Thank you federal Reserve

[Toro]

So spending 1.5 cents to make 1 penny isnt putting us into debt, okay thats right. and no the federal reserve isnt the cause, nor is it the problem that our economy is in trouble, i was just something that i came across with our useless spending. but as a government we still do owe the reserve a lot of money.

Government spending is high and we are going into debt, but relatively little of it is to the Federal Reserve.

http://www.usmessageboard.com/economy/79386-the-fed-has-not-spent-9-trillion.html

 

[Paulie]

Sealy, you spend way too much time arguing with people who know more than you do, and way too little time educating yourself.

Gonegolfin provided you with an overview of the Fed's operations, and if you search his posts you can learn a lot about what you're arguing with people about on here.

You're being persuaded by the sensationalism.

 

[gonegolfin]

This video is a must watch for anyone who wants to understand just how "effective" the Fed is at safeguarding taxpayer money. Apparently nobody at the Federal Reserve has any clue where the trillions of dollars that have come from the Fed's expanded balance sheet have gone.

The Fed balance sheet has expanded by a little over $1 trillion, not trillions as stated above. The assets that the Fed has purchased or acquired in loans since balance sheet expansion commenced (last September) are clear and represented in the H.4.1 I mentioned, as well as other reports. It is the recipients of these bank reserves and the individual amounts (not the aggregate amounts) that the Fed is not divulging. Thus, folks are pressing (and rightly so) for the Fed to divulge this information.

Additionally, nobody there seems to have any idea what the losses on the Fed's $2 trillion portfolio really are.

The problem here is that nobody can agree on the proper measure. The market clearing price of some of these assets (not the purchased treasuries) would be very low if they were all dumped at the same time. But regardless, I have written that the losses on these assets will prevent the Fed from draining the reserves it created during the expansion of the balance sheet. The losses will be exacerbated by higher interest rates. This will result in a larger monetary base than when all of this reserve creation started, even if they sell each and every asset they purchased since September. The result will eventually be inflation.

As for the pittance of $9 trillion in Fed off-balance sheet transactions over the past 8 months, well, yeah, that's also somewhere out there... Just don't ask the Federal Reserve where.

A similar mistake in analysis happened last year with the TAF (Term Auction Facility), which is an on-balance sheet item. The Fed was conducting bi-monthly auctions where it offered cash (in the form of credited bank reserves) in return for various collateral (treasuries, agencies, and MBSs). The terms for these loans varied over time. Typically these were either 28-day or 84-day loans. There were some financial media that simply added the loan amounts from all of the auctions to date and were reporting that the Fed was loaning trillions of $ to the banks. Of course this was patently false as loans were maturing during this process. The Fed simply kept extending these loans by conducting regularly scheduled auctions (rolling over the loans). The program limit was $600 billion and I believe never exceeded about $450 billion. The current outstanding loan amounts for the TAF are about $273 billion.

The TSLF (commenced in December 2007) is similar, except that it is off-balance sheet because the Fed is offering securities for loan (treasuries from the asset side of its balance sheet) in exchange for approved collateral (similar to the TAF). However, the recipient is different in that this a program targeted for the primary dealers (the dealers that specialize in treasury debt). The Fed conducts regular TSLF auctions and the term is fixed at 28-days. The auction amounts grew over time, reaching $75 billion. I recall the program size reaching $259 billion, but did not go much higher than that. There are other lending facilities like this. Some are being wound down (especially since the Fed is making more outright purchases instead of loans).

And then there are the Fed guarantees. But this is neither money spent by the Fed nor loaned by the Fed. Grayson is including the loans I mention above, but also these pledged/guaranteed amounts, in that $9 trillion figure. In fact, the figure is higher now ... but does not represent money spent or loaned by the Fed. This money loaned or spent shows up in the balance sheet.

Brian

 

[sealybobo]

The Federal Reserve is the cause of the downturn, actually. They create the boom-and-bust cycle with their artificially low interest rates.

Kevin, you are more knowledgeable on this than I am. Will you read and reply to gonegolfin. You may agree with some of what he has to say. I want to see. Glad to see you found this topic.

I'm glad you think highly of my opinion on this sealy, but I wouldn't say I'm more knowledgeable on this issue than you are. gonegolfin knows what he's talking about, and more than I do I'm sure.

Hey Kevin. KMAN I believe is trying to put this on Obama. He just started a thread. What 23 trillion is he referring to if not this?

Bailouts could cost U.S. $23 trillion - Eamon Javers - POLITICO.com

Is this 23 different than the $9 trillion I'm talking about?

 

[Kevin_Kennedy]

Kevin, you are more knowledgeable on this than I am. Will you read and reply to gonegolfin. You may agree with some of what he has to say. I want to see. Glad to see you found this topic.

I'm glad you think highly of my opinion on this sealy, but I wouldn't say I'm more knowledgeable on this issue than you are. gonegolfin knows what he's talking about, and more than I do I'm sure.

Hey Kevin. KMAN I believe is trying to put this on Obama. He just started a thread. What 23 trillion is he referring to if not this?

Bailouts could cost U.S. $23 trillion - Eamon Javers - POLITICO.com

Is this 23 different than the $9 trillion I'm talking about?

The $23 - $24 trillion in question is potentially how much the government and Federal Reserve has put us on the hook for with the bailouts. Every article I've read has stated that this is a worst case scenario and it's unlikely that it will come to that much, but since the bailouts are an example of extreme fiscal irresponsibility in the first place I'm not exactly willing to take their word on the matter. It's certainly not just Obama's fault though he bares some of the responsibility. Let's remember that the bailouts began under Bush who is just as responsible.

 

[Toro]

I'm glad you think highly of my opinion on this sealy, but I wouldn't say I'm more knowledgeable on this issue than you are. gonegolfin knows what he's talking about, and more than I do I'm sure.

Hey Kevin. KMAN I believe is trying to put this on Obama. He just started a thread. What 23 trillion is he referring to if not this?

Bailouts could cost U.S. $23 trillion - Eamon Javers - POLITICO.com

Is this 23 different than the $9 trillion I'm talking about?

The $23 - $24 trillion in question is potentially how much the government and Federal Reserve has put us on the hook for with the bailouts. Every article I've read has stated that this is a worst case scenario and it's unlikely that it will come to that much, but since the bailouts are an example of extreme fiscal irresponsibility in the first place I'm not exactly willing to take their word on the matter. It's certainly not just Obama's fault though he bares some of the responsibility. Let's remember that the bailouts began under Bush who is just as responsible.

The government nor the Fed has spent $9 nor $23 trillion.

However, assuming all worst case scenarios, the government could be liable and could have to spend $23 trillion, though it is unlikely.

However, this is a reason to own at least some gold.

 

[Kevin_Kennedy]

Hey Kevin. KMAN I believe is trying to put this on Obama. He just started a thread. What 23 trillion is he referring to if not this?

Bailouts could cost U.S. $23 trillion - Eamon Javers - POLITICO.com

Is this 23 different than the $9 trillion I'm talking about?

The $23 - $24 trillion in question is potentially how much the government and Federal Reserve has put us on the hook for with the bailouts. Every article I've read has stated that this is a worst case scenario and it's unlikely that it will come to that much, but since the bailouts are an example of extreme fiscal irresponsibility in the first place I'm not exactly willing to take their word on the matter. It's certainly not just Obama's fault though he bares some of the responsibility. Let's remember that the bailouts began under Bush who is just as responsible.

The government nor the Fed has spent $9 nor $23 trillion.

However, assuming all worst case scenarios, the government could be liable and could have to spend $23 trillion, though it is unlikely.

However, this is a reason to own at least some gold.

Right. It looks like I phrased my post wrong when I said they "put us on the hook" for that amount of money. I should have said that we're potentially on the hook for that amount of money.