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Here's What Happens When A Central Bank Goes Bust

Gimmesometruth said:
News flash:
We have been in a condition of QE going on 5 years now. What has happened to inflation?
Click to expand...

And our economy is in the tank.....the price of everything has risen through the roof over the past 3 or 4 or so years...gas, bread, milk, eggs, vehicles, clothing...everything...except the things that matter to us most...the prices of our homes and our paychecks both seem to be going down.

Look at the stock market when Burnake even hinted at stopping the QE....it dropped like a rock until he said it wouldnt stop.

Our economy is in shambles....granted there are a few sectors (very few) that are doing well but the over all condition is in the tank.


The QE is only kicking the can down the road...if the Reserve keeps printing (digitizing) money out of thin air the value of that money drops...print enough of it and it becomes worthless. Or maybe thats the plan.
 
Imnukingfutz said:
Look at the stock market when Burnake even hinted at stopping the QE....it dropped like a rock until he said it wouldnt stop.

Our economy is in shambles....granted there are a few sectors (very few) that are doing well but the over all condition is in the tank.
Click to expand...

What econometric measures are you basing your assessment on?

A 3-5 percent correction in an upward trending market is hardly "dropping like a rock"...
 
blaxshep said:
If we can sustain infinite debt and print infinite money why do we need taxes? It's not that complicated, no understanding of economics is required.

You liberals have established two things in every argument.

1. The debt is of no consequence and we can print all the money we need without consequence.

2. We need more tax revenue.

The two points are contradictory.
Click to expand...

Thats a damn good point.

Win the "war on poverty" - print up $1M for every man woman and child....poverty goes away huh?
Need a new bridge - print up the money
Need to fund a war - print up the money
Need a $10M vacation - print up the money
Need a new school - print up the money

What do we need taxes for then? To punish the successful? To redistribute?
 
greyhat said:
What econometric measures are you basing your assessment on?

A 3-5 percent correction in an upward trending market is hardly "dropping like a rock"...
Click to expand...

over a 2 or 3 day period? thats dramatic. Funny how the day he announced they might be stopping the QE the stock market fell and the very day he said it would continue it picked right back up....thats just coincidence...nothing at all to do with the Reserve pumping money into the system to keep it from completely collapsing in on itself.

The DOW dropped 2.3% in one day (June 20) ...that lost about $120 billion of investor money (our retirement accounts, our 401K's, our IRA's)
S&P 500 Index fell 40.74 points, or 2.50 percent...in one day
NASDAQ dropped 78.57 points, or 2.28 percent...in one day

So we are seeing the only thing keeping the economy afloat is the Reserve pumping money into the system....whats going to happen when the Reserve runs a negative balance sheet?

Print even more money and devalue it even further and watch the system collapse
or
Stop pumping money into the economy and watch it collapse.

Either way, I think we are screwed.
 
Imnukingfutz said:
over a 2 or 3 day period? thats dramatic. Funny how the day he announced they might be stopping the QE the stock market fell and the very day he said it would continue it picked right back up....thats just coincidence...nothing at all to do with the Reserve pumping money into the system to keep it from completely collapsing in on itself.

The DOW dropped 2.3% in one day (June 20) ...that lost about $120 billion of investor money (our retirement accounts, our 401K's, our IRA's)
S&P 500 Index fell 40.74 points, or 2.50 percent...in one day
NASDAQ dropped 78.57 points, or 2.28 percent...in one day

So we are seeing the only thing keeping the economy afloat is the Reserve pumping money into the system....whats going to happen when the Reserve runs a negative balance sheet?

Print even more money and devalue it even further and watch the system collapse
or
Stop pumping money into the economy and watch it collapse.

Either way, I think we are screwed.
Click to expand...

You know very little about econometrics and markets; I take pity of your portfolio lol.
 
Imnukingfutz said:
And our economy is in the tank
Click to expand...
We are in a period of recovery from the worst downturn since 29, but it would be worse without QE.

.....the price of everything has risen through the roof over the past 3 or 4 or so years...gas, bread, milk, eggs, vehicles, clothing...everything...except the things that matter to us most...the prices of our homes and our paychecks both seem to be going down.
Click to expand...
The rate of inflation since the recession is lower than 2000-08, housing is rebounding and wages have started to pick up...but again, QE has stabilized the banking/credit markets, we know what happens when the credit markets totally tighten up.

Look at the stock market when Burnake even hinted at stopping the QE....it dropped like a rock until he said it wouldnt stop.
Click to expand...
Well there you go, doesn't that tell you what happens without QE in a tight money market during a period of depressed demand/recovery? Investment would collapse.

Our economy is in shambles....granted there are a few sectors (very few) that are doing well but the over all condition is in the tank.
Click to expand...
You just showed it would be worse without QE.


The QE is only kicking the can down the road...if the Reserve keeps printing (digitizing) money out of thin air the value of that money drops...print enough of it and it becomes worthless. Or maybe thats the plan.
Click to expand...
Inflation has been lower since 2008 and you cited what happens to investment with the hint of ending QE....but yet you remain convinced that ending QE would be good.

I don't believe you thought this through.
 
Gimmesometruth said:
Bzzzz....wrong. You cannot compare a corporation (private bank) to a central bank.

Private banks CANNOT "print" money, central banks can and do.

Thanks for playing. Be sure to visit our gift shop at the exit.
Click to expand...

In other news, the Treasury has decided to replace the $1 bill with the $.01 bill to more accurately illustrate the value of US currency.
 
American said:
In other news, the Treasury has decided to replace the $1 bill with the $.01 bill to more accurately illustrate the value of US currency.
Click to expand...
Under a bill that was overwhelmingly passed by the House and is now before the Senate, Texas would drop algebra II as a core diploma requirement. The bill would severely cut back exit tests, and lower the number of courses students must take in math and science.

http://www.nytimes.com/2013/04/12/e...gebra-ii-requirement.html?pagewanted=all&_r=0
 
washunut said:
It will be interesting to see what happens when the Fed is not able to help finance the deficit with it's earning, but needs to replenish their balance sheet. I am sure many (including those on this site) who will call for having banks pick up the tab.
Click to expand...

I believe all Fed losses must be made up by the Treasury.
 
greyhat said:
You know very little about econometrics and markets; I take pity of your portfolio lol.
Click to expand...

while I am no expert in the stock market I can balance a checkbook and know that a 2.5% loss in one day is not good. But that was just one day...the rest of the month of June was horrible for the stock market.
Stocks: Brutal June clouds start of year's 2nd half - Jun. 30, 2013
Stock markets and gold suffer a June to forget | Business | The Guardian

As to what you said in an earlier post..(I havent figured out how to quote 2 separate posts yet)..."A 3-5 percent correction in an upward trending market..." The only reason the market is trending upwards is due to the $40 Billion a month of new money the Reserve is pumping into it. Money that is eating up the 1.8% or so of the black the Reserve claims to be in.

What happens if the Reserve falls into the red and cant fulfill their obligations...our government is too broke to bail them out...their options are;

1) they default - draw your own economic doomsday scenario - that actually could be the best scenario if you think about it.
2) they print money out of thin air further devaluing the currency, leading to further inflation eventually completely screwing the investors of their bond values.
3) the Reserve borrows from another countries Reserve to save its ass.
 
Gimmesometruth said:
We are in a period of recovery from the worst downturn since 29, but it would be worse without QE.

The rate of inflation since the recession is lower than 2000-08, housing is rebounding and wages have started to pick up...but again, QE has stabilized the banking/credit markets, we know what happens when the credit markets totally tighten up.

Well there you go, doesn't that tell you what happens without QE in a tight money market during a period of depressed demand/recovery? Investment would collapse.

You just showed it would be worse without QE.


Inflation has been lower since 2008 and you cited what happens to investment with the hint of ending QE....but yet you remain convinced that ending QE would be good.

I don't believe you thought this through.
Click to expand...

Seriously?

The QE (AKA additional stimulus monies that end-arounded Congress) is only stretching out the pain. Either way it would have hurt economically to get this train wreck of an economy back on its wheels again. But to pull the band-aid off slowly hurts more than to just rip it off.

Kick the can down the road a little ways and band-aid the problem...pump monies we dont have into the system...feeding their banker & investor friends...while the "regular people" wallow in meritocracy & struggle to pay their monthly bills.
 
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