FED Continues Bond Purchases

[grip]

Premature Fed pullback could "short-circuit" recovery: Bernanke - Yahoo! News

"In light of the moderate pace of the recovery and the continued high level of economic slack, dialing back accommodation with the goal of deterring excessive risk-taking in some areas poses its own risks to growth, price stability, and, ultimately, financial stability," Bernanke said in remarks prepared for delivery at a conference sponsored by the Federal Reserve Bank of San Francisco.

In response to the financial crisis and deep recession of 2007-2009, the Fed not only chopped official rates to effectively zero, but also bought more than $2.5 trillion in assets in an effort to keep long-term rates low.

He noted that a stimulative monetary policy was simply a response to economic conditions, rather than any attempt to keep rates artificially low to inflate asset prices.

I say BS.

Who thinks Bernanke represents gov and corporate interests MORE than the average citizens financial security?

 

[ttwtt78640]

That may well be one and the same now considering the size of our national debt; interest on that massive amount is now at a mere $220 billion per year, which could easily double, triple or even quadruple using historic average US interest rates.

United States Interest Rate

 

[DaveFagan]

Premature Fed pullback could "short-circuit" recovery: Bernanke - Yahoo! News




I say BS.

Who thinks Bernanke represents gov and corporate interests MORE than the average citizens financial security?

I think that since he is head of the Federal Reserve CORPORATION that he represents the stockholders of that CORPORATION. If the Gov't had let the "too big to fail" banks fail in 2007 and 2008 that the Federal Reserve would have gone down the tubes as well. At this time the Fed finds itself in a trap that requires them to help the Gov't more than would be the usual, perhaps even too much. The Federal Reserve seems to be the final resting place for the "toxic mortgages" that created much of this problem. Since most of the rest of the World doesn't want any more US debt, the Federal Reserve seems to be the buyer of last resort to save its' own skin. Perhaps.

 

[CanadaJohn]

That may well be one and the same now considering the size of our national debt; interest on that massive amount is now at a mere $220 billion per year, which could easily double, triple or even quadruple using historic average US interest rates.

United States Interest Rate

Actually, interest payments on the national debt have averaged about $400 billion a year, not $220 billion - think of what could be done in America with that money.

Government - Interest Expense on the Debt Outstanding

 

[grip]

The FED is propping up the economy even more than gov spending, at least for the markets. But the businesses are sitting on too much capital/cash and hurting the workers and their spending. The upward flow has slowed because the downward trickle has almost stopped.

 

[ttwtt78640]

Actually, interest payments on the national debt have averaged about $400 billion a year, not $220 billion - think of what could be done in America with that money.

Government - Interest Expense on the Debt Outstanding

That is an apples to cinder blocks comparison. Using absolute amounts for interest is not applicable, as the amount of debt is ever increasing. What matters most is the interest rate, that was what allowed a lower prior national debt amount to incur a higher annual interest cost; as it stands now, interest rates and the amount of national debt are both likely to go up - it is not if, but when that happens, which will cause us a huge problem.

 

[Kushinator]

That may well be one and the same now considering the size of our national debt; interest on that massive amount is now at a mere $220 billion per year, which could easily double, triple or even quadruple using historic average US interest rates.

United States Interest Rate

What you fail to incorporate into your analysis is exactly how interest rates return to the mean.

 

[ttwtt78640]

What you fail to incorporate into your analysis is exactly how interest rates return to the mean.

My guess would be only if forced to be raised to fight inflation, yet I do not pretend to be an expert on these matters.

HowStuffWorks "Why does the Fed change the interest rate?"

 

[Kushinator]

My guess would be only if forced to be raised to fight inflation, yet I do not pretend to be an expert on these matters.

HowStuffWorks "Why does the Fed change the interest rate?"

How does inflation occur when unemployment is still persistently high? The answer is: it cannot, unless exogenous forces dictate specific price increases. There will not be high inflation unless we have significant gains in both employment and real output, which will offset discrete interest expenses as tax revenue increases and deficit spending diminishes (less expenditures on social safety nets).

 

[Fenton]

The FED is propping up the economy even more than gov spending, at least for the markets. But the businesses are sitting on too much capital/cash and hurting the workers and their spending. The upward flow has slowed because the downward trickle has almost stopped.

Private corporations and investors have every right to hold their capital back. It's called private property rights. I don't blame corporations and investors when twice, a leftist President with a destructive agenda has been elected by the least competent among us.

It's the, as we say in Texas " the hitch in the President's Giddy'up " as he push's an agenda that attacks the engine of the private sector and then he expects growth. He's not going to get any. Corporations and Investors are NOT partisan, they actually hire educated forward looking folks to determine whether or not their investments are safe in the American economy.

The Consensus seems to be that investing in the American economy with a Leftist ideologue in charge isn't a good idea. So your'e left with the FED's pumping. It's isolated to DOW as our economic data gets worse and worse.

I wish Obama had told us his plan in 2008, OR 2012, that Federal Spending with borrowed money was going to be the only thing that kept the GDP above 1 %....wait, it shrunk, go figure.

I wish he would've told us that his FED chairman was going to pump billions in printed capital into the stock market falsely driving up assets prices....with printed money..

And who's it hurt ? The people that supposedly thought Obama was on their side. The working class, middle class family as they will be the one to suffer the brunt of inflation, chronic joblessness and a harder lives for their children and grandchildren.

 

[grip]

Private corporations and investors have every right to hold their capital back. It's called private property rights. I don't blame corporations and investors when twice, a leftist President with a destructive agenda has been elected by the least competent among us.

It's the, as we say in Texas " the hitch in the President's Giddy'up " as he push's an agenda that attacks the engine of the private sector and then he expects growth. He's not going to get any. Corporations and Investors are NOT partisan, they actually hire educated forward looking folks to determine whether or not their investments are safe in the American economy.

The Consensus seems to be that investing in the American economy with a Leftist ideologue in charge is n't a good idea. So your'e left with the FED's pumping. It's isolated to DOW as our economic data gets worse and worse.

I wish Obama had told us his plan in 2008, OR 2012, that Federal Spending with borrowed money was going to be the only thing that kept the GDP above 1 %....wait, it shrunk, go figure.

I wish he would've told us that his FED chairman was going to pump billions in printed capital into the stock market falsely driving up assets prices....with printed money..

And who's it hurt ? The people that supposedly thought Obama was on their side. The working class, middle class family as they will be the one to suffer the brunt of inflation, chronic joblessness and a harder lives for their children and grandchildren.

In all honesty I think he meant well but he went too far in propping up excessive spending on nearly every front. And no I don't blame businesses for sitting on their cash reserves in an unstable economy. As high as the market is it's probably being set up for another fall soon. Obama has a poor understanding of certain economic realities that are still out of control. He used temp band aids on a dam that's leaking buckets. Hopefully something will change for the positive soon but I don't see it yet.

 

[Fenton]

In all honesty I think he meant well but he went too far in propping up excessive spending on nearly every front. And no I don't blame businesses for sitting on their cash reserves in an unstable economy. As high as the market is it's probably being set up for another fall soon. Obama has a poor understanding of certain economic realities that are still out of control. He used temp band aids on a dam that's leaking buckets. Hopefully something will change for the positive soon but I don't see it yet.

I try to stay optimistic, but honesty I see little indication that things are going to turn around. We still have people celebrating the DOW as if it's gains are the result of the economy and private sector. Intelligent people too, or so it would seem.

Look at the corner the Fed's backed it self into. Bernake stated he's continuing his pumping until unemployment reaches 6.5% , but that's the Obama's "definition " of unemployment which doesn't take into account the 8 and half million people not currently in the labor force, under employed etc. So even if Obama twist the data to force 6.5 % unemployment numbers it's not a fair indication of the health of our economy.

And we have yet to experience the full glory of ObamaCare on a already sick economy.

 

[grip]

I try to stay optimistic, but honesty I see little indication that things are going to turn around. We still have people celebrating the DOW as if it's gains are the result of the economy and private sector. Intelligent people too, or so it would seem.

Look at the corner the Fed's backed it self into. Bernake stated he's continuing his pumping until unemployment reaches 6.5% , but that's the Obama's "definition " of unemployment which doesn't take into account the 8 and half million people not currently in the labor force, under employed etc. So even if Obama twist the data to force 6.5 % unemployment numbers it's not a fair indication of the health of our economy.

And we have yet to experience the full glory of ObamaCare on a already sick economy.

You have a better grasp of the problem than most of the Media experts.
I saw that report today about Bernanke and wasn't surprised. They're propping up the Markets assets giving them unrealistic nominal values that will take a beating should a bunch of investors cash out. The bond buying keeping the interest low is the only thing stopping the investors from looking for other avenues.

It's a colossal cluster **** that continues to grow, especially with these extended unemployment benefits and growing welfare subsidies, like food stamps for all.
Nobody wants to see the poorest suffer but you can't continue to bankrupt the nation at this rate or it'll ultimately cause a worse problem. Get too many people who's very lives are dependent on a gov check cut off suddenly and then you'll have riots and chaos.

The FED will keep kicking the can encouraging Congress to keep spending till the worlds investors create a run on our bonds. Then the dollar will take a beating. You can see it coming like a run away train. Again the only prevention is the close connection of everyone's wealth being tied to our own success.

Just read this article China "fully prepared" for currency war:

 

[Kushinator]

but that's the Obama's "definition " of unemployment which doesn't take into account the 8 and half million people not currently in the labor force, under employed etc. So even if Obama twist the data to force 6.5 % unemployment numbers it's not a fair indication of the health of our economy.

How do you expect to be taken seriously in regards to your comments in topics pertaining to political economy?

 

[DaveFagan]

You have a better grasp of the problem than most of the Media experts.
I saw that report today about Bernanke and wasn't surprised. They're propping up the Markets assets giving them unrealistic nominal values that will take a beating should a bunch of investors cash out. The bond buying keeping the interest low is the only thing stopping the investors from looking for other avenues.

It's a colossal cluster **** that continues to grow, especially with these extended unemployment benefits and growing welfare subsidies, like food stamps for all.
Nobody wants to see the poorest suffer but you can't continue to bankrupt the nation at this rate or it'll ultimately cause a worse problem. Get too many people who's very lives are dependent on a gov check cut off suddenly and then you'll have riots and chaos.

The FED will keep kicking the can encouraging Congress to keep spending till the worlds investors create a run on our bonds. Then the dollar will take a beating. You can see it coming like a run away train. Again the only prevention is the close connection of everyone's wealth being tied to our own success.

Just read this article China "fully prepared" for currency war:

I'm no big Obama fan, but I think you fail to grasp that Obama's band aids turned the GWShiiteForBrains Great Depression into the GWShiiteForBrains Great Recesssion and it is a temporary fix at best. Now the "currency wars" might be because of our excessive debt and still attempting to maintain the USDollar as the World's reserve currency. Economies have lots of smoke, mirrors, illusions, distortions, manipulations and benign and malignant intrigue and the largest generator of all would be the largest bank of all, the Federal Reserve, don't you think? Point being that Obama is probably doing all he can, but likely just delaying the inevitable. Our Corporations marshall their resources (MONEY) for a Corporate movement to the country with the strong currency. Corporations are loyal to the strong currency.

 

[DaveFagan]

How does inflation occur when unemployment is still persistently high? The answer is: it cannot, unless exogenous forces dictate specific price increases. There will not be high inflation unless we have significant gains in both employment and real output, which will offset discrete interest expenses as tax revenue increases and deficit spending diminishes (less expenditures on social safety nets).

I think there are a few Africans countries with high unemoloyment and runaway inflation that need your economic expertise. Exogenous forces or co-inky dink?

 

[Kushinator]

I think there are a few Africans countries with high unemoloyment and runaway inflation that need your economic expertise. Exogenous forces or co-inky dink?

African countries do not produce 1/5 of all economic output or have a trade deficit of more than $500 billion while having the lowest trade ratio among G20 nations.