Bernanke: Fed Ready To Monetize Debt (credit, borrow, buy, interest)

[Nor'Eastah]

In this bloomberg article, Fed Chief Bernanke says the Fed may buy Treasuries to "aid the economy":

http://www.bloomberg.com/apps/news?p...5To&refer=home

Many are forecasting a 25 basis point reduction at the FOMC meeting on December 15-16, and a 50 basis point reduction is not out of the question. It's evident that the Fed is running out of ammo with the interest rate cuts, and needs to explore another avenue of manipulation.

Although we are currently experiencing asset deflation, we will shortly be experiencing monetary inflation, if this plan is implemented. You might wish to plan accordingly!

[gwynedd1]

Originally Posted by Nor'Eastah

In this bloomberg article, Fed Chief Bernanke says the Fed may buy Treasuries to "aid the economy":

Bloomberg.com: Worldwide

Many are forecasting a 25 basis point reduction at the FOMC meeting on December 15-16, and a 50 basis point reduction is not out of the question. It's evident that the Fed is running out of ammo with the interest rate cuts, and needs to explore another avenue of manipulation.

Although we are currently experiencing asset deflation, we will shortly be experiencing monetary inflation, if this plan is implemented. You might wish to plan accordingly!

Hi Nor'Eastah,

Here is my take.

Tightening lending will cut into credit based inflationary expansion. They can lower rates all they like but who will qualify to get it? Free food on a cruise ship! ....if you have a ticket. This will keep inflation down so that those who can borrow from the free money pool will make good on their purchases. They need to keep inflation down for club members. This will all be done to "help". When a poor sap sells his house at a 30% loss the new borrower will "help" that person with this new cash.
Its really just an adult swim in the money pool for now. No splashing or playing around to ripple the waves from the poor rabble. Only the rich and insiders will swim in the pool of the free money. Once some of the fur grows back then
we should see inflation uptick again.

Of course all they would need to do is implement a large stimulus and tax it back in if inflation strikes but that would not be commercially created debt but rather unprofitable treasury debt. That will not do.

The really bad news is we are not nor ever will be a banana republic. We are too far north and the weather is poor. We will be one among the emerging kale and turnip republics.