Income Inequality and Monetary Policy

[JimmieD]

we're talking about economics here, not the fine points of banking!! The issue always is, what monetary policy is the right one.

Monetary policy involves the banking system. If you can't understand how monetary operations work, how could you possibly come to the conclusion of the right policy?

 

[EdwardBaiamonte]

we're talking about economics here, not the fine points of banking!! The issue always is, what monetary policy is the right one.

Monetary policy involves the banking system. If you can't understand how monetary operations work, how could you possibly come to the conclusion of the right policy?

well then since you understand it why not tell us what the correct monetary policy is????

 

[TakeAStepBack]

You're only referring to one of the Fed's tools. When they buy assets like mortgage backed securities that is a direct injection of cash into the financial markets.

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

 

[EdwardBaiamonte]

You're only referring to one of the Fed's tools. When they buy assets like mortgage backed securities that is a direct injection of cash into the financial markets.

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

I'm hoping our banking expert comes back as a conservative/ libertarian expert.

 

[JimmieD]

You're only referring to one of the Fed's tools. When they buy assets like mortgage backed securities that is a direct injection of cash into the financial markets.

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

Yes, they get audited: ht tp://ww w.federalreserve.g ov/faqs/about_12784.ht m

 

[Rshermr]

You're only referring to one of the Fed's tools. When they buy assets like mortgage backed securities that is a direct injection of cash into the financial markets.

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

Uh, want to admit you were wrong about that. Nice try, but that was really a stupid post.

 

[EdwardBaiamonte]

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

Yes, they get audited: ht tp://ww w.federalreserve.g ov/faqs/about_12784.ht m

I'm hoping our banking expert JimD comes back as a conservative/ libertarian expert who can tell us what the correct monetary policy is and why..

 

[JimmieD]

No one knows except the fed. The their open market operations have never been audited. Ever.

Yes, they get audited: ht tp://ww w.federalreserve.g ov/faqs/about_12784.ht m

I'm hoping our banking expert JimD comes back as a conservative/ libertarian expert who can tell us what the correct monetary policy is and why..

I'm going to ignore the attempt at insult, but if I were implementing monetary policy right now, I would do something like the Taylor Rule. Ideally though, I think iterest rates should float freely and be determined by market forces.

 

[EdwardBaiamonte]

I would do something like the Taylor Rule. Ideally though, I think iterest rates should float freely and be determined by market forces.

I like both policies a lot!! So what does float freely mean when the government controls the amount or quantity of the commodity that is floating and so the price?

 

[JimmieD]

So what does float freely mean when the government controls the amount or quantity of the commodity that is floating and so the price?

It means that many current interest rates do not necessarily reflect the market rate for credit, and I'm especially thinking of mortgages and treasuries. Absent demand from the Fed, rates would be different.

 

[TakeAStepBack]

Currently, the GAO is prohibited from auditing:
1. transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
2. deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations
3. transactions made under the direction of the Federal Open Market Committee; or
4. a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection of US Code.

http://www.auditthefed.com/about-the-audit/

 

[TakeAStepBack]

But keep swinging batter.

 

[TakeAStepBack]

It's only creating new money if the Fed marks up someone's deposit account when buying those MBS'. But I'm pretty sure the Fed's market operations are limited to working with primary dealers and that nobody's deposit accounts are being added to in this process.

No one knows except the fed. The their open market operations have never been audited. Ever.

Yes, they get audited: ht tp://ww w.federalreserve.g ov/faqs/about_12784.ht m

Cool. More un-audited reports. How enlightening.

 

[EdwardBaiamonte]

So what does float freely mean when the government controls the amount or quantity of the commodity that is floating and so the price?

It means that many current interest rates do not necessarily reflect the market rate for credit, and I'm especially thinking of mortgages and treasuries. Absent demand from the Fed, rates would be different.

and you 'd be ok with higher rates in the middle of what Krugman calls a depression??

 

[JimmieD]

and you 'd be ok with higher rates in the middle of what Krugman calls a depression??

It depends. Had interest rates gone to their "natural rate" a few years ago, it probably would have destroyed economic activity, international trade, and the currency. Many, if not most people, would have been left without a job, without savings, without wealth, unable to service their debts, etc... So I'm hesitant to pursue something that I know would likely destroy everyone's way of life.

In an ideal world, had interest rates been set by market forces all along, then there would be no crisis and no need further manipulate rates. Unfortunately the world isn't ideal.

 

[JimmieD]

No one knows except the fed. The their open market operations have never been audited. Ever.

Yes, they get audited: ht tp://ww w.federalreserve.g ov/faqs/about_12784.ht m

Cool. More un-audited reports. How enlightening.

I guess this means you've read the audits?

 

[TakeAStepBack]

The unaudited "audits"? Yeah.

You'll be OK, man. Seriously.

 

[JimmieD]

The unaudited "audits"? Yeah.

You'll be OK, man. Seriously.

So, in other words, you haven't read them.

 

[TakeAStepBack]

In other words, they are no audited reports. It says it right on the cover and on through. The GOA does not have authority to audit, as stated, the open market operations of the federal reserve.