Please Register or Log in to view the hidden image! As bond funds become "negative buyers" of Treasury paper, Fed must buy more to finance deficits (if they are not cut correspondingly). * This despite the large gains in equity part. I.e. value of its bonds is both falling with interest rising and early "bond vigilantes" are getting out before more loses accumulate.
Oh hogwash, for starters the Fed does not finance the deficit. So your claim that the Fed MUST BUY MORE is just pure hogwash. In finance it is all about risk and return. Equities offer a better risk return profile, therefore money moves from fixed income to equities (i.e. stocks). That is normal, that is to be expected, that is healthy. It is not Armageddon or the precursor to Armageddon.
Oh hogwash Billy T. That is nonsense. The unborn are not in debt. And surprise, you national debt numbers are wrong. As of this writing the national debt is $12,206,195,534,277.00. The population is about 318 million. You do the math. It ain’t $149,434 per person. It’s $ 38,384.26.
I typed a detailed reply to post 83 Joe but when submitting it was told: vBulletin Message: Your submission could not be processed because the token has expired. So will only re-type the first part and note again that your give zero supporting references for your many opinions and my post was based on links given and reference to the National debt clock org. I did, as my only, opinion note: Ponzi would have been proud to have done even 0.000,1% of this. How much debt burden (money) the US tax payers each owe in average now. If not the yet unborn, who will repay the ever increasing per capita national debt? Little green men from Mars? Please Register or Log in to view the hidden image!
Oh so you think the Treasury just burned the 88.4 billion of profits the Fed sent to the Treasury during 2012. How silly of me to think that 88.4 billion was used to finance that much of the US's deficit in 2012. Please Register or Log in to view the hidden image! But of course my real point was that if the deficit is "D" and non-Fed buyers buy bonds with face value total of "d" then the Fed must buy treasury bonds of total D-d. So if d is growing smaller each year, then that Fed's buying must increase.* It is a fact that the Fed now buys a higher fraction of the total than it did a few years (even last year?) ago. * Unless as I noted in my original post 82: (the deficits are not cut correspondingly). In recent years, it is a fact that the Fed did buy more than in the prior year. So I ask you why should that change? It certainly will still be true for 2013 as already is.
Yes how silly of you to create a straw man. As I said before and what is clearly evident, the Fed remitting its profits to the Treasury is funding government. It is not financing the deficit. Congress decides how to spend the money, not the Fed. Congress finances its deficits. So by making the claim you made, you are being more than a little dishonest. The Fed does not finance the Treasury’s deficit. It provides revenues to the Treasury. You are not making any sense. As previously pointed out to you the Fed doesn’t have to buy any government debt. And the Fed doesn’t even buy most of the US public debt. And three, the Fed’s purchase price of any fixed income asset is its present value….not that D-d nonsense. I don’t know what you are trying to say. It doesn’t make sense.
No it is not, the per capital debt number is a point in time measure and the data is readily available from the US Census and the US Department of the Treasury. The number you used were incorrect and grossly overstated per capita public debt. Additionally, the US debt need never be paid off. It only needs to be serviced. You are making a common mistake made by those with little knowledge of finance and economics. Individuals at some point must pay off their debts as their lives are finite. Governments on the other hand are not constrained by the frailties of human mortality. They need never lower their debt levels. Little green men from Mars are not needed. Time works to the advantage of governments. Economic growth and inflation automatically shrink the value of public debt.
That is correct, in principle but not in practice. If it were true when excessive thin-air money is being printed, then Zembabwe would not have had its currenc y collapse. What you neglect is that US still needs to borrow from someone. That "someone" is increasingly the Fed. I.e. US is following Zembabwe's path. Fed is now buying ~80% of ALL Treasury new issue. When it is the only buyer, then US is doomed to follow zembabwe's path to the end, unless it can reduce expenditures to be less than revenue. If it can, then that is when that genreation starts to pay off the debt. So which are you expecting: The yet un-born will start paying the debt, or the dollar will collapse or ? If you have a third alternative, please give some detail as to how it is possible without being essetially the same as the first - I.e. reversing your self and admitting the "yet un-born will pay the debt we are building" as I said, and you said was false."
You are increasing the number of your false statements. Congress does not finance the deficits. It CREATES THEM, especially the House of Representatives, by passing new spending laws and sending them on to the Senate (and not cancelling older ones) that that make the total US expenditures greater than the Revenue the Treasury collects. If this difference, the annual deficit is D and the revenue the Fed sends to the Treasury is F then the Treasury needs to only borrow, issue new bonds, totaling D-F as the Fed has financed F of the deficit D. It is simple math, surely you can understand that, at least. More may come on rest of your post but first some data to contrast with your false opinions the first example of errors, which was (with correct data below from Fed it self, via CBS): A few years ago, before the QEs, China held more of the US debt than the Fed did, but when Fed is buying ~80% and a growing percentage of new treasury issue, that has flipped. Fed now (12November 2013, not 2 January 2013) owns more than twice as much of the US debt as China does. You have argued that China can not dump the Treasury bonds it holds as would be badly damaged. Seems to me that is doubly true for Fed which hold more than twice as much.* As someone must buy the new treasury paper and forigners are buying an ever smaller fraction (no more than 20% now) the Fed is trapped into buying more. As I have said for about a year now: "The Fed has a tiger by its QEtail and can't let go." (For this "someone must buy Treasury bond / finance the deficit" reason and now the Fed is doing the "lion's share" of that; but even it that were not true, the equities market has come to expect the production of ~85 billion of new thin-air money each month and even just a hint that it might stopped was a "cold shower" for equity prices and the associated "wealth effect" the Fed is counting on to hold buying of goods and service up - avoid the Fed's feared deflation. * Even the Fed now admits it can not reduce its growing balance sheet by selling assets as you said in many posts. "Fed can destroy new money as easily as it can create it" or words to that effect. Note that 1.46% increase in a week is also a drop in the value of the MBS the Fed hold. As interest rates rise (necessary to keep Fed from being the only buyer of new Treasury paper) the Fed is taking a "paper loss" on the 85billion it buys each month. Again the Fed is "trapped" can not do what you said it could "easily do - sell assets" to lower it balance sheet. Here is graph of the commonly referenced 10 year treasury bond's growing interest: Please Register or Log in to view the hidden image! That is a 75% increase in one year, but as much of the existing debt has fixed rates, It will be a few years before just paying the interest on the already existing debt increases by ~75%. Please Register or Log in to view the hidden image!It is a shame that your opinions are so frequently contradicted by the facts.
Uh, no. What is a scam is what people like the author of the op-ed piece you referenced are perpetrating. Federal Reserve Bank presidents are elected by bankers. They advocate for and push for Fed policies which are advantageous to bankers. Hazar is playing politics and trying to earn some big bucks by playing to a constituency. http://www.aei-ideas.org/2013/11/on...-the-confessions-of-a-quantitative-easer-guy/ Quantative easing hurts banks by keeping interest rates low. After all, banks make their money charging interest on loans. Higher interest rates benefit banks as they can charge customers higher interest rates (i.e. prices). So if you believe Huszar's op-ed piece you are being played for a fool.
LOL…that is funny Billy T. Here is the unpleasant fact for you. Congress decides how public funds are spent, not the Federal Reserve. Congress creates public debts and it funds (i.e. pays) those debts, not the Federal Reserve. The Fed’s profitability has nothing to do how congress spends its money as you had claimed. You changed your formulas. Yes if congress creates a deficit, it funds that deficit with debt or higher taxes. But that really isn’t relevant to your claims about the Federal Reserve. Putting your hands over ears and chanting la la la and citing more specious conspiracy sources as you are want to do, does not change the facts which were previously presented to you using real data from record of reference sources. You overstated the debt. Your numbers were and remain wrong for all the reasons previously stated. It is a fact that if China dumped US Treasuries it would destroy its economy as China is heavily dependent on US trade. Here is the difference between China and the Fed; the Fed is not a country. The Fed is a central bank. The Fed is not dependent on US trade. The Fed need never sell its US Treasury bonds.
It's deceptive, as I said the author is being a bit deceptive. He is pushing a political agenda and playing on the ignorance of his readers. What is more important is what he is not telling his readers. The goal of QE is multifold. It isn’t just to reduce interest rates for consumers. It’s to ensure there is enough liquidity in the financial markets….to ensure institutions have enough money to pay their bills and keep producing and keep people employed. Credit accessibility has been and remains an ongoing issue for consumers as banks remain risk adverse. And given the circumstances, who can blame them? They lack confidence and restoring confidence takes time. It doesn't happen overnight. Trust must be earned over time. It has always been so and will remain so. If you are a very trustworthy customer (i.e. good credit rating) you are making out with our current low interest rates. That said, interest rates have gone down for everyone including consumers. That is a fact. Lower interest rates and tighter interest rate spreads has squeezed bank profitability. That is why banks want an end to Quantitative Easing. Banks want higher interest rates because they earn more money with higher interest rates. So the notion being sold, that Wall Street is pocketing the extra cash is false. It is at best what we used to call sales puffery. And as I pointed out there are two groups within the Federal Reserve, the Fed Bank presidents and the Federal Reserve Governors. The former are elected by member banks and represent banking interests. The latter are appointed by the POTUS and approved by the Senate and they represent all Americans. This guy is pushing the banking interests; perhaps he is campaigning to become a Fed president. http://finance.fortune.cnn.com/2013/07/12/federal-reserve-interest-rates/
Now in adition to your numerous prior false statements and putting workds in my mouth I never said you said, in now bold text just quoted you falsely say: Congress pays debts. NO. The US Treasury pays the US debts. Did you note know they recently made a "guestimate" of how long they could do that if the debt ceiling was not increased. I never said the Federal Reserve pays debts. Here is what I said: I.e. the Fed turns it profits, when they exist, over to the Treasury it only needs to borrow D - F to pay all of the deficit, D, and the other obligation the Congress, has created, like Social Security. Those are Treasury Checks, not check written by the Congress, although most in modern times are direct deposits made by the treasury, not Congress. Making reply post with more false statements (about a dozen now, but I have lost accurate count) buy please ceases with your habit of putting word in other people's mouth and then saying they are false. I'm too busy just now to make more corrections to your post but had to take time to protest your putting words in my mouth I never said.
LOL, yeah Billy T I have seen that play book before. Whenever I point out the silly things you write, you excuse it by claiming I am putting words in your mouth. LOL, your problem is the words you write. And you are doing it again. I suggest you get a copy of the US Constitution and read it. Congress is responsible for raising revenues and paying all the nation’s debts. The Treasury does nothing without the approval of congress. If congress does not authorize payment, nothing is paid. Let’s try to keep it simple for you. If I purchase a good or service and I get the bill and I tell my accountant to pay the bill and the bank cashes the check, who paid the bill, did I pay the bill or did the bank pay the bill? The bottom line here Billy T is that the Fed is not funding the national debt when it returns its profits to the US Treasury as you had claimed. Congress decides how that money is spent or if it is spent. You said the Fed financed the US debt, and I accurately restated your claim. I never said you claimed the Federal Reserve pays “debts”. That is you putting words in my mouth. The unfortunate truth for you is Fed does not finance anything other than its internal operations and to claim otherwise as you did is just wrong. And as usual Billy T you are getting lost in the details. The Treasury cannot do anything without the authorization of congress. The Treasury is an agent of Congress. Congress decides what revenues the Treasury will collect and what moneys will be spent and how it will be spent…not the US Treasury. How about you make one cogent and true statement? And how about answering my several challenges made to you? And how about stopping the obfuscation an engaging in honest dialogue?
Financial Times was hinting at a new solution: Negative Interest Rates for savers. How DARE they save! They need to do their patriotic duty and go into debt! Spend Spend SPEEENDDD!!! That's the "American Way". Well, that and LandLording. Negative interest - can you imagine?
No need for imaginations. It has happened in shorter term bonds, even 2 year bonds, recently if speaking of the real, not nominal, interest rates.
It won't take much "arm twisting" to get new Fed chief, Yellin, to keep QEinfinity living up to its name. I bet after the next FOMC meting they hold the bond and mortgage buying at current 75billion or at least don't drop the rate of mortgage buying as that would stress the FHA, Fanny & Freddy May. For more on the sad / dangerous state of FHA see: http://www.sciforums.com/showthread...in-the-wings&p=3153641&viewfull=1#post3153641 Note that FHA had to ask treasury for 1.7 billion in help to pay its bills only ~4 months ago - first time since its founding in ~1930 it could not pay its own way! and with 30 to 1 leverage on mortgage debts that themselves are highly leveraged in many case, it only takes tiny decline in the economy for FHA to be back at Treasury asking for more help. FHA may be a 10 billion dollar unfunded debt tab for the Federal Government to pick up as is Social Security, now that instead of sending funds to the Treasury, the SS administration is asking Treasury to pay off bonds it holds so it can pay the SS benefits to the explosion (10,000 /day) of baby boomers retiring. They were tax payers in the highest earning / tax paying/ years now switching to be "negative tax payers" I.e. collectors of SS in many cases.
