Fed Monetizes 1 Trillion in MBS and Treasuries for 2013

[achilles28]

Quote from HopelessTrader:

Thanks Hopeless.

Appears the "normal level" for both male and female LF participation is around the year 2000. That's where we should be to get back to where we were, in terms of national income. That's a big drop - 4.5% from peak to trough.

 

[HopelessTrader]

This one is interesting too..

 

[ktm]

Quote from HopelessTrader:

This one is interesting too..

I think M3 better reflects the balance sheet expansion.

 

[HopelessTrader]

Quote from ktm:

I think M3 better reflects the balance sheet expansion.

As you know they stopped keeping track of it. I believe it's lower than M1 or M2 balance though.

Do you think that is good or bad? Depends what you think we are fighting.. inflation or deflation..?

 

[ktm]

Quote from HopelessTrader:

As you know they stopped keeping track of it. I believe it's lower than M1 or M2 balance though.

Do you think that is good or bad? Depends what you think we are fighting.. inflation or deflation..?

True, I forgot the gov't stopped. I've been following it, but I guess it's a non-gov't entity that is putting out the numbers. M3 gets institutional money funds and repo's over and above M2.

I think it's odd that they stopped tracking it. I don't share the conspiracy theories of many around here, but I don't discount he possibility that the feds changed something legitimate to achieve some short term political objective. The headlines surrounding the GOP effort to mess with the CPI calculation in order to achieve 200B in savings sound nefarious as well.

If the number is inaccurate, then fix the methodology. If you can change the formula to save money, something seems amiss.

 

[ktm]

Quote from Tsing Tao:

I'm not pissed because I am short, nor am I even short. But you are a fool if you think the Fed crowding out everyone else in the debt market and flooding over 1 Trillion into the market every year is a good thing - especially when it is yielding such meagre economic results as we're getting now.

How do you suppose this will be unwound? Or will it?

You sound like a Bernanke apologist.

Quote from denner:

LOL, seriously, these threads never change. Achilles28 and Tsing Tao throw a bit of truth syrum into the mix and the usual suspects start their routine of put downs. Anyone who is critical of the Fed is a "disgruntled short seller".

None of the apologists can begin to wrap their heads around how the Fed will unwind this, but then again they believe all the bullshit they are being fed....

Just like interest rates are at all time lows because of "great investor demand". There must be something in the water.

As another poster mentioned, these are bills, notes and bonds....with expirations. You guys ever buy a bond? You know what happens when it matures, right?

Tell me why it matters that the Fed is doing this. The Fed buys the bonds, earns interest from the Treasury then pays it back to the Treasury in the form of excess Federal funds. The money never hits general circulation - check M1 thru MZM and you'll see the math. The increases in circulation are a small fraction of that which is being used to extend our national line of credit. Would you rather that China buy the bonds?

You should be glad that the Fed is there to take this action. What do you suggest should have been done when the real estate market crash crashed and the market needed support? What would you do instead?

 

[Tsing Tao]

Quote from CT10Gov:

Why would they unwind those assets? Those are bond-like; They will eventually mature or be redeemed.

Because if they don't, they've effectively permanently grown the money supply around $3T?

 

[Tsing Tao]

Quote from spencer:

Obviously you are not an American, and you probably hate America. I saw your other thread, and did not care to comment. But I will just add that you are extremely emotional and show no traits of an excellent trader, and if you think the US (and the world) will not grow - and you want to bet against it - go ahead. I would suggest going to sleep on a runway at Kennedy instead. I am very interested to see what your reaction will be to all of this 3 years from now.

You say the GDP has not even changed. I guess you haven't even bothered to look at actual GDP, let alone compared to the world, instead of just looking at the rates of change. http://www.usgovernmentspending.com/us_gdp_history

Making a lot of ASSumptions in your post, I see. None of them correct, either.

Where did I say that GDP has not even changed? That chart, however, is a bunch of statistical nonsense.

 

[Tsing Tao]

Quote from ktm:

As another poster mentioned, these are bills, notes and bonds....with expirations. You guys ever buy a bond? You know what happens when it matures, right?

Tell me why it matters that the Fed is doing this. The Fed buys the bonds, earns interest from the Treasury then pays it back to the Treasury in the form of excess Federal funds. The money never hits general circulation - check M1 thru MZM and you'll see the math. The increases in circulation are a small fraction of that which is being used to extend our national line of credit. Would you rather that China buy the bonds?

You should be glad that the Fed is there to take this action. What do you suggest should have been done when the real estate market crash crashed and the market needed support? What would you do instead?

It's not just bills - but regardless, keeping anything on the Fed's balance sheet permanently amounts to a permanent expansion of the money supply. Injecting $3-4 Trillion over the course of 4 years isn't having any effect now, because we're in the process of deleveraging. Once that stops and inflation picks up, and most of this isn't parked at the Fed in bank reserves but goes into the greater economy, watch out. The Fed says it can tighten rates once inflation pick up, and they can, but slowly. However, even an aggressive tightening campaign will do exactly nothing with all that money finally finding it's way into the economy. It must first be sterilized, dialed back, reverse repo'd whatever you want to call it, before tightening rates does diddly squat.

Markets need to clear themselves through recessions. Natural cycles need to be allowed to happen. They'll happen just the same, but the analogy I heard once that sounded great was "Would you rather throw up for 6 months straight or be nauseous for 20 years?"

I wonder if Japan wishes they could go back.

 

[oldtime]

I've read a lot of Tsing Tao's posts, and I think he has a lot better things to do with his time and energy than hate America.

I was born bred and raised here, and sometimes I even hate it

nothing wrong with hating

as long as from time to time you have a loving solution