Author Topic: Fed refuses to stop stimulus  (Read 5894 times)

arce1988

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Fed refuses to stop stimulus
« on: September 18, 2013, 03:30:27 PM »
http://money.cnn.com/2013/09/18/news/economy/federal-reserve-taper/index.html?hpt=hp_t1


Money experts?


Of the 10 Fed members who vote on monetary policy decisions, only Kansas City Fed President Esther George voted against Wednesday's decision. George has dissented at every Fed meeting this year, expressing concerns of fear that Fed stimulus could increase "the risks of future economic and financial imbalances" and lead to a run-up in inflation over time. 

OneMoreRep

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Re: Fed refuses to stop stimulus
« Reply #1 on: September 18, 2013, 03:45:21 PM »
Steve,

Even though the economy is starting to slowly pick up, the Fed doesn't feel too confident until it's been on the up-and-up a little longer.

The reason why they refuse to stop the stimulus is because it keeps more money in the market. When the Fed wants to increase the money supply, it buys government bonds. By buying government bonds, they effectively lower interest rates (on things like mortgages for instance) and cause an increase in the price of bonds. As a result, this purchase of long-term government bonds increases the money supply in our economy, which in turn makes money more available and by default actually reduces the cost of borrowing money.

On the flip side, when the Fed wants to raise interest rates (which reduces the money supply) it in turn sells long-term government bonds. This sale of bonds causes the price of bonds to be reduced, yet the rate on these bonds increase.

The abridged version is that (in my opinion) the Fed is simply placing a bandaid on an impending hemorrhage and will leave the trouble of figuring this mess out to the new Fed Chair. That and they also aren't confident in the prospect of our economy truly rebounding, so they are trying to keep a decent current of money available.

PM me if you'd like further explanation regarding this..

"1"

Thin Lizzy

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Re: Fed refuses to stop stimulus
« Reply #2 on: September 18, 2013, 03:58:09 PM »
OneMoreRep,

That's the "official" explanation for the move. Obama let the real reason out of the bag when he commented that the debt ceiling needs to be raised.

Who do you think is going to buy that additional debt? At this point, the Fed's QE is almost entirely about funding the government.

Tedim

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Re: Fed refuses to stop stimulus
« Reply #3 on: September 18, 2013, 03:59:15 PM »
If they stop the pump everything implodes and I mean every sector. So they'll keep pumping....

OneMoreRep

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Re: Fed refuses to stop stimulus
« Reply #4 on: September 18, 2013, 04:00:26 PM »
If they stop the pump everything implodes and I mean every sector. So they'll keep pumping....

Correct.

@ThinLizzy - I don't disagree, it's just a lot messier than words can describe, hence why I told Arce to PM me if he desires more of the skinny..

"1"

arce1988

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Re: Fed refuses to stop stimulus
« Reply #5 on: September 18, 2013, 04:03:48 PM »
  Thanks guys    so the debt limit will be raised again    but at what point will it get absurd? 22 trillion? 44 trillion? 66 trillion?

Tedim

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Re: Fed refuses to stop stimulus
« Reply #6 on: September 18, 2013, 04:07:15 PM »
I've posted explanations and reasons for the implosion....... rhyme and verse if anyone is interested in details search my history my fat fingers are tired of the hunt and peck on this iPhone

arce1988

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Re: Fed refuses to stop stimulus
« Reply #7 on: September 18, 2013, 04:07:41 PM »
California economist says real US debt $70 Trillion


The federal government has been low-balling the public for years on how much debt it actually has, a University of California, San Diego economics professor says, adding that the real amount is $70 trillion – not $16.9 trillion.

James Hamilton's claim the United States is in a much deeper financial hole than many realize comes as Congress gets ready for another budget battle when lawmakers return in September. Both sides have been digging in on their policy positions over the debt, spending and the country's future fiscal health.

Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those figures brings the total amount the government owes to a staggering $70 trillion, he says.

Tedim

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Re: Fed refuses to stop stimulus
« Reply #8 on: September 18, 2013, 04:09:17 PM »
 Thanks guys    so the debt limit will be raised again    but at what point will it get absurd? 22 trillion? 44 trillion? 66 trillion?

125% of GDP is end game no nation in history as ever exceeded this debt lvl....also just a fun fact no nation in history has ever paid off their national debt, never.  :-\

OneMoreRep

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Re: Fed refuses to stop stimulus
« Reply #9 on: September 18, 2013, 04:09:52 PM »
  Thanks guys    so the debt limit will be raised again    but at what point will it get absurd? 22 trillion? 44 trillion? 66 trillion?

Unfortunately, it might very well continue.

We have many economic issues on the horizon with potential government shutdown and even default status and because of which, the Fed needs to keep things still for now until we normalize things a bit.

Problem with all of this is that we did a little similar by way of a stimulus circa 2000 and around 2008, we felt the repercussions of said actions.

What's that saying, "Those who don't remember their past are condemned to repeat it"..

"1"

arce1988

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Re: Fed refuses to stop stimulus
« Reply #10 on: September 18, 2013, 04:11:08 PM »
George Santayana


 great statement


 thanks OMR

Shockwave

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Re: Fed refuses to stop stimulus
« Reply #11 on: September 18, 2013, 04:30:00 PM »
Time to let rhis mockery implode, wait until its burned to the ground, and then pisson the ashes before we begin to build a system dedicated to the ideals that the founding fathers... rather than the perverse mockery it has become today.


Thin Lizzy

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Re: Fed refuses to stop stimulus
« Reply #12 on: September 18, 2013, 04:33:32 PM »
If they stop the pump everything implodes and I mean every sector. So they'll keep pumping....

Actually, Companies are holding record amounts of cash on their Balance Sheets. So, liquidity isn't the real issue.

If the fed stops buying debt, interest rates will rise and the the payments that have to be made by the government will overwhelm the federal budget. When the fed buys the debt, the interest payments funnel back to the treasury in a sort of monetary/fiscal circle jerk.

The end game of this is a collapse of the dollar.

WalterWhite

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Re: Fed refuses to stop stimulus
« Reply #13 on: September 18, 2013, 04:33:47 PM »
Unfortunately, it might very well continue.

We have many economic issues on the horizon with potential government shutdown and even default status and because of which, the Fed needs to keep things still for now until we normalize things a bit.

Problem with all of this is that we did a little similar by way of a stimulus circa 2000 and around 2008, we felt the repercussions of said actions.

What's that saying, "Those who don't remember their past are condemned to repeat it"..

"1"

Indeed  this is an unequivocal house of cards.  The zero rate policy alone was/is unprecedented and combine that with the enormous monthly purchases of t bills and mortgage backed securities and the fed experiment's fuse is lit. We have a stock market driven by this policy because there is no return elsewhere, however, look at where long term rates have gone with just the discussion of ending the qe program.  Then where will the fed unload all these bonds?  The fed never really thought out an exit strategy which won't push the inflation button and lead to a sharp market decline.
 
I have gone on this diatribe before and will keep it short..the dollar collapse thin lizzy talks of is real!  Get out of bond funds, prepare to hold municipal issues until maturity and don't stay married to any equity positions.

arce1988

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Re: Fed refuses to stop stimulus
« Reply #14 on: September 18, 2013, 04:35:15 PM »
  Great minds here on the forum

hazbin

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Re: Fed refuses to stop stimulus
« Reply #15 on: September 18, 2013, 05:26:51 PM »
 ;)

Megalodon

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Re: Fed refuses to stop stimulus
« Reply #16 on: September 18, 2013, 05:34:12 PM »
  Thanks guys    so the debt limit will be raised again    but at what point will it get absurd? 22 trillion? 44 trillion? 66 trillion?

We have become acclimated to Trillions. Quadrillions will take some adjustment.

arce1988

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Re: Fed refuses to stop stimulus
« Reply #17 on: September 18, 2013, 05:43:20 PM »
  Yugoslavia here we come

Irongrip400

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Re: Fed refuses to stop stimulus
« Reply #18 on: September 18, 2013, 05:45:50 PM »
125% of GDP is end game no nation in history as ever exceeded this debt lvl....also just a fun fact no nation in history has ever paid off their national debt, never.  :-\

Andrew Jackson did.

Tedim

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Re: Fed refuses to stop stimulus
« Reply #19 on: September 18, 2013, 05:53:39 PM »
Andrew Jackson did.

Absolutely right...for less than 1 year.

ProudVirgin69

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Re: Fed refuses to stop stimulus
« Reply #20 on: September 18, 2013, 06:19:28 PM »
nah cant happen as of now.

the usa can just monetize its debt.

as long the planets trades in usd, all will be good.

still biggest economy on earth, the people still believe in the tax revenue of the govt(this is one point how currency value is established), all good.

the fed has never said theyd stop the stimulus,they only planned to reduce it somewhat,not even 10% i think.

if they stopped it overnight, itd cause a true economic disaster.

the problem is ppl are greedy and want everything upfront,before they earned it, the fed is not to blame.

if those same debitor ppl ran the economy, THEN the usa would be in the shitter.


Basically this.

Lol at people thinking the US is going anywhere.  We're firmly entrenched as number 1.

Deal with it 8)


Thin Lizzy

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Re: Fed refuses to stop stimulus
« Reply #21 on: September 18, 2013, 06:23:37 PM »
nah cant happen as of now.

the usa can just monetize its debt.

as long the planets trades in usd, all will be good.

still biggest economy on earth, the people still believe in the tax revenue of the govt(this is one point how currency value is established), all good.

the fed has never said theyd stop the stimulus,they only planned to reduce it somewhat,not even 10% i think.

if they stopped it overnight, itd cause a true economic disaster.

the problem is ppl are greedy and want everything upfront,before they earned it, the fed is not to blame.

if those same debitor ppl ran the economy, THEN the usa would be in the shitter.



The reason you're right is that the rest of the major economies are in even worse shape.

Japan has serious demographic problems, as there aren't enough young workers to replace and support its aging workforce. In addition, Japan's debt levels are even higher than those of the U.S., and having been monetizing at an even greater rate.

Europe has no entrepreneurship, tremendous debt,  and is stuck in a failed contraption called the European Union.

China's export led growth model has pretty much run its course, as their biggest customers, the U.S, Europe, and Japan are broke.  Rebalancing their economy will be a painful process.

The U.S is basically the best horse in the glue factory, FOR NOW.

Mr.1derful

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Re: Fed refuses to stop stimulus
« Reply #22 on: September 19, 2013, 08:40:58 PM »
Get ready for Peter Schiff was Right Part II.

arce1988

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Re: Fed refuses to stop stimulus
« Reply #23 on: September 19, 2013, 08:43:12 PM »
Quote
The U.S is basically the best horse in the glue factory, FOR NOW.

^


PS, Galeniko may not speak English very well... but he sure can write it


http://englishharmony.com/write-in-english-better-than-speak/

Isn’t It Weird That I Can Write In English Better Than Speak?
by ROBBY on JANUARY 9TH, 2012


Short answer – “NO, it’s not weird at all! It’s actually completely normal for any English speaker – be it native or foreign – to be able to write in English better than speak!”

However, having said this, the reverse isn’t always true and I’m not claiming that all English speakers are better writers than speakers. It’s just that it’s NOT WEIRD if you happen to be a better writer than a speaker.

Now, would you like to get a bit more elaborate answer to this question? Well, it’s going to take me more than just a paragraph or two to say all I have to say in this regard, so I’d better settle down in front of my laptop with a mug of coffee because writing this article is going to take me a little while.

There are many aspects to the curious problem of differences between writing and speaking in English and who else would be more qualified to answer the above question than me? After all, I live in an English speaking country and I spend the biggest part of my day at work communicating with native English speakers; most of my evenings are spent writing articles for my blog and answering e-mails.

Years spent on analyzing English fluency related issues have left me with a very good understanding of how one’s writing skills influence one’s ability to speak and vice versa, so let my long answer begin!

So, is it weird that you can write in English better than speak?

NO, and the reason number one is…


1. If You Learnt English the Traditional Way,
It’s Hardly Surprising Your Written English is
Better than Your Spoken English!

In a nutshell, if you’ve learnt the English language by filling in blanks in workbooks and constructing sentences based on English Grammar rules, you’ve become very good at it. So, why would you be surprised to find out in a few years down the line that you’re much better at writing in English than speaking?

Do you think that the ability to create a piece of writing must somehow result in ability to produce verbal content of the same quality?

I’m sorry to disappoint you my friend, but it simply isn’t true!

Just think about it from this perspective – when you write, is your mouth engaged in any way in the text creation process? Is your ability to deliver fluent English speech being developed while you write? I don’t think so, because were the opposite true, you wouldn’t be asking the question in the first place, isn’t that right?

2. If You Spend Most of Your Time Writing,
It’s Rather Common Sense You’re Better at It!

I spend plenty of my time writing articles for this blog, and after a good few years doing this on a regular basis I want to believe I’m good at it! It’s a result of years’ hard work, and if you’re anything like me, you must have experienced a considerable improvement in terms of your ability to deliver very well written English content.

At the same time, if you don’t have much interpersonal contact with other English speakers, your spoken English improvement is lagging behind. The funny thing is, YOUR EGO WANTS to see the same improvement in terms of verbal fluency, but the obvious answer that it’s all down to the lack of practice just keeps eluding you.

It actually boils down to a single premise – YOU ARE WHAT YOU DO :!: If you write a lot – you’re a good writer. If you speak a lot – you’re a good speaker.

Yet interestingly enough, even if you spend an equal amount of your time on writing and speaking, the chances are that you can express your thoughts slightly better in writing. Well, it’s actually quite obvious as well because…

3. You Have an Awful Lot More Time
For Planning When Writing!

When you write, you can stop for a second, think on a few different ways of putting the particular thought into words, and then write it down on a piece of paper or type it onto a computer. There’s nothing preventing you from creating perfect sentences in writing simply because you can always take your time and choose the best fitting words!

Those who face real people in real life don’t have such a luxury – when you speak you have to produce your speech pretty much instantly. Of course, sometimes you will hesitate and think of the best fitting word, phrase, or English Grammar Tense.

By and large, however, an English speaker – be it foreign or native – doesn’t have as much time for planning the speech when speaking as when constructing sentences when writing.

So if you’re bugging yourself about not being eloquent enough when speaking, you can rest assured that millions of native English speakers are probably feeling the same way. After all, when you create a piece of writing, you can always proofread it, polish any imperfections and make it sound as perfect as possible.

And, if you know how to make use of Google and online dictionaries to make sure you use the same means of expression as native English speakers do, your writing really might not differ from that of a native English speaker!

So is it surprising that if you have access to so many extra recourses when writing, that your writing is actually better than your spoken English?

4. When Writing, You’re not Emotionally Affected!

When you interact with other human beings, there’s always emotions involved.

Your new work colleague might make you too conscious of your own English speech, the girl or the handsome guy sitting at the workstation next to you might make you embarrassed, and your boss is probably pissing you off every time he walks by and makes some non-sense comment!

Add on some foreign English speaking perfectionists who’ll scowl at the slightest mistake you make, and some who’ll be always rushing you speech making you completely tongue-tied, and the overall picture all of a sudden gets very grim indeed!

Personally I tackle such emotional pressure with a decent dose of ignorance, but at the same time I’m fully aware of how difficult it sometimes is not to become emotionally affected and maintain your English fluency.

When you write, on the other hand, you are emotion-free for the most part (unless someone is peeking over your shoulder as you write and making you irritated!) And even if you’re frustrated and moody while writing, it will affect your ability to create that piece of writing to a lesser extent than if you were speaking.

So, did I convince you of the fact that there’s nothing weird about being able to write better in English than speak?

I hope I did, and I also hope you enjoyed reading this article! ;-)

Robby

P.S. Would you like to find out why I’m highlighting some of the text in red? Read this article and you’ll learn why it’s so important to learn idiomatic expressions and how it will help you to improve your spoken English!

P.S.S. Are you serious about your spoken English improvement? Check out my English Harmony System HERE!

 

WalterWhite

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Re: Fed refuses to stop stimulus
« Reply #24 on: September 19, 2013, 09:57:32 PM »
nah cant happen as of now.

the usa can just monetize its debt.

as long the planets trades in usd, all will be good.

still biggest economy on earth, the people still believe in the tax revenue of the govt(this is one point how currency value is established), all good.

the fed has never said theyd stop the stimulus,they only planned to reduce it somewhat,not even 10% i think.

if they stopped it overnight, itd cause a true economic disaster.

the problem is ppl are greedy and want everything upfront,before they earned it, the fed is not to blame.

if those same debitor ppl ran the economy, THEN the usa would be in the shitter.



The fed is not monetizing QE acquisitions and has already said it will sell Treasuries and MBS's as soon as QE ends.  This will lead to the rise in interest rates I mentioned earlier. Also we may have a large economy but we are sputtering and this fed policy has not led to major economic growth.  The numbers tell the story of an overextended QE program which is no longer doing more than propping the stock market and now just keeping short term rates in a holding pattern.  This will have to end at some point and then the fed gov financing rates will rise.

Presently 85% of marketable U.S. Treasury debt is held outside the Fed and is close to the average ratio held over the past 20 years.

QE is an experiment. So if the Fed tries to slowly taper off on the program, to borrow a phrase, it's like setting your stopwatch with a sledgehammer.  Unintended consequences, we either get the recession we deserve, and it will be a doozy.... or we follow Japan and get fifteen plus years of zero/negative growth.

I'm not sure what the outcome of this experiment will be but no one should pat the fed on the back!