Fed capitulates: the central bank is broken

Originally posted by anachryon

Originally posted by seek4 truth
The government borrows from the Fed and if anything the treasury is paying them for debt owed by the government.

You might want to do a little reading whilst you seek truth, my friend.

...an unprecedented action.

I wouldnt believe everything you read! But just out of curiosity who is it that prints the money?

Originally posted by The Stand
But just out of curiosity who is it that prints the money?

The Bureau of Engraving and Printing handles the notes, the US Mint mints coinage.
BEP is under the US Treasury, the Mint is under the Dept of State.
Other bonds and securities are handled through the US Treasury.

The Federal Reserve doesn't print any money. It issues the money printed by the various governmental offices.

Originally posted by anachryon

Originally posted by The Stand
But just out of curiosity who is it that prints the money?

The Bureau of Engraving and Printing handles the notes, the US Mint mints coinage.
BEP is under the US Treasury, the Mint is under the Dept of State.
Other bonds and securities are handled through the US Treasury.

The Federal Reserve doesn't print any money. It issues the money printed by the various governmental offices.

So would it be safe to say that they decide how much money is printed and where it goes?

Originally posted by Anonymous Avatar
It is deflationary as long as the tier banks are hoarding this cash. Anachryon, do you think they are planning on releasing it into the wild and if they do, do you think Hyper-Inflation will occur?

That is a very good point. They can basically crash the dollar at will just by re-adjusting the interest rates on this money. Maybe this is their plan, so their banker buddies can really cash in. It would be a good idea to keep an incredibly close watch on that rate IMO.

Originally posted by The Stand
So would it be safe to say that they decide how much money is printed and where it goes?

You're asking the wrong questions to get your point across. Try just being direct and saying what you mean next time.

Monetary policy is much more complex than "Does the Fed decide to print up a bunch of money?"
The Fed can order printing of $4 quadrillion if they want, but that money won't be "printed" unless the Treasury (and other related departments) approve its addition to the gov't balance sheets.

reply to post by anachryon


You mean unless they agree to pay the interest on it!!

anyone want to roast a pig. i like pork. roasted pork is good.
to many pigs on the land, lets go get us pigs and feed the whole. we can make a large feeding frenzy and talk about how to better cut the fat off of the pigs. oops. gee, im hungry.

Originally posted by anachryon


I'm working under the assumption that recovery will happen. Maybe not V-shaped, maybe a wide U or an upside-down candy cane. L isn't something I'm ready to consider in a research sense. It's possible, and my gut takes it into consideration, but my brain is expecting eventual recovery.

When new companies start up to take advantage of the next bubble, whatever that may be, whenever that may be, the demand will be there and the will won't be far behind as the money starts to flow. That hoarded money will come out sooner or later unless there's a complete collapse of the U$ a la the Papiermark.

I think it depends on what people mean by "recovery"

The further the economy spirals thru the reinforcing cycle of unemployement and less consumer spending, the recovery would not imply a return to previous years prosperity but instead a stop to the decline and then a subsequent rise which will not come close to reaching the heights of the prior apex.

In regard to the (supply of hoarded money) i am skeptical as to how much money is being hoarded that is not needed to keep there capital base at a level that meets the minimum requirements after the beating company's took from deleveraging due to asset price falls. I don't see this hoarded money as being "inflationary ammo that is being stocked up in the closet" but instead as survival fuel that is hoarded to meet capital requirments. I could be wrong but that's how i see it now.

I don't see any new "bubble's being created". The biggest potential i see for a "recovery" ( or stop to the potentially free falling economy) is a wide spread gov't investment in the infrastructure of this country as well as in a very aggressive alternative energy infrastructure plan implemented. Both could serve to fill some of the employment void's left from the coming job losses. I think obama and congress may be allowed to be aggressive on this front

Right now we have deflation and this is taking root in the economy, the best way to avoid this is very debateable and the only remedy in monetary policy maybe to merly delay it's occurence thru more and more reckless bubble's and then on it's eve, try to convince the investor class that it won' be allowed to happen here. although after it does i think history show's a one time devaluation also makes it easier (a political decison chosen to pay off any public liablities (medicare/S. security with cheap/worthelss $) and get out of the deflationary spiral as well as inflate real asset prices again (that the wealthy elite hold)

Regarding public debt, some country's also have historically allowed a debt forgiveness /jubilee as well which brings down public debt to a level that would allow them to take on new loans which could get the economy moving again. Regarding Gov't debt, keeping intrest rates arificially low on debt (via intrest rate derviatives) and having country's dependent on your consumer (japan , china) are great ways to continue to keep the intrest rate burden on the gov't debt at a serviceable level for longer than it otherwise should(not to mention having petro dollar revenue's recycled into your gov't debt) and when that is falling off due to (lower oil $) the political leverage wil be used to "entice" citizens to place there 401k's in a position which fill the void in demand for gov't debt to keep the intrest payment's on gov't debt serviceable. wether the international debt (gov't intrest rates can be kept down) or the public debt obligations hit the fan first may determine what policy's of (1 time devaluation) debt forgiveness or default may be used and *in what order*.

I don't think many foreign country's are under the influence that the U.S govt is going to pay them back anyway, one group (OPEC) seems happy to keep investing in gov't debt so long as the u.s protects them militarily (while they price oil $), the other group China, japan seem to invest in govt' debt merely to keep intrest rates down which helps keep U.S consumers able to buy more of there exports which are need to support there own economy's. Due to this think it is possible for the bankers to potentially maintain there confidence game with paper and keep asset prices high by first a one time devaluation of the currency (while foregin govt's continue to purchase the gov't debt (although this choice would be most likely in the case of a debt forgiveness for the american public) because then the foreign gov't buying u.s gov't debt may think that the u.s consumers would still be capable to support the foreign country's export markets.........phewwwwwwwwwww

central bank Traditional reflationary measure's can't be used when citizens are in tremendous debt, losing there jobs, and company's are dealing with the subsequent fall in earnings with many facing bankruptcy as the walmarts survive and especially as financial institutions are heavily deleveraging from the prior credit expansion. All at the same time a dervivative monster was created in a ponzi scheme which *likely IMO* also serves to keep intrest rate's and gold prices down so that the confidence game in paper currency can be continued thru connected banks like JP morgan and Detushe bank in particular. A one time revaluation of the dollar will at some point likely be required to get us out of the deflationary spiral (and monetize the debt) public and possible gov't debt. If foreign country's don't support the gov't bond market in the face of a large devaluation then perhaps a default on foreign debt will occur. I see this coming to head in a couple years as the deflationary recession deepends into a depression and the debt's become relatively larger due to deflation.



[edit on 10-11-2008 by cpdaman]

[edit on 10-11-2008 by cpdaman]

reply to post by cpdaman


Hi Cpdaman,

Your posts are fantastics, they explain well the damned situation, but you expect default on U.S. debt in the next years.

I think it would be within 9 month from now, in mid 2009. Not funny, but they saw the september crash accuratly.



www.swissinfo.org...


www.leap2020.eu...!-Alerte-Crise-Systemique-Globale-Ete-2009-Cessation-de-paiement-du-gouvernement-americain_a2240.html

Weiss' money and markets also foresee a crash on US Bonds.

The carotts are cooked !!!!

Best of luck

reply to post by anachryon




Yes indeed, the Treasury & the Fed. both realize the 'central bank' is broke+broken....

that is the reason why the 11-11-08 push to get all commercial mortgages... re-done in more rational terms,
they are not just focusing on the Freddy/Fannie/Hud safety mortgages...


now they want all mortgages to be refinanced, including lowered interest, and exotic 'balances' with back-end loading of the original (albiet exaggerated/inflated cost basis)
and radical requirements like a 38% cap on a cost-income ratio !


see, what they are trying to hide in the smokescreen,,, a smokescreen of finally addressing the fraudulently originated 1st mortgages by millions of (unqualified) home-buyers... with a couple of hundered Billion$ in mortgage restructuring/bailouts which will attempt to hide the +2 Trillion$
of Bank bailout/AIG insurance bailout/Freddie-Fannie bailout ....
monies already spent!
And make the public feel guilty of 'breaking the US Treasury Bank,
because of the Trifiling Ammount spent on mortgage programs launched on Veteran's Day, Nov 11th, 2008.

its another game being played on the populace,
making we-the-people feel guilty & responsible... when it is actually the corrupt banker & investment system that collapsed the USA finance system & the dollar itself being thrown into a combined deflationary & followed immediately by hyper inflation as the well paid elites that actually broke-the-bank ... have enough money to bid up the cost of the resources that remain.



say la vie