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HUGE inflation is in the future...making the double-digit inflation under Jimmy Carter look childish in comparison. Thanks Dims!
No it isn't. Its stagflation. We are in a rent seeking environment. More rich people can dump free money into something like a corn field which will jack up the price of the land. Expensive land makes expensive products. Fewer people can afford expensive products, and so more economic malaise. Look at the results from last QE.
The more credit creation takes the form of inflating asset prices – rather than financing purchases of goods and services or direct investment employing labor – the more deflationary its effects are on the “real” economy of production and consumption. Housing and other asset prices crash, causing negative equity. Yet homeowners and businesses still have to pay off their debts. The national income accounts classify this pay-down as “saving,” although the revenue is not available to the debtors doing the “saving” by “deleveraging.”
I said the Fed would wait to do QE closer to the election. Has to be fresh in people's minds as they go to the polls.
A roaring DJIA tells everyone that Utopia is just around the corner.
No it isn't. Its stagflation. We are in a rent seeking environment. More rich people can dump free money into something like a corn field which will jack up the price of the land. Expensive land makes expensive products. Fewer people can afford expensive products, and so more economic malaise. Look at the results from last QE.
The more credit creation takes the form of inflating asset prices – rather than financing purchases of goods and services or direct investment employing labor – the more deflationary its effects are on the “real” economy of production and consumption. Housing and other asset prices crash, causing negative equity. Yet homeowners and businesses still have to pay off their debts. The national income accounts classify this pay-down as “saving,” although the revenue is not available to the debtors doing the “saving” by “deleveraging.”
There is no inflation because the banks are sitting on 1.5 trillion reserves and are not willing to release it out. The low rates actually cuts into the banks profits. When they release the money in form of loans, people will increase spending and 'feel' wealthier, and that's when inflation kicks in.
There is no inflation because the banks are sitting on 1.5 trillion reserved and are not willing to release it out. The low rates actually cuts into the banks profits. When they release the money in form of loans, people will increase spending and 'feel' wealthier, and that's when inflation kicks in.
I said the Fed would wait to do QE closer to the election. Has to be fresh in people's minds as they go to the polls.
A roaring DJIA tells everyone that Utopia is just around the corner.
Why would a Republican Fed chairman try to help a Democrat win the election? The Fed doesn't take orders from the WH, or the Congress. It's actually the other way round. The Fed always does what't best for their owners, the banks.
Why would a Republican Fed chairman try to help a Democrat win the election? The Fed doesn't take orders from the WH, or the Congress. It's actually the other way round. The Fed always does what't best for their owners, the banks.
Maybe you missed the part where the current Republican candidate for POTUS has said multiple times that he wants to fire Benranke...its called job security.
Although if I remember correctly, the Bernank said that 11 of the 14 Fed Presidents voted in favor of QE3, I don't have anything to back that up, was just 1/2 watching him speak on CNBC today.
There is no inflation because the banks are sitting on 1.5 trillion reserves and are not willing to release it out. The low rates actually cuts into the banks profits. When they release the money in form of loans, people will increase spending and 'feel' wealthier, and that's when inflation kicks in.
Where is the asset? The only asset capable of absorbing that amount of debt is real estate. Are there going to be trillion dollar RV loans? They just insured more stagflation which makes a housing recovery hopeless. Reserves don't matter. Asset equity matters. The only scenario I see is China committing financial suicide with us or an oil shock that would create an equity absorbing sponge big enough. Iran maybe could do it.
Where is the asset? The only asset capable of absorbing that amount of debt is real estate. Are there going to be trillion dollar RV loans? They just insured more stagflation which makes a housing recovery hopeless. Reserves don't matter. Asset equity matters. The only scenario I see is China committing financial suicide with us or an oil shock that would create an equity absorbing sponge big enough. Iran maybe could do it.
Your unborn children. Welcome to perpetuity-ville.
Bernanke, a GW Bush appointee, steps up to the plate. He knows the Repubs in Congress will do nothing for jobs and the Dems are limited in what Obama can do via Exec Order. So the Fed takes steps that will help with jobs. Get money into the system, get people buying things which gets Businesses to expand and hire. Best thing about the Fed action, there is no time limit. The Repubs will bluster and cry, but everybody knows why, their only desire is to keep and gain political seats. We need to see to it, that aim is not realized.
Where is the asset? The only asset capable of absorbing that amount of debt is real estate. Are there going to be trillion dollar RV loans? They just insured more stagflation which makes a housing recovery hopeless. Reserves don't matter. Asset equity matters. The only scenario I see is China committing financial suicide with us or an oil shock that would create an equity absorbing sponge big enough. Iran maybe could do it.
I wasn't trying to argue the 1.5 trillion was a good thing, but when banks have cash reserves, it is an asset for them. If it were up to me the Fed would disappear.
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Thanks Dims! 
