Fed announces policy shift on inflation (2014, foreclosure, pension, purchase)

[EDS_]

Originally Posted by Johnhw2

C
I know an economist with the Dallas Fed who was base in Houston for a while. We had a monthly breakfast to discuss Houston economy and implications for the large MPC's we owned. A U of H professor joined us when he could. I assume you are not talking about the same guy I knew, Bill Gilmer?

Different guy. I'll DM his name to you later.

[mathjak107]

Originally Posted by C2BP

I once saw a Beavis and Butthead episode where they each had a box of candy bars to sell. Butthead bough a candy bar from Beavis for a dollar and Butthead ate the candy bar. Beavis then bought a candy bar from Butthead with the dollar he just gave him and Beavis ate the candy bar. They went back and forth with the same dollar until both had eaten all the candy bars. It kind of reminds me of our Zombie Economy propped up by the FED with a massive shrinking of GDP.

The FED is the enemy of the American people. How can anyone have any trust or hope in this criminal and corrupt organization and the entire system? Starting with Alan Greenspan all previous FED members since 2001 should be arrested and publicly prosecuted for treason.

You have a vendetta against the fed ...not all of us do so don’t say the fed is the enemy of the American people

[SkyDog77]

Originally Posted by C2BP

The FED is the enemy of the American people. How can anyone have any trust or hope in this criminal and corrupt organization and the entire system? Starting with Alan Greenspan all previous FED members since 2001 should be arrested and publicly prosecuted for treason.

This is a religious argument for you. It’s rooted in a fundamental belief, not data.

[lchoro]

The problem is that the Fed does not act as an independent regulatory body which seeks to rein in dangerous practices in the financial system. They assist the institutions in taking excessive risk and look the other way on fraudulent business dealings while providing guarantees that their losses will be offloaded to the government.

Fed charged with regulatory capture

[SkyDog77]

Originally Posted by lchoro

The problem is that the Fed does not act as an independent regulatory body which seeks to rein in dangerous practices in the financial system. They assist the institutions in taking excessive risk and look the other way on fraudulent business dealings while providing guarantees that their losses will be offloaded to the government.

Fed charged with regulatory capture

The mission of the Federal Reserve System is to foster the stability, integrity, and efficiency of the nation's monetary, financial, and payment systems so as to promote optimal macroeconomic performance.

No more, no less.

[Wolverine607]

Originally Posted by SkyDog77

The money that entered into the system in 2009 largely sat on bank balance sheets as reserves because of new requirements that were meant to ensure bank stability. The money that just entered the system went directly to people who spent it. The impact on inflation will likely be different because of this.

Where is this money that went directly to people who spent it from the FED. I saw no such magic deposit into my bank account? Well I got the $1200 stimulus check but that was from congress and added to deficit not from the FED?

Who got this money form the FED bond buying that went to people who spent it? I mean large institutions only have enough to sell bonds to the FED. So super rich people maybe got it or super rich corporations who owned bonds that they sold to the FED?

[Igor Blevin]

The Fed is afraid of deflation again, just like 2009. They are worried the fallout from Covid 19 is going to result in a deep new recession.

You can hear the helicopter firing up to drop money again, just like Ben Bernanke did in 2009-2012. More new years of quantitative easing, and all the printing is going to cause inflation.

The other sound you hear is the clunk of gold being stored away by everyone who sees the coming financial collapse (eventual & ultimate, not impending). The national debt is going to $40 trillion before you know it after being at $5 trilion in 1990.

STUNNING.

And 97 percent of people don't know and don't care because they don't understand the ramifications.

[SkyDog77]

Originally Posted by Wolverine607

Where is this money that went directly to people who spent it from the FED. I saw no such magic deposit into my bank account? Well I got the $1200 stimulus check but that was from congress and added to deficit not from the FED?

Who got this money form the FED bond buying that went to people who spent it? I mean large institutions only have enough to sell bonds to the FED. So super rich people maybe got it or super rich corporations who owned bonds that they sold to the FED?

I suggest an intro level macroeconomics course.

What mechanism do you think allows the Treasury to have the money to send you that $1200 stimulus check? Where do you think the money is coming from that is funding the PPP program?

The Federal Reserve can and does create money, and it can and does use that money to buy government bonds. That’s what the Fed did during the Great Recession of 2007-09, and that’s what it is doing now. To be precise, the Fed isn’t giving money directly to the Treasury. The Fed is, in effect, buying government IOUs (Treasury bonds) from private investors or foreign governments who have lent money to the Treasury. But, of course, the more the Fed buys, the lower the interest rates that the government has to pay on new borrowing, and the more the U.S. Treasury can borrow overall without pushing up that interest rate.

https://www.brookings.edu/blog/up-fr...avirus-crisis/

[Igor Blevin]

Originally Posted by SkyDog77

That all depends on inflation. The Fed hasn’t even been able to hit their target 2% (I know that there are people who don’t buy that number, but this is a constant metric that we are using) after the last round of QE. If it does go up this time, and there are reasons to believe it will, rates will have to climb.

Interest rates will never climb appreciably again. We will never be able to service the interest on a $40 trillion national debt with the prime at 5%, for example.

The Fed has painted us into a corner of zeroish prime interest rates for the forseeable future or until the ultimate financial collapse. The ability to lower interest rates to stimulate the economy is now dead and gone. The best thing we could have done in 2008 was to let the market puke up and expunge all the debt and take our hit with a short term economic depression that also achieved risk management so that irresponsible institutions learned Uncle Sugar would not bail them out in the future.

By rewarding all the irresponsible institutions, they learned that the taxpayers would backstop every insane risk they took. Heads they win, tails they don't lose.

This ends badly. Hopefully not in my remaining lifetime.

[Wolverine607]

Originally Posted by SkyDog77

I suggest an intro level macroeconomics course.

Where do you think the money is coming from that allowed congress to send you that $1200 stimulus check? Where do you think the money is coming from that is funding the PPP program?

Your probably right. The FED printed that money to give us that check.

If congress did not give us tyhe checks and the rest of money on FED balance sheet, how does it make it into mainstream economy? None of the rest of that was seen in anyone average person's bank account.

I mean the FED's balance sheet is $7 trillion. And $1 trillion is about $3000 per person. So if all $7 trillion went to economy, then $21K should be in each person's bank account with United States population of 330 million.