The Feds Effort Has Done Nothing

[JamesVU2000]

look what happened when credit spreads began to tighten in march. the price of oil and commodities went into orbit. Thats the price we pay for constant credit expansion. Its massively inflationary.

loose credit= high inflation. the money always finds is most coveted. right now its resources

 

[Aaron Copland]

Quote from makloda:

And why would we need anyone to help credit being cut off even more than it is right now? Looking at the TED spread and 2y swap rates shows panicking banks that are a) hoarding cash b) don't trust their peers c) unable/unwilling to disseminate credit to corporate/consumer customers.

It seems the banks are BROKE! don't tell anyone you might create a panic.


http://www.federalreserve.gov/releases/h3/Current/

 

[makloda]

Quote from JamesVU2000:look what happened when credit spreads began to tighten in march. the price of oil and commodities went into orbit. Thats the price we pay for constant credit expansion. Its massively inflationary.

The CRB index is 5% below its March 1 level now. Funny isn't it, considering the Fed is printing money 24/7 and pumping credit around the world?!

On a side note, Gold went from $650 to $1000 when Volcker started to raise rates and only started to implode many months later.

 

[Hydroblunt]

Quote from Aaron Copland:

Your brain washed, Americans have a negative savings rate. Oh I better hurry to the bank and get my $700.00 hundred dollars out . Makloda you’re dumber than dirt.

He is brainwashed and dumber than dirt, but in this case, you are even worse.

Even the average American isn't stupid enough to trust FDIC to perform if multiple banks fail.

 

[maxpi]

Quote from Aaron Copland:

Your brain washed, Americans have a negative savings rate. Oh I better hurry to the bank and get my $700.00 hundred dollars out . Makloda you’re dumber than dirt.

Idiotic....... I know many, many Americans that work and put away money in 401k's and don't use credit cards.. some in the US have a negative rate and some positive.. overall is negaite but are the positive savings rate people going to say "relax, don't worry about the failing bank, overall we have a negative savings rate" LOL.

 

[Landis82]

Quote from Cache Landing:

The point is that the "FED" doesn't have nearly as much control as most people imply. Ultimately the consumer is in control. In the US we have demostrated that we are willing to buy the goods. Now the g-ment and FED policies need to eliminate the possiblity of deflation. Consumers will prevent a depression if they aren't given a reason to delay purchases.

Excellent post.

 

[Landis82]

Quote from amanda33:

Drastic measures such as raising interest rates and causing a deflationary environment could so easily be a kill rather than a cure to the economy, whereas a controlled recession + inflation should at the least give the FED more room to raise rates later.

Agreed 100%.

I'm always amazed at the rather "naive" posters in these threads that jump up and down blaming Bernanke and the FED for inflation - - - and yet they have no problem ushering in a total DEFLATIONARY collapse that would totally KILL off the American economy.

And to think that there isn't even a significant statistical chance of that happening at this time, is really putting your head in the sand.

 

[makloda]

Quote from Pa(b)st Prime:Are the banks in turn speeding the recovery by offering cheap available credit?

Uhm thanks for the explaining the TED spread to me. As you correctly say it's a market rate and the market rate signals a tight credit market for the average bank. END OF MESSAGE.

These will once again disseminate credit into the economy once their balance sheets allow for it and they feel more confident in getting their loans paid back by consumers and corporations. Nobody in their right mind would expect banks to pass through lower Fed rates right now to suspect borrowers without the typical 18-24 months lag.

The matter of the fact is that a series of Fed rate hikes in order to 'decelerate debt-fueled consumer and corporate spending' are unnecessary at this time. Credit is tight, there is no need to make it tighter.

Regarding your $10 hot dog metaphor... Who cares if the hot dog costs $10? I don't. All I care about is how long I have to work for it. Are you better off knowing a hot dog is $2 in 10 years just like it is today? Or are you better off knowing that the amount of time you have to spend working in order to purchase a certain good becomes less and less in the future?

 

[JamesVU2000]

Quote from makloda:

The CRB index is 5% below its March 1 level now. Funny isn't it, considering the Fed is printing money 24/7 and pumping credit around the world?!

On a side note, Gold went from $650 to $1000 when Volcker started to raise rates and only started to implode many months later.

I know and in case you havent noticed CDS are right where they are in march. My guess is A LOT of bankruptcies are around the corner.

I guess right now deflation is winning the battle.

 

[Aaron Copland]

Quote from maxpi:

Idiotic....... I know many, many Americans that work and put away money in 401k's and don't use credit cards.. some in the US have a negative rate and some positive.. overall is negaite but are the positive savings rate people going to say "relax, don't worry about the failing bank, overall we have a negative savings rate" LOL.

Indeed some do save and live within there means, and they are the ones getting hurt by earning nil on there savings.

I have no problem with the Fed helping depositary banks, they should not open the discount window to Wall Street investment banks, that’s my issue here.