Bernanke Is Clueless

[QQQBALL]

Quote from trefoil:

Yeah, yeah, yeah. You and everyone else thinks that. Reflexive Pavlovian response around here it seems.
Think about the business of banking, then think about what kind of incentive a flat curve would give you to play games to get better profits. Think, in short, like a businessman, not an ideologue.
The answer to why this happened then becomes obvious.

you talk in baseless generalities. ill respond if you say something meaningful. i gotta get back to trading.

 

[dhpar]

QQQBALL what do you mean by "FED does not print money"?
who prints them?

 

[trefoil]

You make a one line post backed by precisely nothing and then say I'm talking in baseless generalities? Yeesh.

 

[dhpar]

worth reading (or listening if you have Bloomberg):

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.PPpR.4Zr_0&refer=home

 

[QQQBALL]

Quote from dhpar:

QQQBALL what do you mean by "FED does not print money"?
who prints them?

im not sure i said that...

the Treasury Dept issues "money", not the FED. the FED does not call down the blow-hole & order an extra $1 Trillion dollars. they do, however, provide liquidity through their open market actions & by setting FF & discount IRs.

look at the 10-year (TNX), its at 4.38% already

 

[krazykarl]

Quote from dhpar:

QQQBALL what do you mean by "FED does not print money"?
who prints them?

The treasury department prints money.


The FED is a central bank that holds money and lends it out. The FED gets its money from the treasury department at a reduced rate. Think of the FED as that cool kid you went to school with whose dad inherited a gazillion dollars and knows all the right people. Because he is cool and has a gazillion dollars he keeps meeting more of the right people..

 

[dhpar]

Quote from krazykarl:

The treasury department prints money.


The FED is a central bank that holds money and lends it out. The FED gets its money from the treasury department at a reduced rate. Think of the FED as that cool kid you went to school with whose dad inherited a gazillion dollars and knows all the right people. Because he is cool and has a gazillion dollars he keeps meeting more of the right people..

ok - fair enough. I did not know we talk about the physical printing.
At the end of the day it is really about money supply and this is influenced mainly by the fed.

 

[AAAintheBeltway]

Quote from sprstpd:

Substitute the price of food if you wish. It's all the same. I'm sure you can agree that as the value of the USD decreases, inflation in all areas of life is a byproduct. I want interest rates up higher to protect the dollar which will in turn curb the current inflation predicament.

I'm not trying to nitpick, but the main thing driving food prices is the idiotic ethanol policy. Another is demand from china. Neither are affected by Fed policies.

The main sectors that are affected by rate policy are hurting badly, eg housing, construction, finance. Manufacturing and retail could be next.

I'm not advocating bailouts of Wall Street speculators, but sometimes antipathy for the excesses of the rich can obscure sound policy. Politically, this country is not going to sit around and let everyone who bought a house the last two or three years get thrown under the bus. Just will not happen. If congress gets involved, the "cure" will be far worse economically than a few Fed cuts.

 

[AAAintheBeltway]

Quote from QQQBALL:

it is NOT the FED's job to maintain a strong dollar. i think that falls to the Treasury Dept. the FED does not print money, it is a PRIVATE organization. it is owned by the member banks, NOT the govt.

here is the FED RESERVE ACT

To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.

here is

SECTION 2A—Monetary Policy Objectives

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

Ok you are literally correct, but sound dollar and stable prices are two sides of the same coin.

 

[QQQBALL]

Quote from AAAintheBeltway:

Politically, this country is not going to sit around and let everyone who bought a house the last two or three years get thrown under the bus. Just will not happen. If congress gets involved, the "cure" will be far worse economically than a few Fed cuts.

lets be practical. not every buyer of last 2-3 years will default. also, a buyer with original 100% LTV - what is he really losing of he defaults? if home prices/value drop 10%, then he has like 111% LTV - he is already cooked, so what are you gonna do, cut loan balances in concert with decreasing home values? next, lets look at the marginal buyer/homemoaner. he can barely make payments, but why should he? if he stops, he gets govt assistance. so the bailout actually worsens the crisis, b/c borrowers at the margin stop making payments. now what about the prudent folks that waited for prices to decline so that they could buy at an "affoitrdable level"? well they get fucked as the govt artificially supports housing prices - BTW, i missed that part in reading over the constitution .

i'd also sugegst that the bailout is not for benefit of borrowers, but in fact, the LENDERS. the LENDERS are the ones that LOSE on foreclosures on loans with high LTVs in a declining r.e. market. they can call it a homemoaner bailout, but they are bailing out the banksters.