I want to know how much in Treasuries they own. I also want to know how much they have invested in the stock market.
80% of US debt purchased by the Fed in 2009?!
- Thread starter DrPepper
- Start date
I want to know how much in Treasuries they own. I also want to know how much they have invested in the stock market.
Right, this is not exactly specific, but I think you're looking for information on the Fed's balance sheet and the mkt interaction that FRBNY engages in on behalf of the FR system (OMOs etc). You also think that it's falls into one of the areas that currently are not accessible to the GAO.
Let me reiterate what I have said before. You will find this information here:
http://www.federalreserve.gov/releases/h41/current/
If you want to see externally audited financial statements, you'll have to wait for the 2009 Combined Financial Statements of the Federal Reserve Banks.
Moreover, as a representative of the mkt (you may not like me, but looks like I'm the only one you got), I am telling you that the mkt collectively knows the UST holdings of the Fed, by individual ISIN. The total corresponds to what the Fed publishes in the weekly H.4.1 release.
I have a feeling that you still don't believe me... So here's my question:
Do you believe that there's a conspiracy by the Fed to cook its books or, alternatively, run a second, secret and unaudited set of books that contains the real information about the Fed's acitivities? If you believe the above is true and the secret had remained so remarkably well-hidden, in spite of the scrutiny and the various audits that have been conducted, what makes you think that another GAO review will actually reveal the truth?
Moreover, if you believe that the Federal Reserve System is all one big fraud, why then not believe that an alien in Britney Spears's body is actually pulling all the strings?
I was not being disingenuous. I objected to the factually incorrect statement that the Fed bought 80% of the USTs issued by the US govt in 2009. Also, as I said, I am not completely disagreeing with Bill Gross. My only point is that, if anything, it's him that's being disingenuous by exaggerating the proportions of the flow to make his point and talk up his book.
The Fed paid for all its asset purchase programs (it's $1.25trn agency MBS, not agency debt) by creating bank reserves, as the FOMC stated. The purchases were done in the secondary mkt, by auction, so the mkt determined the pricing, with the knowledge, of course, that the Fed bid is there. The Fed's asset purchase programs, without a doubt, helped support the UST mkt and had a positive effect on the ability of the US govt to issue.
True, monetization is monetization, but how can you say it's irrelevant? Suppose in a hypothetical country, in extremis, printing money out of thin air prevents social issues and a civil war, would you still say it's evil? Obviously, it can still be a bad idea, in the long run, but that's hardly a foregone conclusion, is it? As to the Congress, of course it had everything to do with it. Did the Fed create the housing bubble all by itself? Does the Congress have any responsibility for that? Who instituted the Fed dual inflation/employment mandate, as opposed to just inflation? As an aside, this illustrates to me the problem with democracy in general and the US political process in particular: everyone is happy to take the upside of a bubble, but when it's time to pay for the party, it's the other guy's fault and responsibility.
Let's not argue about this, as we will never agree. To me, as I said before, the system is what it is and is, ultimately, as inevitable as human greed.
Fine, I respect that. But for those that are following up on our exchange as well as my points made to scriabinop, I will post a chart that describes my point.
The system feeds on fiscal and monetary expansion. Without it, our gdp collapses immediately. But continuing it, delays the collapse. That is the choice that has been made. To spend.
But as to your point of greed - it has nothing to do with our monetary system's need for accelerated debt growth in proportion to economic growth. The issue of greed arises as to *how* that debt is used/spent, i.e. who gets it, why, and what do they do with it.
It's a self performed audit, nothing more than a PR move. The guidelines for the audit are set by the Fed, not the accounting firm or any other agency.
I gave you an analogy, which you may not have fully understood. What Ron Paul and his supporters want is a full audit
I know about this and what is performed is nothing more than what the Fed already does with their self audit. I am sorry, but this is a joke. I have to refer once again to the investor and company analogy. Would you invest in a company that did something like this? An audit that where certain parts are restricted? Come on now.
You don't think the Fed is a problem. It is an institution that was planned & organized in secret on Jekyll Island by major elitists and then rushed through Congress day before a Holiday. Any money created under the Fed system requires interest to be paid back on top of the Principal. But only the principal is created. How can you pay back P+I, unless you borrow another unit of P? Seems like a perfect formula for runaway deficits and perpetually growing government budgets.
It's kinda common sense that it was "foul play", although I would not call it that. It's just business as usual. Lehman & Bear were not cool enough. If you know Lehman history & founding, you can understand why they were allowed to fail, in a worse fashion than Bear.
There is nothing stupid about, it's just business. I can see you are under impression that things like this just happen, but in reality, they do not. Some wild cards are in play, like the fact that Goldman & Morgan Stanley were on the verge of bankruptcy because they got carried away too much, but the quick fixes are available.
I think it is you who hasn't understood. The audit that Deloitte (and before them PriceWaterhouse and Coopers & Lybrand) perform of the Federal Reserve Banks' financial statements is EXACTLY like the one that an accounting firm would perform when faced with a private organization's accounts. The statement the auditor makes is the same, the procedure is the same and the result should be interpreted in an identical fashion. That is why your analogy doesn't apply, as I have already told you. How much clearer can I get for you to understand this? If you claim that the Fed determines the guidelines for the Deloitte et al audit, offer me tangible, specific proof of this.
You're contradicting yourself now. You don't trust the Fed, right? So, surely, exactly the same audit, but performed by the GAO should make you jump for joy? As to the restricted parts, I already said that there's a compelling argument to be made for monetary policy to not be subject to GAO supervision. So your analogy is misguided. Furthermore, I can tell you for sure, that I will certainly NOT invest in govt paper, if the CB's monetary policy decisions are subject to a political audit.
You have no idea how an economy operates, do you? This is kindergarten economics stuff...
Misthos, I see your point, but let me offer an alternative theory for your consideration, summarized by this chart (source US Census Bureau):Quote from Misthos:
Fine, I respect that. But for those that are following up on our exchange as well as my points made to scriabinop, I will post a chart that describes my point.
The system feeds on fiscal and monetary expansion. Without it, our gdp collapses immediately. But continuing it, delays the collapse. That is the choice that has been made. To spend.
But as to your point of greed - it has nothing to do with our monetary system's need for accelerated debt growth in proportion to economic growth. The issue of greed arises as to *how* that debt is used/spent, i.e. who gets it, why, and what do they do with it.
Essentially, it's, predictably, too much money chasing too few productive assets.
Quote from Misthos:
Fine, I respect that. But for those that are following up on our exchange as well as my points made to scriabinop, I will post a chart that describes my point.
The system feeds on fiscal and monetary expansion. Without it, our gdp collapses immediately. But continuing it, delays the collapse. That is the choice that has been made. To spend.
But as to your point of greed - it has nothing to do with our monetary system's need for accelerated debt growth in proportion to economic growth. The issue of greed arises as to *how* that debt is used/spent, i.e. who gets it, why, and what do they do with it.
Simply - Excellent post... thank you...
You don't realize it's a self audit, do you?
If you bothered to read the standard into letter of the audits, as well as the accompanying notations, you would know that the guidelines for the financial statements (which are in turn "independently" audited) are set by the BoD of the Federal Reserve. In other words, you will only know what they want you to know.
You're essentially being told by an institution that is in full charge of monetary policy that they will not disclose everything and that is the law. Being that our tax paying ability is essentially collateral for the whole system, I think we have a right to know what exactly is going on. The analogy holds correct, an investor wants to know where his money is going and an audit where it's blatantly stated where certain financial dealings will not be disclosed would be laughed at.
Kindergarden economics stuff is understanding that P+I cannot equal to P. Maybe that part is too complicated for you. The fact is that all currency under the Fed comes with interest attached. Feel free to look at what we call a dollar bill anytime, it does not say "dollar bill", it's a federal reserve note. All money creation is through debt, that is how the Federal Reserve Banking act is devised, for a reason.
Try actually researching the history of the Fed and central banking in general. The design is genius and has thousands of years of history behind it. All that you see happening now is by design, not by accident.