Here is a thought about the FED

Quote from daddyeaux:

easy money means a 20's style boom and then the movie ends badly........
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could'nt agree more, but the boys in the fed have made a softish landing out of the question.
the temptation to print money to pay for imported oil has overwhelmed them completely and now there is the small matter of tourism in iraq.

a bit like working in a chocolate factory. the temptation to make yourself sick is just too great for the average person even although they are fully aware of the outcome.
 
the current credit boom from the early 70's started just after the US came off the gold standard....

the Treasury confiscated gold in the 30's to prevent hoarding...

governments are capable of bizarre behavior during times of panic....
 
Quote from daddyeaux:

the current credit boom from the early 70's started just after the US came off the gold standard....

the Treasury confiscated gold in the 30's to prevent hoarding...

governments are capable of bizarre behavior during times of panic....
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quite right.

Nixon can proudly claim to be the begining of the end.

The next step is for more oil producers to commence selling in a basket of currencies and then begin reducing the dollar content.

The idea that the us can use credit in order to build a military in order to defend it's debt is deeply flawed.

the "no war on terror" and the trade wars are highlighting the depth of this flawed thinking
 
Quote from daddyeaux:

cant see money supply inflation WITHOUT asset value inflation.....the two share a lung

Greenspan's 1% FF bubbled housing and now there's a bust-panic-bailout
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hi daddy,

so you say that on one hand there is going to be asset inflation but on the other hand that house prices will tumble. I find it a bit inconsistent - could you please explain? A house is an asset in my book. (of course unless it is a liability :D)
 
Quote from jjf:

What if the FED continues to expand money supply, but the banks raise the mortgage criteria in order to divert the money elsewhere.

Would incomes rise enabling existing mortgages to be met.

Would the bubble be passed elsewhere.

It is a little like squeezing the toothpaste tube in the center. You are never quite certain where the next pressure buildup will occur.
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WSJ had article on how other countries are following suit with the Fed and injecting money into their systems. Their concern was that this would create a emerging market bubble. These countries have already had a huge runup and it is arguable that it is deserved or sustainable.

However, some argue that the opposite such as this thread:

http://biz.yahoo.com/ibd/070919/etf.html?.v=1
 
well, if the $300,000 house (100% financed) you live in is now has a market value of $200,000 let's say, the house is no longer an asset....

it's now a net $100K liability with interest piling on....

Bernanke has said publicly on many occasions that he is more concerned with asset deflation than the economy...

so the net effect of chopping interest rates is to force holders of cash and short term paper to purchase hard assets to stave off currency devaluation....so Ok they dont buy real estate just yet but the cash is flowing into gold/oil/wheat/foreign currencies etc.....

Bernanke is really responding to investment banks that are screaming at him since they now hold $300 billion in orphaned paper that they cant find a market for much less a buyer....

just an opinion of course
 
Quote from daddyeaux:

well, if the $300,000 house (100% financed) you live in is now has a market value of $200,000 let's say, the house is no longer an asset....

it's now a net $100K liability with interest piling on....

Bernanke has said publicly on many occasions that he is more concerned with asset deflation than the economy...

so the net effect of chopping interest rates is to force holders of cash and short term paper to purchase hard assets to stave off currency devaluation....so Ok they dont buy real estate just yet but the cash is flowing into gold/oil/wheat/foreign currencies etc.....

Bernanke is really responding to investment banks that are screaming at him since they now hold $300 billion in orphaned paper that they cant find a market for much less a buyer....

just an opinion of course
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not a bad opinion.

also, with more money in the pockets of home owners with negative equity, the lenders have more options with which to spread the credit crunch.

The banks need time to spread this load and once it is contained you can bet that rates will rise again to favor the banks.
However that will be another story.
 
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