They are stuck in a vise between a rock and hard place. The answer is simple raise rates and get it done and over with. Reactionary placating policies lead to nothing more than impulsive solutions that prolong a correction.
Akuma
Akuma
Nobody can take Fed Reserve seriously ...
- Thread starter Q.E.D.
- Start date
Not really... allow me to intervene with a few facts: 1) The fed does print but it doesn't occur as a part of QE. QE changes the ratio of Bank reserves to Treasury securities held in the private sector. The fed is doing the opposite of QE right now, i.e. they are decreasing reserves and increasing Treasuries held in the private sector; 2) The fed does "print" from time to time but they have no control over the amounts "printed", nor does the Treasury. The amount to be printed is decided indirectly by Congress when they determine the level of spending and the level of taxing.
The amount of federal spending into the private sector minus the amount of revenue collected from the private sector = the amount printed. "Printing" causes an increase in private sector savings equal to the penny to the amount "printed", because each penny printed is converted, via Treasury sales, to newly issued Treasury securities. Printing does not cause inflation. Certainly not in the more immediate sense anyway.
Inflation, as Friedman said, is caused by too many dollars chasing after too few goods and services. The cause of this is multivariate however. Certainly supply, demand, and fed monetary policy are factors. But please don't forget that "printing" is not a fed monetary tool; it can't be, because how much gets printed is a up to Congress; not the Fed.*
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*It is common to confuse an increase in the "money supply", via loans and fractional reserve banking, with printing. The fed does influence the "money supply" indirectly via direct control of the fed funds rate. Any influence the fed might have on supply of goods and services in the private sector economy, however, except at interest rate extremes, is weak, indirect, and occurs with large lag. The Fed's influence on demand is also weak and indirect (and a non-linear function of interest rates!). In general the near term effect of the "printing" of new money on the money supply is virtually zero -- i.e., 100% of newly printed money is routinely converted to Treasury Securities (savings). Even with time and subsequent fed conversion of some of these securities back to bank reserves, the influence of newly printed money on the "money supply" is usually insignificant compared to the amount of temporary, inside money created via fractional reserve banking. It's just wrong to say, "the fed is causing inflation via money printing".
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This is good. Completely consistent with what I point out above. Notice he points out that Congress determines the amount of printing , not the fed. Second he points out that QE does not cause inflation. He points out that the fed can supply all the cash needed in the banking system. This does not involve any "printing" of new money, however, unless the Congress so directs. (I point out above how Congress does this).
You may wonder where more cash comes from if it is not from printing. Although more cash could comes ultimately from deficit spending, i.e., printing, it usually doesn't. I pointed out why above. In everyday banking operation, more vault cash -- and less deposited reserves -- comes from the conversion of a bank's reserve deposit to vault cash as needed. And the reverse happens in the case of excess cash. Remember, vault cash is a part of a bank's reserve. When a bank wants more of their reserve in the form of vault cash and less in the form of a reserve deposit at the fed, the bank simply orders more cash from the fed. The Fed debits the bank's reserve account and arranges for an equivalent load of bank notes to be delivered to the bank. The fed is just transforming one form of money into another form. This leaves the Treasury's and Fed's total, current liability unchanged. Recall that all forms of money (coin, bank notes, bank deposits, treasury securities, etc.) when in private sector hands, represent obligations, i.e., liabilities, of the U.S. government and private sector assets.
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see
This guy gets it right. He doesn't explain where real money printing occurs however, but I have done that for you in my posts here. The real printing occurs when the Fed covers a net fiscal year Treasury overdraft. The Fed does this, and although we say the Fed is printing, it is really the Congress, not the Fed, that's printing. Congress is the only government body authorized to create U.S. money, consequently Congress, and only Congress, can "Print." The Fed is merely acting as Congress's agent when they cover a Treasury reserve account deficit.
If you give your daughter five buck to pick up a dozen eggs at the grocery store, who is buying the eggs, you or your daughter?
This guy gets it right. He doesn't explain where real money printing occurs however, but I have done that for you in my posts here. The real printing occurs when the Fed covers a net fiscal year Treasury overdraft. The Fed does this, and although we say the Fed is printing, it is really the Congress, not the Fed, that's printing. Congress is the only government body authorized to create U.S. money, consequently Congress, and only Congress, can "Print." The Fed is merely acting as Congress's agent when they cover a Treasury reserve account deficit.
If you give your daughter five buck to pick up a dozen eggs at the grocery store, who is buying the eggs, you or your daughter?
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By saying Congress he meant he has mandate from congress for financial stability not that congress determines anything
How Fed decides to print is solely Feds decision
Seconds he point about QE and of course it's not true what he says - the question if he s lying or he is a fool
what's more interesting with 17k messages and enormous time spent on this board you still don't understand a thing
As long as I can remember, going all the way back to the early 90s, it's ALWAYS been that way. Greenspan, Bernanke, Yellen, Powell, all same. When things look rosy, they sit on their hands and do absolutely nothing until EVERYONE knows the market is frothy. It's only after the bubble bursts and the market tanks they scramble for action. But by then, it's too little too late. With this current inflation, Powell and his cronies could have started upping the rates much sooner but no, they just had to wait until all the stars lined up. By that time, you didn't need to be a genius, let alone an economist, to know that price is friggin' outta control.
FYI I've been bitching about this inflation since the early 2020.
This inflation has been simmering since late mid-1990s, thanks to Greenspan. However, like SBF outdid Madoff, Bernanke, Yellen & Powell outdid not only SBF, but even Greenspan (they all created fiat "currency,") Quite ironic the greatest democratic republic ever established, is being brought down by a few hand fulls of non-elected dictators.As long as I can remember, going all the way back to the early 90s, it's ALWAYS been that way. Greenspan, Bernanke, Yellen, Powell, all same. When things look rosy, they sit on their hands and do absolutely nothing until EVERYONE knows the market is frothy. It's only after the bubble bursts and the market tanks they scramble for action. But by then, it's too little too late. With this current inflation, Powell and his cronies could have started upping the rates much sooner but no, they just had to wait until all the stars lined up. By that time, you didn't need to be a genius, let alone an economist, to know that price is friggin' outta control.
FYI I've been bitching about this inflation since the early 2020.