The federal reserve is going to pull another ONE TRILLION DOLLARS OUT OF THEIR ASS!

[Paulie]

you can't pull a trillion dollars out of your ass and say it has value!

Boy, I wish I knew anyone who could pull money out of their ass. You're spewing bullshit.

Oh, one of those idiots who thinks the Federal Reserve doesn't create money out of thin air.

It's amazing to me that people who don't even understand how the Fed's open market operations work have the audacity to get involved in debates like this.

Fitz, why are you arguing with this idiot?

 

[Paulie]

dollars being printed.

Do you actually think the national mints are busy "printing" dollars? How much time do you think it would take to "print" that much money? If you don't think money is actually being "printed", why are you regurgitating that lie?

No money is being created. None. Non-liquid money (M2) bonds are being exchanged for liquid money (cash reserves or M1). That's it. LIQUIDITY is what is being increased, not the supply of money.

This is so wrong on so many levels!

When the federal reserve buys an asset from an institution, it creates a dollar amount out of thin air electronically on its balance sheet to purchase said asset.

That money then goes into the banking institution's reserves, increasing the monetary base.

Conversely, when the Fed sells an asset, a banking institution's reserves are debited, decreasing the monetary base.

This is how the Federal Reserve controls the money supply and the rate of interest.

How the fuck are you in here arguing this when you don't even know how it works?

I'm not sure how you could think the Fed is using existing liquidity for this QE2, when they haven't sold 600 billion worth of assets to come up with that cash.

 

[Mr.Fitnah]

The fed is now buying its own debt Something they said they would never do.
I cant wait until a buck is worth 1 cent .

 

[LiberalNut]

When the federal reserve buys an asset from an institution, it creates a dollar amount out of thin air

Oh yeah? That would mean that the underlying asset has no value. Gee, if you don't think bonds have any value, why don't you just give me yours? I'll even give you 10 cents for every wothless bond you give me. Good deal huh?

This is how the Federal Reserve controls the money supply and the rate of interest.

It's ONE WAY the fed manilulates the supply of M1 which is only one form of money. They also control the rate at which money is lent to member banks and they control the reserve requirements of banks. But, you are running around thinking that reserves, M1, is the only kind of money there is. You're doing that cause you're clueless.

I'm not sure how you could think the Fed is using existing liquidity for this QE2

This statement shows how clueless you are. It's so garbled i can't even really respond to it. Suffice to say that i never said anything like this idiotic sentence.

when they haven't sold 600 billion worth of assets to come up with that cash.

Another sign of cluelessness. Of course they have sold such assets. If the bank doesn't have the bond, the fed can't be buying it now can it? The fed is taking a non-liquid, M2, asset from the bank and replacing it with liquid, M1, reserves. The money supply is unchanged unless you ignorantly contend that M1 is the only kind of money that exists.

 

[Paulie]

When the federal reserve buys an asset from an institution, it creates a dollar amount out of thin air

Oh yeah? That would mean that the underlying asset has no value. Gee, if you don't think bonds have any value, why don't you just give me yours? I'll even give you 10 cents for every wothless bond you give me. Good deal huh?

This is how the Federal Reserve controls the money supply and the rate of interest.

It's ONE WAY the fed manilulates the supply of M1 which is only one form of money. They also control the rate at which money is lent to member banks and they control the reserve requirements of banks. But, you are running around thinking that reserves, M1, is the only kind of money there is. You're doing that cause you're clueless.

I'm not sure how you could think the Fed is using existing liquidity for this QE2

This statement shows how clueless you are. It's so garbled i can't even really respond to it. Suffice to say that i never said anything like this idiotic sentence.

when they haven't sold 600 billion worth of assets to come up with that cash.

Another sign of cluelessness. Of course they have sold such assets. If the bank doesn't have the bond, the fed can't be buying it now can it? The fed is taking a non-liquid, M2, asset from the bank and replacing it with liquid, M1, reserves. The money supply is unchanged unless you ignorantly contend that M1 is the only kind of money that exists.

Listen kid...

I'm not going to argue with this level of stupidity.

Just understand that you know a sum total of jack + shit about this, and go on about your life.

 

[Paulie]

I'm sorry, I had to come back for more, I didn't read your dumbass post all the way through.

There are some glaring errors that you need to be laughed at for

But, you are running around thinking that reserves, M1, is the only kind of money there is. You're doing that cause you're clueless.

Bank reserves are not included in M1, you fucking retard. Bank reserves are M0.

It's ONE WAY the fed manilulates the supply of M1 which is only one form of money. They also control the rate at which money is lent to member banks and they control the reserve requirements of banks.

Manipulating the money supply is precisely HOW they control the rate at which member banks lend to each other. This is OPEN MARKET OPERATIONS. On top of designating a reserve requirement, which is about the only thing you got right in that entire post.

Seriously my man, why the fuck are you in here?

 

[Toro]

Because inflation erodes the purchasing power of your currency. It buys less.

But your paycheck goes up correspondingly. If you make $10,000 and pay a mortgage of $250 it's exactly the same as making $100,000 and paying and paying a mortgage of $2,500. Yeah, a dollar bought more in 1970, but people had a lot less dollars dipshit.

Why do you make the assumption that your paycheck goes up correspondingly? My paycheck certainly doesn't do that. Who's does?

Your argument about buying more in 1970 is a logical fallacy. The fact that there has been economic growth since then, and thus "less dollars" back then, is irrelevant to the inflation discussion.

 

[Toro]

You said inflation was not a rational concern.

No rational person would fear inflation at this time. That's a fact.

Gold has risen from $300 to $1400 this decade. That doesn't happen by accident. There are a lot of rational people who are fearing inflation.

 

[LiberalNut]

Bank reserves are not included in M1,

FRACTIONAL reserves you moron! If the reserves are lendable or "excess reserves", they're M1 dipshit!

 

[Toro]

Only new hires and critical employees come close to keeping pace with the new inflated wages

That's bullshit and you know it. Your family went through this in the real world, right? Wages adjust to prices. How much was your Dad's mortgage in 1970? What was his paycheck? The mortgage didn't change, right? the paycheck did, right? He came out smelling like a rose, right?

So, in other words, a transference of wealth from savers to borrows is a good thing. Got it.

 

[Toro]

You assume I think both redistribution of wealth, AND my personal benefit was a good thing.

No, I don't. I expect you to not recognize that it's a good thing and to advocate against your own best interests and in favor of mine. It's what wingnuts do.

So, in other words, grandma is screwed.

And that's a good thing to liberals!

 

[LiberalNut]

Gold has risen from $300 to $1400 this decade. That doesn't happen by accident. There are a lot of rational people who are fearing inflation.

Classic bubble. The utility value of gold hasn't risen. The supply hasn't decreased. The price has risen. Why? Cause all that money that the idiot righties give rich people has to go somewhere! Since there's no demand to justify capital investment, the money goes from stocks to exotic real estate assets to commodities and such. Gold is only a "hedge" against inflation if people are fucking buying it! This bubble will burst like all the others. Then the roving bubble of capital will move somewhere else.

 

[editec]

you can't pull a trillion dollars out of your ass and say it has value!

Boy, I wish I knew anyone who could pull money out of their ass. You're spewing bullshit.

Oh, one of those idiots who thinks the Federal Reserve doesn't create money out of thin air.

It's amazing to me that people who don't even understand how the Fed's open market operations work have the audacity to get involved in debates like this.

Fitz, why are you arguing with this idiot?

What part of them REDEEMING bonds are you failing to understand?

You see the BONDS represent DEBT.

They have RETIRED that debt by paying them off.

Was money created?

Not really since the money was created when the BOND was originally sold.

What they're doing now is turning that dpotential cash locked into the form of an IOU into liquid asset that the former bond holder will them either spend or reinvest.

 

[LiberalNut]

So, in other words, a transference of wealth from savers to borrows is a good thing

Clearly, I mean absolutely clearly, it's a good thing if you're the borrower and a bad thing if you're the lender. Why is this concept having so much trouble getting through your thick skull?

 

[Toro]

The stagflation of the 70s was caused by OPEC.

Wrong. OPEC had little to do with it, or a little to do with it.

The inflation of the 70s was caused by excessive money growth, which was created by the budget deficits created by the Vietnam War and LBJ's Great Society. America was importing capital, and countries such as France were demanding repayment in gold. So Nixon dropped dollar convertibility and Bretton Woods was ended. Inflation ensued.

 

[Mr.Fitnah]

Gold has risen from $300 to $1400 this decade. That doesn't happen by accident. There are a lot of rational people who are fearing inflation.

Classic bubble. The utility value of gold hasn't risen. The supply hasn't decreased. The price has risen. Why? Cause all that money that the idiot righties give rich people has to go somewhere! Since there's no demand to justify capital investment, the money goes from stocks to exotic real estate assets to commodities and such. Gold is only a "hedge" against inflation if people are fucking buying it! This bubble will burst like all the others. Then the roving bubble of capital will move somewhere else.

Bought a couple of nice suits then, will by a couple of nice suits now the gold didnt change, the value of the dollar is being manipulated

 

[LiberalNut]

What part of them REDEEMING bonds are you failing to understand?

There is no part of this that I don't understand. A non-liquid, M2 asset is replaced with a more liquid, M1 asset. The overall money supply is unchanged. To think otherwise is to believe that the bond itself has no value. If you think that, please sell me your bonds for 10 cents each. You'd be making money for nothing, right?

Not really since the money was created when the BOND was originally sold.

No, no, no! When the bond was sold, a liquid, MB or M1, asset was replaced with a non-liquid M2 asset. the overall money supply was unchanged. LIQUIDITY was decreased.

What they're doing now is turning that dpotential cash locked into the form of an IOU into liquid asset that the former bond holder will them either spend or reinvest.

YES!!!!! and, if we were at or near full employment, we would be creating liquidity chasing the same amounts of goods and services, that would be inflationary. But that isn't the situation we are in!

 

[Bill Angel]

China's been threatening to cut up our credit cards with them for about a year or two

Uh huh. And what happens to them if they stop buying our debt? The real world is knocking dude, are you gonna answer the door?

They could in many regards just turn internally

No fucking way! They don't have the internal purchasing power to come close to buying the output capacity of their industries. If we go belly-up, they go belly-up worse. Even if you don't understand that, they do.

The Fed's action is having the desired effect of weakening the dollar versus other major currencies.
See Dollar Drops Most in Four Weeks as Fed to Pump Money into Financial System

I'm also in favor of putting the screws (monetarily) to the Chinese.
The Fed's action will make it that much more difficult for the Chinese to prop up the dollar by buying up US Debt. I've read that the Chinese currency, the yuan, is undervalued against the dollar by as much as 40%.

 

[LiberalNut]

OPEC had little to do with it, or a little to do with it.

You're being ignorant again. Your graph shows you that M2 is rising in the 70s! That means liquidity IS BEING TAKEN OUT OF THE SYSTEM!!!

This was a reaction to the price increases, inflation, being caused by OPEC.

 

[Toro]

So, in other words, a transference of wealth from savers to borrows is a good thing

Clearly, I mean absolutely clearly, it's a good thing if you're the borrower and a bad thing if you're the lender. Why is this concept having so much trouble getting through your thick skull?

I am clear that it is a good thing for borrowers. I am less clear why you think this is a good thing in aggregate.

In aggregate, S = I. We have a capital surplus and thus are importing capital from the rest of the world, primarily Asia. But this has created a massive imbalance in the global economy, including housing bubbles in China and bad balance sheets at Chinese banks. A collapse of the housing bubble in China could mean a massive repatriation of capital away from America back to China, causing our interest rates to rise significantly. China has already begun to cut back its purchases of our bonds, who have been supplanted by the Brits, the oil producing countries and the Fed. And if inflation begins to rise - i.e. monetary velocity starts to accelerate - there could be a wholesale dumping of US Tbonds.

The nation is getting older. Thus there is a greater propensity to save. A transference of wealth from saver to debtor is a bad thing, not a good thing. We are punishing savers at the benefit of speculators.