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This would be an easy fix if instead of counterfeit dollars, the Fed would print yuan. Flood the world with yuan, and buy back debt with a stronger dollar. It's about their last option - after selling gold, holding tungstun, inflating currency locked up in banks and bonuses, and rates at nada.
The WalMart crowd would cheer for even cheaper crap and we could crack the back of oil prices and knock GS' and JPM's dicks in the dirt. We could even start to see "25 Cents" stores again.
Who knows how many dollars the Chinese are printing but in a war to print other countries' currency - we should kick serious ass - since we're so good at printing our own.
I agree, the financial situation after the crisis hit is not stable at all. So, it makes the government find some ways out of this situation. Economics isn't stable by its nature, to my mind. And this very fact brings uncertainty and exitement all over the world, not only in the US. Though, on the other hand, during the history there were financial crisis hits which involved the whole world. And these phenomena seem to be naturally determined.
Heh, heh....she can pussyfoot around it, but Janet Yellen
is bearish more than dovish.
Help me out here. The administration chides banks for not loaning more to small business, so how is raising the interest rates on reserves held by the fed going to help that. You're going to pay the banks more to do nothing with their money. Hmmm, either we could make loans to small business that might not get paid back. Or collect guarenteed money from the Fed and hit the golf course. Fore!
Ah that's the plan. They bitch about lending but imagine what the inflation picture looks like if they lend that money into circulation and it starts chasing goods. They are trying to repair the bank's balance sheets pure and simple.
No they're not. They're using that excuse to pay bankers monstrous bonuses for utter, scandalous failure.
They are institutionalizing Moral Hazard, our new flag.
I just wonder what plan B is?
That was plan B...:-)
Citigroup Warns Customers It May Refuse To Allow Withdrawals
"I'd keep playing. I don't think the hard stuff is going to come down for quite a while"
Everything is fine!
i'm fairly certain there's never a bad time for a caddyshack reference.
"nice hat. did it come with a free bowl of soup? it looks good on you though..." (eyes rolling)
You and your peers are full of shit.
Gee, you are opposed to big deficits but with your peers continue to enable such with your monetization strategy. How about just handing out bottles of Thunderbird to alcoholics and declaring them cured?
Yeah, the Fed members appear to oppose big deficits and claim to loathe moral hazard of the banking system.
Yet in practice, they encourage both. And they appear to sleep pretty well at night doing so.
If No-Gellin' Yellen had her way, we'd be seeing QE in perpetuity.
I love your stuff Assetman but damnit, all I can envision now is that horrendous Dr. Scholl's commercial....painful...lol!
"So where does all this leave Federal Reserve policy? Traditionally, the main tool of Fed monetary policy...."
Janet and the other idiots of the fed ARE the main tools- with a capital T.
I'd like the US Govt to pay off the government's debt by sending Bush, Obama, and most every present and past congressman and senator (minus a few exceptions: Paul, Kantor, Kucinich, Leahy...) to work in China's coal mines until the debt is extinguished.
Every prognosticator out there, both amateur and professional, can take all their scratch work and whip it into the nearest trash bin. It's all outdated rubbish if this new healthcare tax and seize bill goes through.
So, let me see if I understand this... the government (taxpayers) is going to pay the banks interest on the reserves that the taxpayers lent to them (which were quantitatively eased into existence and which the taxpayers pay interest on back to the FED) so they will retain the money within rather than lend it back to the taxpayers, which the taxpayers did not want to lend to them to begin with... WTF?
So we the people get to pay interest, twice, for the privelage of lending money to the very institutions that caused this debacle? Thank you, sir, may I have another...
and another and another and and -
Hopefully the next benefit package to taxpayers will include a pint of Thunderbird, some aspirin, and lube.
May I suggest that the Federal Reserve start printing food and distribute it to the hungry in America?
I walked out my local grocery store yesterday and saw a man in a wheelchair at the edge of the parking lot. He was far enough away to barely be on the property of the store. He was near enough that you could see the sign he held asking for help.
The prices in the store are higher than last year, at least for food that I buy.
Was this man a veteran of one of America's misguided imperial wars? His legs no longer functioned. His face was aged in the way of those who live rough.
On his face I saw nothing but despair. On his face I saw the future of America.
just came across a friend from school days that I used to make little films with. He posted this not long ago:
Dear Mr. President
Main Street's Latest Economic Outlook:
There are 25 million Americans out of work.
There are still over 8 million illegal aliens in the workforce.
Obama proclaimed in his State of the Union address that “jobs must be our number one focus in 2010.”
Then he falsely claimed that his trillion-dollar stimulus bill saved two million jobs.
Now, he’s going to waste more billions upon billions of Americans’ money for the same failed program, this time calling it a “jobs” bill.
There’s a better way, says President Reagan’s former US Treasurer, Bay Buchanan: "A much simpler approach to protect jobs: cut back on immigration."
But, according to Buchanan, the White House’s website sees it differently: “The President is pleased Congress is taking steps forward on immigration reform that includes effective border security measures with a path for legalization for those who are willing to pay taxes and abide by the law…using the current tools at our disposal while we work with Congress to enact comprehensive reform.”
“In other words, he wants amnesty,” says Buchanan.
Obama says he supports Rep. Louis Guiterrez’s (D-Ill.) misnamed Comprehensive Immigration Reform for America's Security and Prosperity Act of 2009. That, says Buchanan, “will completely gut all enforcement against illegal immigration and give a blanket amnesty to illegal aliens. The bill has over 90 Democratic co-sponsors.”
And adds: “Every month, our government issues 75,000 new permanent work visas and 50,000 new temporary work visas. That’s 1.5 million new foreign workers competing with Americans for jobs since Obama took office.” Rep. Guiterrez’s amnesty bill will issue over 500,000 new visas to foreign workers next year alone.
Putting two and two together, this from The Market Ticker
Governors Brace For More Economic Turmoil (Nickbert)
States face budget holes totaling $134 billion over the next three years, according to the governors, who explained that tax collections keep declining as Medicaid costs soar. High unemployment persists. States cut 18,000 jobs in January alone and more job losses are anticipated. Because states are required to balance their budgets, shortfalls will be made up by raising taxes or fees or cutting services.
And Americans, STILL, do not dare call it treason.
They are a well trained lot for the most part. Don't speak out of line too much, pretty sensitive to going against the status quo and what the heads on TV think you should and should not say.
I am not even American, and I have to educate my American friends and family as to what is really going on in the world. Not good.
Zerohedge needs to go mega-viral. Perhaps we can kick-off "Zerohedge for Beginners" with a glossary etc. to help those who don't understand yet? It is really important the truth be spread, take every chance you can to do it.
And market goes up as expected. Just went green!
Yellen says: "...such massive sales of mortgage-related and Treasury securities could be disruptive to markets.."
But what about buying? Didn't the same amount of buying cause same sort of market disruption in 2009? So, when rates fall and/or markets rise - it's good, but when rates rise and/or markets fall - that's a "disruption?"
Let the "free" markets be really free! (from interventionists)
Blue pill for you, for telling the truth....
Politicians will say and do anything for votes, citizens or illegals, does not matter. Obama is nothing new, no hope just another dope.
240428, you have hit the nail right on the head. This woman is seriously divorced from reality and needs to dye her hair blue with football laden antennae. If people are hungry or sick, you feed them and heal them; you cant say hear get that guy over there who I've just given a billion dollars to, to peel off a twenty and eat that or rub it better. And let's see how enamoured of the ponzi Fed scheme she is..hmm...the Fed wants to raise interest rates, by selling its 1.5 trillion mortgage book that has a spred duration of ohhh what...7 years? Return a mark to myth balance sheet so it takes a hit of ohhhh what....1% interest rate at the ten year + 1% spread widening = 2% x 7 times the 1.5 trillion? ok, so the Fed can pony up the 210 billion out of thin air with yet another ponzi device. Fed Funds cover the charge that banks charge each other? Another crock, that's LIBOR and that only works when the Fed and other Governments/central banks down own LIBOR. Grrrrrr...arghhhh...I may need to play some AC/Dc...dirty deeds down with sheep!
It is a reflex action to pull out the li'l chestnut below when Lady Lubrication offers a divination.
Chalk up another one for the epigram: The truths you hold to be most dear are lies told to you by liars...
By Jim GrantGrant's Interest Rate ObserverDecember 2, 2005
Former Fed governor Laurence H. Meyer, in a 2003 talk at the Federal Reserve Bank of St. Louis, described a telltale exchange on the subject of how to define[price/financial] stability. The scene was Meyer's first FOMC meeting, in July 1996, and governor Janet Yellen was making the case for inflation targeting; she said she would aim for 2%. Greenspan replied that the Federal Reserve had a mandate to foster stable prices, not rising ones. To which Yellen rejoined that the Fed also had a mandate to promote full employment. To hear her tell it, a small positive rate of currency depreciation is a necessary lubricant for economic growth (not so, according to a survey of 133 economists over 50 years, produced in 2002 by Stanley Fischer et al.)
"Janet then seized the initiative", Meyer related,"asking the chairman how he would define price stability. Greenspan tried to get away with his vague definition; 'Price stability is the state in which expected changes in the general price level do not effectively alter business or household decisions.' But Yellen pressed him and asked him if he could put a number on that. Remarkably, the chairman agreed, and said he preferred zero inflation, correctly measured. Janet asked him if he could settle for 2% incorrectly measured."
Meyer finished his story;
During a go-around on the topic, only a few Committee members preferred a target of zero, and the consensus was very strong for a 2% target. The chairman ended up summarizing the discussions 'an agreement for 2%' but he cautioned members not to reveal that such a discussion took place.
interesting paper, thanks. actually, its full of common sense and practice as well
The Fed will not be in any position to raise interest rates at least not voluntarily anytime soon. The US economy is stuck in a liquidity trap and there is no way out except through debt liquidation.
The Fed follows the interest rates set by the debt markets. The Fed's $2.2 Trillion balance sheet is a mere footnote on the $50+ Trillion overall debt market.
Only if short term T rates go up will the Fed then be forced to raise the interest rate it pays on excess reserves. This exercise merely keeps up the illusion that the Fed not the market sets interest rates.
Just a heads up:
SP500 / DOW / COPPER counter trend rally looks over.
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Thanks for such an interesting and useful article. The economical situation is really hard in our country and there are many analyzes made lately. However it is really hard to find some nice ones. I think that Janet Yellen is making those economic outlooks perfectly. Of course the situation remains hard, I can't get any paycheck cash advance at all yet. Few years ago it was no a problem. However I believe that the situation will change. Obama and his government are trying to change everything that is wrong in our system. First of all health care and it's problems. Then maybe some financial details will be added and we will be able to forget about this economical recession. Let's just wait and believe that everything will be all right. Thanks one more time for such an informative article. I will be waiting for more nice ones from you in the nearest future too.
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