loosecannon
Senior Member
- May 7, 2007
- 4,888
- 269
- 48
I meant that figuratively, altho it may very well be true literally if not formally in the not distant future.
First off the Federal Reserve is the singular agency "within" the US government (they are actually owned by and pay dividends to 1700 member banks and are nearly autonomous beyond the pres appointing their chairman) tasked with the job of managing the economy.
Tasked with maintaining constant growth sans excesses in inflation and sans any deflation whatsoever.
The Fed assumes this task primarily because it gives them the power to target interest rates which serves nobody more than it does their own stockholder constituents, the banks. Predictable, very predictable interest rates enable banks to make money by slicing margins as thin as a razor if need be to still reap dividends. Wild and crazy interest rates inhibit lending and opportunities for bank profiteering. The Fed being owned by, and serving the banks primary need as a core part of it's mission statement is the proverbial adage of the fox guarding the hen house as much as any thing ever as.
But back on topic. The Fed is out of ammo. They are powerless to do the task of which they were created to attend:
Analysis: The uncomfortable mathematics of monetary policy | Reuters
I would post much more of the article if I could, but board rules prohibit it:
Ok, I will post this quote as well:
The article goes on to point out that altho the Fed COULD do a lot more they won't and it wouldn't do much good if they did.
The reason why is because all the fed can do is influence how much money people and corps borrow. That's the whole scope of their management toolbox. Tinkering with the amount of credit issued. Tinkering with the amount of new debt created.
The system has failed. We need to divorce ourselves from an econ system that begins and ends with debt as the driver of the economy and fall head over heels in love with a new econ system that revolves around a durable currency that is not dependent on ever increasing debt, constant growth or the federal reserve running our economy on behalf of (and for the benefit of) 1700 of the nation's banks.
We need this because the Federal Reserve is out of ammo and can no longer address the real economic woes of our nation. The Fed saved the banks, but they can't save the rest of and the real economy.
they were never designed or intended to do so.
First off the Federal Reserve is the singular agency "within" the US government (they are actually owned by and pay dividends to 1700 member banks and are nearly autonomous beyond the pres appointing their chairman) tasked with the job of managing the economy.
Tasked with maintaining constant growth sans excesses in inflation and sans any deflation whatsoever.
The Fed assumes this task primarily because it gives them the power to target interest rates which serves nobody more than it does their own stockholder constituents, the banks. Predictable, very predictable interest rates enable banks to make money by slicing margins as thin as a razor if need be to still reap dividends. Wild and crazy interest rates inhibit lending and opportunities for bank profiteering. The Fed being owned by, and serving the banks primary need as a core part of it's mission statement is the proverbial adage of the fox guarding the hen house as much as any thing ever as.
But back on topic. The Fed is out of ammo. They are powerless to do the task of which they were created to attend:
But there is a growing fear within and outside the central bank about whether the risks of such purchases outweigh the benefits. One concern is that it may take an ever larger amount of bond buying to get the same effect.
"If it's buying Treasuries, which is what the Fed is talking about lately, I think it has low returns period, and maybe diminishing returns to scale," said Alan Blinder, Princeton economist and former Fed vice chair, on the sidelines of the Fed symposium.
That's partly because most of the impact of Fed easing, especially that which is accomplished through unorthodox means, comes from the "announcement effect" on market expectations, rather than the purchases of securities themselves.
In an example of just how meek the effects of unconventional policy might be, Larry Meyer, a former Fed governor now with Macroeconomic Advisers, once estimated that $100 billion in Treasury purchases might lead only to a 0.10 percentage point drop in long-term interest rates.
Analysis: The uncomfortable mathematics of monetary policy | Reuters
I would post much more of the article if I could, but board rules prohibit it:
Ok, I will post this quote as well:
The figures bandied about are eye-popping. When the Fed first embarked on its policy of asset purchases, known as quantitative easing, Goldman Sachs economists estimated Fed credit to the banking system might have to expand to as much as $4 trillion to $5 trillion in order to grapple with the scope of the financial crisis.....
Instead, the Fed, in addition to slashing official borrowing costs to effectively zero, bought over $1.5 trillion in Treasury and mortgage bonds, bringing its balance sheet to a still-lofty $2.3 trillion from pre-crisis levels around $850 billion. Back then, this tack was widely seen by investors as the Fed pulling out the big guns.
The article goes on to point out that altho the Fed COULD do a lot more they won't and it wouldn't do much good if they did.
The reason why is because all the fed can do is influence how much money people and corps borrow. That's the whole scope of their management toolbox. Tinkering with the amount of credit issued. Tinkering with the amount of new debt created.
The system has failed. We need to divorce ourselves from an econ system that begins and ends with debt as the driver of the economy and fall head over heels in love with a new econ system that revolves around a durable currency that is not dependent on ever increasing debt, constant growth or the federal reserve running our economy on behalf of (and for the benefit of) 1700 of the nation's banks.
We need this because the Federal Reserve is out of ammo and can no longer address the real economic woes of our nation. The Fed saved the banks, but they can't save the rest of and the real economy.
they were never designed or intended to do so.