The bimbo from Alaska is suddenly an expert on monetary policy.

[Hicup]

You make a point about lowering interest rates. But if this lowering of rates is based on an artificial action such as Fed intervention it probably has less beneficial effect. Bankers may be concerned that this action will have the desired effect of increasing inflation. That would mean that they would be lending long term at low rates and then when inflation rises, interest rates also rise and they lose the opportunity to lend at those higher rates.

The country is already flooded with liquidity. What does adding another $600 billion to the money supply help? Lower interest rates by a few basis points, short term big deal.

Something we should be concerned about and be on the lookout for is the G20 finally taking a hard look at how to replace the dollar as the sole currency reserve for the world. If that were to happen, then we would be at the mercy of the IMF to help work out our debt situation.

Good grasp of the situation, however, I do warn most that this infusion is asking for trouble that begins geo-politically, and ends with potential monetary disaster. Not to mention that Washnut is correct, the liquidity of the private sector is not at issue, everyone has money; and that's the point afterall. With the uncertainty of Obama policies, everyone is holding on to it, and why wouldn't they? The Federal government can't induce anyone to free up the cash, and in large part why the "recovery" is stalled. It's Obama's own fault. What did he expect? Check that, never mind, he hasn't surrounded himself with people that care about all aspects of American society, only those that serve his overall agenda.

Pushing the dollar out as the standard would be very bad for the USA, and perhaps, and since Obama can't get us into the global kumbyaya willingly, he'll do it covertly, and infusing of cash into the market when it isn't even remotely needed, is one way to force the political will of the G20, and our trading partners to do it anyway. The only hope is that Germany, China, and the rest, realize that this is Obama's plan, and they don't take the bait and wait out the next two years.

I have a feeling that everyone is going to wait it out for another two years. Probably the best move!


Tim-

 

[Kushinator]

I should point out a couple of things before foot mouth syndrome becomes a thread epidemic.

First: The "suddenly concerned" international community can stick their manipulation jumbo up their ass. They have no problem allowing the dollar to depreciate when we were buying all of their goods in record numbers. In 2007, the US trade balance was <-$600,000,000,000. During that time, the USD:IND was < 77.89 (the current value). The only people who were griping at the time were the tin hat hyperinflation predictors and oil producing nations. Germany, China, Brazil etc..., were quite silent on the issue (and purchasing US debt in the process).

Had the US dollar not been the world reserve currency, the value would most likely have been far lower, but of course our trade partners must protect the market value of their reserves (our debt). So...... they were buying like they were in short supply. The market value of new issue US Treasury certificates remained relatively close to face value, and that was that.

Suddenly, when the US is purchasing 40% less goods from abroad (a function of consumer demand), inflation is very low, and the US dollar value begins to trade on par with fundamentals, it is a manipulation.

What the tabloids fail to articulate is how the US dollar has responded since late 2009. If you look at the trends in job creation, when we were in the negative, the dollar would fall. When we began seeing positive job creation, the dollar would rally.

Even after the Fed officially announced QEII, job numbers came in more than twice the streets estimate, and......................, that’s right, the dollar rallied.

Second: The Fed has a duel mandate; price stability and unemployment close to the natural rate. Prices (and this includes all prices except for minerals) have yet to hit their pre-crisis levels. Yes corn futures are higher than last year, but they are still 35% below their pre-crisis high. Yes gasoline is higher than last year, but it is still 35% lower than its pre-crisis high.

I am not calling for $140 oil, or $8 corn; but we must come to terms as to why the Fed has stepped in. Fiscal authorities (Congress) will not provide the market with proper fiscal stimulus. If Congress were to provide a level of stimulus necessary to translate into sustainable job creation, we would not be having this conversation.

Instead, the partisan blinders seem to be super glued to the eye sockets; and a few political hustlers want to make headwind by barking about a concept they have shown little (if any) ability to comprehend. Congratulations :sigh:

 

[Kushinator]

Goldenboy, we don't have customers. You know, the folks that walk into a business wanting to buy ?

Funny. How can commodity prices rally without customers? That's right, its some magical set of events. :lamo

 

[ARealConservative]

Second: The Fed has a duel mandate; price stability and unemployment close to the natural rate.

I used to believe this to be true.

 

[Eighty Deuce]

Funny. How can commodity prices rally without customers? That's right, its some magical set of events. :lamo

Again, is this willful ignorance ? Let's take oil, and your "rally". Don't add one new customer to the worldwide demand for oil. But begin to pump dollars with zero relation to GDP growth into the market, and watch the price in dollars go up !! You can understand that, right ? Its not the oil going up so much as it is the dollars going down ? What do you think the record gold prices are ?

As mentioned earlier, Obama has finally managed to tax the middle and lower classes bigtime. And to the liberals, this is a good thing. How friggin bass-ackward, upside down allegiance, Obama knee-pad wearing can you folks get ?

 

[cpwill]

The original line that sparked the whole joke was:

It's just more humerous to say "you can see Russia from my House!"

it is funnier that way, agreed.

are you saying there is no island in Alaska that is within visual range of Russia?

 

[Kushinator]

Again, is this willful ignorance ? Let's take oil, and your "rally". Don't add one new customer to the worldwide demand for oil. But begin to pump dollars with zero relation to GDP growth into the market, and watch the price in dollars go up !! You can understand that, right ? Its not the oil going up so much as it is the dollars going down ? What do you think the record gold prices are ?

You failed to mention the basis of the price mechanism. How can prices go up (even with gold) if nobody is there to buy the said goods? I am not denying the value of the dollar has fallen since June. But in order for prices to go up, people have to be buying. This is a fundamental theorem of microeconomics.

As mentioned earlier, Obama has finally managed to tax the middle and lower classes bigtime. And to the liberals, this is a good thing. How friggin bass-ackward, upside down allegiance, Obama knee-pad wearing can you folks get ?

You sure know how to spin it.

 

[Eighty Deuce]

You failed to mention the basis of the price mechanism. How can prices go up (even with gold) if nobody is there to buy the said goods? I am not denying the value of the dollar has fallen since June. But in order for prices to go up, people have to be buying. This is a fundamental theorem of microeconomics.



You sure know how to spin it.

Are we debating whether or not any money is trading hands out there ? Regarding my original post about "not having customers", did you take it literally that I meant that there were zero customers out there ? Is that where we are at with discourse here ?

Do I then have to point out that in my example, I was saying that the model assumed demand stayed exactly the same ? I did say that, did I not ? And that the action of the Fed would cause commodity prices to go up. Heck, I've "made" money in dollars because of this. But I also will be paying more for food and gas. I am able to benefit some from this action. It is the lower end of the economic spectrum that will get pinched.

This is a gimmick by the Fed. It is leveraging equity from everyone else. Its really pretty cut and dry. It absolutely will cost folks more money here just to get through the day. Whether it starts a currency war that only makes it worse remains to be seen. I remember the pain of undoing stagflation in the late 70's and early 80's. That is where this crap leads.

Obama is a disaster. Forget that he is Repub or Dem ... we had to throw in the towel on Nixon decades ago ... I know the feeling. Obama is a failure. Let the idiot go.

 

[Kushinator]

Are we debating whether or not any money is trading hands out there ? Regarding my original post about "not having customers", did you take it literally that I meant that there were zero customers out there ? Is that where we are at with discourse here ?

Of course not. Lack of customers equates to lack of demand for the underlining good. There seems to be demand for commodities.

Do I then have to point out that in my example, I was saying that the model assumed demand stayed exactly the same ? I did say that, did I not ? And that the action of the Fed would cause commodity prices to go up. Heck, I've "made" money in dollars because of this. But I also will be paying more for food and gas. I am able to benefit some from this action. It is the lower end of the economic spectrum that will get pinched.

And therein lies your problem. You are bastardizing demand to fit your argument. Increased demand does not require more customers, it requires customers to be willing to purchase the good at a higher price. Given your previous IS/LM error, you are getting way to far ahead of yourself in this example.

This is a gimmick by the Fed. It is leveraging equity from everyone else. Its really pretty cut and dry. It absolutely will cost folks more money here just to get through the day. Whether it starts a currency war that only makes it worse remains to be seen. I remember the pain of undoing stagflation in the late 70's and early 80's. That is where this crap leads.

If a US mining company can suddenly charge more money for their product, do they attempt to sell more (increase supply)? How is it that a mining company increases supply?

BTW, stagflation of the 70's and early 80's was a function of consumer expectations of supply falling given their particular demand schedule. Due to the inelastic demand properties of petro, this will naturally translate into increased prices given a supply shortage. Perhaps this can be of some help:Supply Side Exogenous Shocks

Obama is a disaster. Forget that he is Repub or Dem ... we had to throw in the towel on Nixon decades ago ... I know the feeling. Obama is a failure. Let the idiot go.

Funny; I’m not a democrat. Let go of your constant need to speculate about me as a person. It shows you have run out of ammo.

 

[Aunt Spiker]

it is funnier that way, agreed.

are you saying there is no island in Alaska that is within visual range of Russia?

LOL

Indeed there are some! But she most assuredly can't see Russia from her house

 

[cpwill]

which, again, is a tina fey quote; not a palin one...

 

[Aunt Spiker]

which, again, is a tina fey quote; not a palin one...

Which was first brought into this thread as a joke purely for it's humor inspiring qualities.

 

[tryreading]

source

I just have one question: Where was "momma grizzly" at when the Fed purchased somewhere along the lines of $1.5 trillion in US Treasuries and mortgage backed securities in late 2008 early 2009?

Probably licking her wounds from the election. Now she is an expert.... Great:shock:

Well, she does read The Economist now.

 

[Grant]

Which was first brought into this thread as a joke purely for it's humor inspiring qualities.

Yes, it was amusing two years ago. Now it's a parody of those who still thing it's funny.

 

[imagep]

Again, is this willful ignorance ? Let's take oil, and your "rally". Don't add one new customer to the worldwide demand for oil. But begin to pump dollars with zero relation to GDP growth into the market, and watch the price in dollars go up !! You can understand that, right ? Its not the oil going up so much as it is the dollars going down ? What do you think the record gold prices are ?

As mentioned earlier, Obama has finally managed to tax the middle and lower classes bigtime. And to the liberals, this is a good thing. How friggin bass-ackward, upside down allegiance, Obama knee-pad wearing can you folks get ?

I am under the impression that the price of oil and gold has gone up world wide - in all or almost all currencies. If it is all due to "dollars going down", then wouldn't the cost of a foreign made tshirt or baseball cap be going up at the same rate as gold? Could it be that the record gold prices have a lot more to do with hype than anything else?