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The Demented "Old Normal" Speaks: Greenspan Forgets His Lines From Year Ago, Now Hearts QE
Forget 'irrational exuberance', forget 'deregulation of derivatives', Big Al is back and this time he seems to have forgotten any- and every-thing we has ever said. It was only a year ago that Greenspan told CNBC "I am ill-aware of anything that really worked. Not only QE2 but QE1" and yet today the mumbling-'maestro' pronounces, via Bloomberg:
- *GREENSPAN SAYS EQUITY STIMULUS IS HELPING TO DRIVE ECONOMY
- *GREENSPAN SAYS EQUITY STIMULUS IS UNDERESTIMATED
- *GREENSPAN SAYS EQUITY IS COLLATERAL OF FINANCIAL SYSTEM
So it sounds like Alan has joined Ben in the parade of 'the-market-is-the-economy' thinkers as now the critical action of all the greatest minds in our economic policy-makers are convinced that debasement manufacturing a rising equity market (by whatever means necessary) is key (and nothing else!) though his schizophrenia was completed during his interview with Bloomberg's Tom Keene just minutes ago:
"The first thing we do is stop doing what we are doing." Says leave markets alone and let them work.
Greenspan also added, for sincerity, that:
- *GREENSPAN SAYS THERE IS A `HUGE FISCAL CLIFF'
- *GREENSPAN SAYS `INTEREST RATES ARE LOW BEFORE THEY GO UP'
But it appears we should not worry about any of that, since:
- *GREENSPAN SAYS STOCKS ARE `CHEAP'
The piece de resistance, confirming that once one passes 70, one should never leave home without their favorite antipsychotic medicine:
- GREENSPAN SAYS GLOBAL SAVINGS PUSHED DOWN LONG TERM RATES
- GREENSPAN SAYS HOUSING BOOM WASN'T AN AMERICAN PHENOMENON
- GREENSPAN SAYS LOWERING RATES IN 2003 WAS RIGHT THING
And, drumroll:
- GREENSPAN SAYS LOW FED RATES DIDN'T FUEL HOUSING BOOM
Is it any wonder Paulson & Co got eviscerated listening to this.
Recall from CNBC in July last year:
"The former Federal Reserve Chairman stated in a CNBC interview that the Fed’s quantitative easing programs under Ben Bernanke have done little to increase lending and stimulate the U.S. economy. ”There is no evidence that huge inflow of money into the system basically worked. It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion. Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1.”
Going forward, Greenspan said he “would be surprised if there was a QE3? due to the damaging effects it could have on the value of the U.S. dollar."
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"Libertarian"
"Ex-Randroid"
Toady psychopath.
5150
293.81
Contracted Weaselthelioma from Reptilian Shape Shifter Sociopath, Paul CrapMan.
Nominally human.
"Incontinent Greenspan Dumps a Pantload on Bloomberg's Tom Keene"
"There, there, Mr. Greenspan. Let's wipe that tapioca pudding off your chest before the interview, ok?"
If he's not senile he must have been tortured / threatened / promised something really really nice... (does he already have a Nobel Prize? Does he have an Oscar?)
Hebrew Profit (I mean 'Prophet')...
Knuksie! How you doing? Busting out of here to play golf this afternoon, beautiful day here in the Deep South. I hope life is treating you well. (Shot a 74 last weekend, had one of those days)
I kno how it goes... Lipped out that 4 footer on 18 for a 73, right?
If anyone here is in risk mgmt, they should know that Equities play a bigger role to the economy than the Bond market. Which is why when you watch the 'news' on MSM, you here jack shit about bond indices...just the usual crap "Dow surges to highest point in 4 years". They will protect it with all their power since confidence is driving off the Equities market and not the other way around.
Secondly, the govt has been issuing Treasuries like mad for the past few years? Well firstly they are funding the banks with free money and secondly, these 'securities' are considered SAFEST and of HIGHEST quality in the banks capital. Thus, the benefits of holding them is two fold. The banks look pristine with all this AAA rated paper on their books. Thats why they want to get Egan Jones for trying to mess up their plan.
I mean we obviously know that the UST is the biggest ponzi scheme ever but nobody seems to give a rats ass. You think these Basel agreements that are supposed to come online soon means anything?? They as useful as politicians.
As well, I have mentioned this before already but Equities are also considered Tier 1 capital so if the banks are loaded up with UST and Equities, this gives everyone that they are well capitalized.
So, essentially, the winner is whoever can tell the best 'lie'...
If anyone here is in risk mgmt, they should know that Equities play a bigger role to the economy than the Bond market.
I stopped right there. Has to be one of the dumbest comments i have ever read.
No need to junk me but yes after studying Risk Mgmt, I realize its nothing more than a ploy by the investment industry to pretend they are regulating it properly.
What?????
Are you Drunk?
Hey Dawg!
Whazappenin?
Got a game this afternoon myself!
Now a 74 is an OMG in my book, Dawg. I've never broken 80.
Keep on, my brother.
I'll catch up with you this evening to swap lies.
Blessings,
K
"Contra Indicator"
Him and Biggs are about neck and neck as all time champions...
"Alzheimer-affected"
I always knew "Greenspeek" was gibberish and the media pundits (who are assholes) were making up shit from his pootie-tangness (http://en.wikipedia.org/wiki/Pootie_Tang). I have been vindicated.
There is an old saying "you can't polish a turd".
But Keene, Bloomberg, CNBC, WSJ, NYT, and the rest of the MSM keep buffing away.
THese people are all complete psychopaths who fear discovery. So they chatter, chatter, chatter - and the media gives them coverage.
Alan Greenspan - surely one of the greatest turncoats in libertarian history.
How could the man who wrote one of the seminal essays on the importance of gold:
http://www.constitution.org/mon/greenspan_gold.htm
come out with such drivel, without his head exploding?
Some people posit he's been secretly doing his best to crash fiat and get us back on the gold standard. So far, he and his protege Ben haven't been doing too badly.
I seem to have missed it. Does he say what flavor the KoolAid was? The devil is in the details.
Reminds of that scene in "Lord of the Rings" where Frodo offers the ring of power to Gandalf:
Gandalf: "Understand, that I would try to use the ring for good..."
"Ex-Randroid"
Not ex-anything. He studied with her. He wrote a chapter of one of her books. This is what happens when Randroids are in charge. There's theory, and then there's reality.
"Politics works through passion and prejudice, otherwise we'd all go stark, staring sane!"
Ayn Rand's logic was impeccable, Progressive/Socialists...not so much!
I submit the charge that the reason you're afraid of Ayn Rand's "theories", is that they would actually solve a lot of problems and put yer Big Brother out of work!
We have been brought up by the progressives (liberals) that without stealing from our neighbor, there is no way to help the poor and those that need help. That is the biggest lie every put out there...and most of the American people have fallen for it.
Government is constantly trying to find a way to have unlimited creation of currency (Euros, FRNs [Federal Reserve Notes]) and credit without inflation, unlimited spending and deficits without economic ruin, unlimited national debt without repayment, and unlimited growth of power and plunder (regulation and taxation) without revolt.
They can no more halve things and get the sensual good, by itself, than we can get an inside that shall have no outside, or a light without a shadow.
GREENSPAN SAYS GO LONG EVERY US EQUITY IN THE MARKET
GREENSPAN SAYS THROW OUT ALL RISK MANAGEMENT--THE TIME TO HAVE A ONE-SIDED LONG BOOK HAS COME
GREENSPAN SAYS STOCKS LIKE PCLN, CMG, AND AAPL ARE THE EQUIVALENT OF GOLD DURING THE GOLDRUSH. EVERYBODY SHOULD BUY THEM
GRENSPAN SAYS EVERYBODY SHOULD HEED BARTON BIGGS, JOE LAVORGNA AND BIRYANI AS INFALLIBLE GUIDES TO THIS MARKET
GREENSPAN SAYS THAT BERNANKE IS THE SECOND COMING OF HOWARD ROARKE AND THAT AYN RAND WOULD BE PROUD OF BERNANKE
I'm feeling dementia coming on strong via osmosis....i am confused.............by....these........rigged..........fucked.......up..........drool............drool.......slop...slop..........ta
When is this guy gonna die?
Agreed.
don't wish that on him. he may look dead but because of that he is one of those guys who never ages it seems...
besides, i loved him in The Godfather until he came to Micheal with that deal at the funeral and they had to rub him out.
that was him, wasn't it?
I hope Greenspan, Buffett, and Munger all live at least another twenty years. I'd like to see them unable to feed themselves, shitting their britches hourly, and yet with enough functional brain power (assuming they ever acquire it) to see and comprehend the damage that they've wreaked on humanity.
I noticed that he didn't accompany Andrea to the WH Correspondent's Dinner last week. Likely interfered with bath time, but who knows?
he died 4 years ago...this is just a hologram they wheel out
actually he is correct....when inflation hyperinflation hit then the stick market is gonna roar just to keep up lol it happened in Zimbabwe
greenspan when you die I am pissing on your grave...
he's kind of like our Franco ....?
"When is this guy gonna die?"
when we the ones he and his ilk have fucked put bullets in there domes....
Not soon enough...!!!
*GREENSPAN SAYS STOCKS ARE `CHEAP'..... WHEN VALUED IN GOLD OR SILVER
*FIXED*
Stocks are cheap in dollar terms, since it's the dollar on the verge of tanking.
In terms of gold and silver, stocks are set to get much much cheaper.
Thats true unless your source of income is the dollar... then not so much ;-)
But stocks are very expensive in terms of gold and silver. To sell your gold and silver to buy stocks would be a wealth loser.
It's time Big Al hit the (Geritol) bottle and then turn his attention to shagging Andrea Mitchell, his darling wife and propaganda master.
Sorry. Was that my out-loud voice?
Easy on the meds- I think Geritol and DELUSIONOL might be a deadly mix for this geezer. :)
If I were Greenspan I wouldn't be showing my face much these days.
These guys truly have no shame.
With a face like that you got nuthin to laugh about...
So debt on the backs of future generations, currency debasement, and inflation are now "equity" or capital? Did Ben blow some hopium smoke up his ass?
http://www.youtube.com/watch?v=253PiA7zIl4&feature=player_embedded#! Voight calls out Barack Obama............
Diggin' Up Big Al, just shows how desperate they really are!
Greed spin already pleaded insanity in front of Congress a few years ago - paraphrasing ''everything I believed to be true about economics and markets was apparently wrong. Lol, sorry'
lol, yup.... "I had no idea people on Wall Street would be so greedy."
Yeah, sure Alan, sure.
Stocks are cheap valued in dollars since the base case for market valuation should be titled "The Weimar Republic Case."
Testicle lockbox...
I needed confirmation of getting out and going short. Let's see, May 1st, Closed Euro so no drama in the air, a surprise ism number and good ol greenspan telling me stocks are cheap. If the signs of a set up aren't staring you in the face i have a bridge that needs to be sold
Greenspan drinking the cool-aid:
Election Year so the story is Stock Market Index is all that matters (since it's the only "good news" story)
let's all join in the sing-a-long:
"The Market IS the Economy, The Market is the Economy,
high-ho the derry-o, the market is the economy."
(just because a song is currently in power rotation getting heavy airplay.....by no means indicates it will be an enduring classic)
I was thinking more of a Kumbaya version (being Mayday and all that).
Worst Fed Chair ever residied over most benign conditions and managed to build biggest landmine for citizenry to face... has converted FED to Buyer of last resorts for the stock market...as primary role..
I am amazed this guy still gets airtime and is not tarred and feathered.. is it merely 'for entertainment' purposes? he was wall streets bitch.. and has been found out for it, even by the dumbest retail investor..?
Technically, they're all the worst. Except for perhaps Benjamin Strong (he died before they could get the scam going full throttle).
Greenspan: Inflation's contrarian indicator.
"Sir Alan" (Nothing else needs to be said... )
Zing!
No place better than CNBC ...
... for the world to see THEY have finally gotten "Bubbles" Greenspan's meds adjusted so he toes the party line.
It's only fair since they've been using Andrea as the guinea pig all this time.
barliman
Them there pesky internets keeping elite bullshi**ers (somewhat) honest. Who knewz? Well done ZH and her denizens worldwide.
http://www.thedailybell.com/3846/The-Velocity-of-Money-Is-Coming-Along-W...
"The system we have currently is not a monetary system per se but a kind of looting. It is based on the dollar reserve system itself that instructs the Saud family to trade oil for dollars and nothing else."
"There is nothing humble about what Bernanke is doing or has done. He's playing around with the lives and savings of billions. It's impossible for a handful of good, gray men to manage a global economy of tens of trillions. It cannot be done."
I love that pic (as well as The Daily Bell).
Ditto
Alzheimer's is such a cruel disease
Is it possible that the Fed, ECB, BOE and BOJ have been accepting equities (or even equity derivatives - ie. "in the money" index options) as collateral? It sure sounds like it.
If so, his comments make a bit more sense, since he would be "talking his (Bernanke's) book".
What does he actually do now? It's like he actually never left the Fed. He's getting that old mojo back just before his "Fed models" blew up.
greenspan loves creative destruction.
"let the fed destroy itself" -- greenspan and ron paul are on the same page.
*GREENSPAN SAYS EQUITY IS COLLATERAL OF FINANCIAL SYSTEM
IED's are of many varieties...
Funny, I remember back in the day when it was the collateral of the manufacturing system.
Wealth Transfer, Bitchez!
Is he still alive? Is the dead man talking?
"
"
Translation: someone else's fault. Bush?
if Greenspan volckered he would have not only been kicked to the curb, he would of most likely been arrested or at the least slandered. It is a complete misunderstanding to think these guys can just raise rates without repercussions. Congress , the president and the constituents would not and will not except the pain that would accompany a fed rate raise.
favorite guy in this whole debacle. he never lies or is wrong you just have to read into what he is saying. The master of speaking the truth while telling people what the want to hear. I will translate for all those that haven't figured it out
100% true the economy in the short terms is being driven by stimulus. If it wasnt there we would have a huge collapse. Of course in the long run that is the best outcome but very few care about the long run.
100% true. The effects are immense doesn't mean they are positive.
Again 100% spot on.
*GREENSPAN SAYS STOCKS ARE `CHEAP'
100% true they are cheap relative to the doubling of money supply 10% yoy growth for 20+ straight months of money growth. They are cheap relative to the amount of money now in existence.
GREENSPAN SAYS LOW FED RATES DIDN'T FUEL HOUSING BOOM
100% true. Low rates are a symptom of a the philosophy of statist wealth redistribution. The housing boom was fueled by people's desire for everyone to be rich regardless of their producitve output.
Right, so let's recap.
In the aftermath of the 2008 crisis, the Bank of England lowered base interest rates, which in turn reversed the significant drops in the housing markets. Except that you now claim that these aren't at all connected.
Here's a quote by Eddie George (former BoE governor):
http://www.constitution.org/mon/greenspan_gold.htm
Once you can understand that article you should understand what I mean. Low rates are an effect of other causes. Greenspan is correct in saying that low rates were not the cause in the context of not being the ultimate root cause.
BTW housing prices boomed from the 70's through the 2008 they went exponential in 2002 or so but the boom had already been taking place. The cause was an increasing supply of money which led to more credit. It can be argued that lower rates had some effect but again were not the cause
Thanks Greenspam for chipping in on the housing bubble and crash started by Clinton and Fannie Mae.
http://confoundedinterest.wordpress.com/2012/05/01/homeownership-falls-to-15-year-low-after-clintons-great-leap-forward/
Nice to hear from the Ghost of Christmas Past. Wonder who they are going to cast in the role of Ghost of Christmas Future.
Obummer. He will be the face of death as TPTB unleash their next phase.
Is there anybody out there really take this guy seriously? Or does everybody just roll their eyes and politely nod their head as he recalls the "glory days"?
He is a true genius. I take everything he says very seriously. I suggest you read into what he is really saying and learn something.
Anyone that can write this is not idiot. And he has recently said there is nothing he would take back from that article. Once you understand the context he is operating in you can start to understand exactly why he is one of the smartest people on the planet.
http://www.constitution.org/mon/greenspan_gold.htm
They are all lying scum just telling the sheeple what they need to hear. Ignore all MSM and you're much better off.
What would May Day be without irrational exuberance from the 1st God of Exponential Paper.
Sure, Greenspan was always a shill as well as a whore for the Criminal Class.
But evaluating this policy recommendation requires perspective. First, get clear what a Balance Sheet Recession does to an economy. Why this is different from other modes of operation in a macroeconomy.
Richard Koo of Nomura. The book, the lectures. Then come back with a non-ideological take on capitalism. (Which would also work under socialism or most forms of mixed-command economies.)
Details matter. The comments here suck.
Guck Freenspan.
This tribe has one totem.....
Paulson & Co P&L since bringing Greenspan on....nuff said on the lack of anything of value from this guy.
Fucking lying Greenspan. Still trolling for his uber elite old boy's club. Savings NOT equity is the collateral of the financial system. This old boy didn't forget, he just conveniently decided to change his mind to suit the will of the .1%. I certainly like how China handles these kind of financial dissidents who rape and pillage the population or scam for personal/private gains, a two year stint waitin' to die and them hang em high.
Sorry Toxi, there is NO collateral in the financial system. The whole thing is built upon "faith" in the US to economically grow and the stability and ability of the government to leve taxes.
The Fed system is merely the hand of the puppet master running the financial game.
Once Greenspan signed on with the Fed cartel as its mumbling message boy, his contacts with truth, morality and loyalty to his country…like Bernanke's…were abandoned. Except for occasional bouts with dementia, Greenspan stuck to the script, the Fed is essential.
As Bill Black related in his incredible interview with Chris Martenson on ZH this week, Greenspan dismisses any thought that fraud can exist in the market.
In his first meeting over lunch with the new head of the Commodity Futures Trading Commission Brooksley Born, Greenspan said, to Born’s utter amazement: We’re going to disagree because you believe that fraud provides the basis for regulation. (It was Greenspan who was hired by Charles Keating as a lobbyist to recruit the Keating Five from the U.S. Senate in 1987 to prevent law enforcement in the Lincoln Savings scandal; Keating became the most infamous of the S&L frauds in the 1980s and 90s.) If there is no fraud, of course, according to Greenspan there is no need for regulation.
If we’re not dealing with fraud, we’re not dealing with law, and we’re not dealing with justice. We are dealing with the destruction of a great nation.
'Stocks are 'cheap' here at all time record highs....oh ok that makes a lot of sense...
The last time the DOW was at these levels wasnt oil about $25 and the interest rate at 5%?
Ah, good old, "I thought the junkies would recognize the hazards of addictive narcotics and self-regulate." Greenspun.
Mumble...mumble...pontificate...PUT!...mumbo...jumbo...razzle...dazzle...PUT!
Fuck that bubble-blowing bloviator.
"*GREENSPAN SAYS EQUITY STIMULUS IS HELPING TO DRIVE ECONOMY"
Translation: The Fed can't fix the housing market or the job market, so they pump equities and then LIE to the masses about the impact their actions have on real inflation.
Green Allanspats, maestro, savant, bon-viant, master swordsman of money honeys, proclaimed his analysis of the baltic card board box 3rd derivative cubed, diced, and slap-chopped - ehivh indicates a return of irrational zuberance, which means that we're all gonna be RICH, RICH, RICH and spurt sticky gobs of moolah all over the love of our lives....CDS's and CDO's!!!
If you let the markets decide, then you'll have negative nominal rates. Instead Operation Twist isrant to divert short-term demand into long term bonds. Ok but you're eventually going to get negative nominal rates across your entire yield curve. That will effectively destroy earnings for a very long time.
Even if you get only short-term negative nominal rates, the only performing asset will be gold and theoretically profitable gold mines with no debt and robust grades.
'Let markets decide'...lol yea Allan lets do that....shut down the computers which make 90% of all market trades, turn off the manipulation of futures and set the rates back to just 3% and see what the markets do. Im all for it, lets do it!
Funny thing about the "equity market is the economy" mindset.
The TBTF financial players, because they get free money, HAVE to speculate with it since the public, so in debt, can not borrow. Ask bankers if there's no demand or are regulations so demanding on equity that they can not lend; the answer is both. The latter is due to the lies of the mark-to-model asset sheet. The former is the real economy.
Uncle Ben thinks by juicing the equity markets via TBTF Monopoly money will create optimism within the populace. Like Bush #1, he has no idea what's going on outside his TBTF club.
As the real economy and income deteriorates, Babyboomers et. al. must sell their equity paper to pay for needs.
A consumer economy so construed must further deteriorate under such conditions.
Where is ALL the growth in equities, foreign sales. Their domestic income has flat lined; see above part about consumers. The foreign growth is the marketing campaign to sell the equity paper to .... the long only guys who HAVE to buy equity, it's a requirement by law driven by the fund's requirements. So, they buy. And then turn to Wall Street's marketing machine to come up with the explaination to the retail bag holders.
Well, as the demographics continue to shift the flow of fiat will accellerate out and the only players really left will be the TBTF's balance sheet.
Hey, I have some green sh1t to sell you. It's growing. There's more of it.
Ignore that guy behind the curtain printing more of it.
This green sh1t is great. It keeps going up. Get it while it's still "cheap".
WTF is wrong with him??
had this been good old Soviet Russia, Stalin/Andropov/Gorbachev would've given him a gun and said, "hey you fucked yup old man I trust you do the right thing"
Instead he walks around like he's the fucking pope of wall street
Not demented at all, he is one of the gang will say and do whatever the tribe tells him to do.
Everyone that ate the greenspan cake yelled it tastes good, but when the plate was empty, our happiness turned to anger. We wanted to eat the cake and have it too. Nobody forced usury onto the population. We bit the apple and will pay the price.
He should be put out to pasture and put down like a diseased horse, or rabid dog.
Where can I use my TVIX as collateral for a new car purchase?
When there are no laws and no law enforcement, the criminals keep doing whatever demented activities that they have been allowed to get away with. I'm Shocked!
Someone needs to triple down on their meds.
Whatever tiny speck of credibility he still had is gone.
Greenspan is the slobbering poster boy of someone who got sucked up by the Dark Side.
Time for you medication Alan.
Greenspan has been senile for years and like Chauncy Gardiner the Washington CRowd hung on his every word
Equity as defined in law means a totally different idea than in finance land. Equity is the value of a substance of which there is none currently; its all promissary notes generally which are extended by the notemaker which is the signatur (noodle that for a moment first). Greenspan I dont think was talking to finance people, though they will be listening; he's speaking to those with the legal reigns of the underlying real value (equity) to the public system, that is the private one where all the value really lies occulted as it should from your goyim consciousness! (i kid i kid)
I'm sure SOME around here are mildy entertained and aware of the dueling financial system, dubbed occult economy by some. When you factor in the Yamashita gold, the Jews gold etc...(what happened to LIBYA's btw) it seems reasonable to conclude there is smoke, so lets wait for fire.
In that vein, I think Meastro played the right tune, namely equity, the value underwriting the digits is the real collateral of the economy (BLACK GOLD!!!!!). Right now FRN's mean nothing, they are valueless. There is a gent who is trying to go to the BOSTON FED on May 26th and demand lawful money pursuant to a statute in some Act to exchange his money for the red seal, lawful constitution money which he can then turn in for gold. Probably wont happen...but I wish him well and might even join as I'm in a FED bank city...though not Boston.
Perhaps Meastro has just given the green light as he's a rather senior member of the club. He's just given the green light to tear down the old system, letting it rot, while the new one begins taking over. I don't pretend to have all the answers, but the shift is before us...how many bankers have resigned this year? Over 600 now...how many senior memebers of royalty have egg on their faces in the last 12 months? Why did OBAMA sign that registry at Westminster Abby using 2008 last year!!!??? How many lawsuits have been filed against the FED in the past 3 years? How many sovereign movements are happening in the country right now? Novelty is well, reaching a point of infinity no? We can PRINT manufactured parts now...sweet...oh and we rolled out a hologram technology on the DL at a CULTURAL event...please tell me I'm not the only one here noticing the blatant occult sybolism all over the Superbowl and then the grammys too!
I actually see these comments as the go ahead on MAY DAY folks...dig deeper...
ZH is the best left brain, finance site ever invented...as long as they can source material from the materium. Use the right brain a bit more and see with fresh eyes...or not.
The final analysis as Morgan Freeman speaks on BoB's first track of the new album this morning...
[Outro: Morgan Freeman]
As the mask of deception falls off the face of humanity
Unveiling the grim reality of duality
In which everyone is a casualty, no one will be exempt
Truth has many shades
It's not a matter of black and white, but gray
Although many, we are one, so in the final analysis
Could it be that we are fighting a war that can't be won?
:)
alzheimers.........or just another fucking moron like the rest of the Keynsian gods
GREENSPAN: “Equity Stimulus”
- Greenspan (2002) “To mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion” http://faculty.chicagobooth.edu/douglas.diamond/research/Illiquidty%20ap...
Also see:
The Fed Created Serial Bubbles by Policy by Henry C K Liu http://www.henryckliu.com/page194.html
I had the opportunity to briefly meet Alan Greenspan around 9 months ago. I asked him when QE3 was coming. His response was: “I am still waiting for QE1 and 2 to work”. Clearly they didn’t expect the banks to hold all the excess reserves at the Fed.
If the size of the Fed balance sheet is a political issue then a way around that is through degrading its quality e.g. swapping some of the commercial bank’s treasuries for MBS. The Fed then gets the trash on its own balance sheet, leaving the commercial banks free to lend. I suppose this is what they are planning once Operation Twist expires at the end of June; if political conditions won’t allow more balance sheet expansion.
This type of operation could have a greater impact on money supply than the Fed simply buying more treasuries- depending on its impact on the capital position of the banks.