Fed is buying treasuries

[RiceRocket]

They expand their balance sheet. Which equals digital money creation. It would be simlilar to you logging on to your bank account and electronically adding an additional zero to your balance. 1,000 to 10,000 with the stroke of a key. The problem is, it's illegal for us to do it, but legal under the fed powers. The monetary system is basically a game of confidence. People believe that dollars have a value as a medium of exchange, and it is backed up by law and a powerful enforcement mechanism.

 

[bettles]

Quote from RiceRocket:

They expand their balance sheet. Which equals digital money creation. It would be simlilar to you logging on to your bank account and electronically adding an additional zero to your balance. 1,000 to 10,000 with the stroke of a key. The problem is, it's illegal for us to do it, but legal under the fed powers. The monetary system is basically a game of confidence. People believe that dollars have a value as a medium of exchange, and it is backed up by law and a powerful enforcement mechanism.

But then why would they ever need to sell bonds in the first place? Why not just always "create" money? Or they can only do that sparingly lest people lose confidence in the dollar?

Here is a Treasury URL that (supposedly) lists "debt to the penny". Will this debt increase by the amount of the bonds purchased?

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Thanks,
Bettles

 

[bronks]

Quote from RiceRocket:

They expand their balance sheet. Which equals digital money creation. It would be simlilar to you logging on to your bank account and electronically adding an additional zero to your balance. 1,000 to 10,000 with the stroke of a key. The problem is, it's illegal for us to do it, but legal under the fed powers. The monetary system is basically a game of confidence. People believe that dollars have a value as a medium of exchange, and it is backed up by law and a powerful enforcement mechanism.

I think I'm going to open my own bank. I'm gonna call it Bronks Bank next to a 7-11. Set up a few Dell workstations with Bronks Bank software. My CPU will be my safe... no need to deal with those pesky steel doors, plus it'll be password protected... I think I'll start with 50 mil. Nice round number. But first I'm gonna take out 10 mil for personal and administrative purposes.

OK, who wants some cash, I'm open for business...

 

[S2007S]

They are trying so hard to jump start the housing market, today they talked about mortgage rates going as low as 4% after this latest fed announcement, this will of course help the banks but long term what this does to an ever slowing economy is nothing. How many ways can they try to fix this economy, even if they do pump the economy higher with massive liquidity injections its going to just create more problems.

 

[rros]

Quote from intradaybill:

Those stupid traders that sold the dollar today now nothing about the velocity of money. They will get burned soon. It is the velocity of money that generates inflation, not quantitative easing and the velocity is down at this point, negative slope, not even sign of turning up. Stupid suckers.

Soon the EU central bank will be forced to do quantitative easing and EUR will fall balancing things out. In the G20 summit the US tried to convince Europeans to go along with them and the British with quantitative easing and they will have to sooner or later if they want to keep the union together. Three nations will be forced out pretty soon based on the spreads they get for their bond issues relative to German bonds.

Monies created from quantitative easing are NOT printing money in the traditional meaning of the words. These monies can be withdrawn from the economy as easily if the central banks see signs of inflation.

Everything working as planned to get the new long term economic cycle in progress. It will take a few years though. First deflation, then moderate inflation, then stagflation, then recession and afterwards a boom.

Velocity of money is a consequence of inflation. You don't influence velocity... you see it "as a result of". You print more money to devalue its worth to generate inflation. As people realize more dollars are needed to maintain the same purchasing power, they will move from paper to assets as fast as they can. And the banks will do the same. Thus, increasing the velocity. I live through 2 hyperinflations and what I just described is as real as it gets. Feel free to correct me though.

 

[akeserla]

Looks like good days are coming, inflation will help my home price recover

 

[Pilotboy]

Quote from dhpar:

oh boy - so I should believe you rather than the publicly available fed balance sheet?

The Financial Services Committee can't even see the Fed's true balance sheet. You think they have the real thing on their website..........

 

[Hansel H]

Quote from Pa(b)st Prime:

Weakening the dollar and making American manufacturing competitive IS a viable solution. EVERYONE is trying to drive down their exchange rate. Stocks will dig a little dollar weakness....

Soon, in the global race to the bottom, every central bank will be @ 0%; after that it's all a matter of who's most imaginative at coming up with ways to weaken their currencies without causing their economies to implode completely.

 

[janvir19]

We have a winner...congrats you actually understand more than 99% of ETers...

Quote from intradaybill:

Those stupid traders that sold the dollar today now nothing about the velocity of money. They will get burned soon. It is the velocity of money that generates inflation, not quantitative easing and the velocity is down at this point, negative slope, not even sign of turning up. Stupid suckers.

Soon the EU central bank will be forced to do quantitative easing and EUR will fall balancing things out. In the G20 summit the US tried to convince Europeans to go along with them and the British with quantitative easing and they will have to sooner or later if they want to keep the union together. Three nations will be forced out pretty soon based on the spreads they get for their bond issues relative to German bonds.

Monies created from quantitative easing are NOT printing money in the traditional meaning of the words. These monies can be withdrawn from the economy as easily if the central banks see signs of inflation.

Everything working as planned to get the new long term economic cycle in progress. It will take a few years though. First deflation, then moderate inflation, then stagflation, then recession and afterwards a boom.

 

[gucci]

Quote from intradaybill:

Those stupid traders that sold the dollar today now nothing about the velocity of money. They will get burned soon.

Are they really stupid? Perhaps they were trading in now and not predicting the future?