing” has not been terribly successful. Even with super low rates, it has also taken massive sequestering of inventories for the housing market to have the appearance of stabilizing. We have low household formation due to young adults facing high unemployment, low paying jobs with generally short job tenures, and heavy student debt burdens. On top of that, we have generational headwinds as boomers hit retirement age and want or need to downsize. Keeping money on sale is not going to induce banks to lend more if they can’t find enough qualified borrowers. And the consumer deleveraging story is not as positive as the statistics would lead you to believe. A lot of it is involuntary, meaning driven by foreclosures. In addition, retirees also curtail their spending thanks to the fall in interest income they’ve suffered under ZIRP.

But another big issue is that the Fed looks to have painted itself in a corner. Is the US going to have 3.5% mortgage interest rates forever? If the central banks does manage to create a bit more inflation, how does it think it will exit? A mere 1% increase in interest rates, from 3.5% to 4.5%, increases mortgage payments on a 30 year fixed rate mortgage payments by 13%. That will translate into a meaningful dent in housing prices. And where does the Fed go if a financial crisis or other shock occurs?

The Fed failed to see the crisis coming, failed to push for restructuring of consumer, particularly mortgage, debt, and is now in full bore “if the only tool you have is a hammer, every problem looks like a nail” mode. And in the crisis, the Fed was slow to act and then overdid when it finally roused itself (remember “75 is the new 25″?) it looks as if the Bernanke Fed is incapable of looking at its own history.

Mike

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