0 votes

The Fed's 2:15 decree; Where will it get that $600 billion? What could possibly go wrong?

Update: Official FOMC Statement Here.

WASHINGTON (MarketWatch) — The Federal Reserve pledged on Wednesday to start a controversial new $600 billion bond-buying spree to rescue the economy from its current doldrums.

The Federal Open Market Committee of the central bank said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, including about $75 billion this month, in a strategy called quantitative easing.

http://www.marketwatch.com/story/fed-to-buy-600-billion-in-g...

As I said below, don't expect the Fed to buy anything that is not guaranteed by the Federal Government. They are, after all, a bank. They're not going to lose.

Marketwatch: The market remains focused on the Fed, whose policy announcement is due at 2:15 p.m. Eastern time. Observers largely expect some form of quantitative easing as the central bank seeks to boost the U.S. economy.

http://www.marketwatch.com/story/us-futures-flat-after-elect...

Bloomberg: The Federal Reserve will probably begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News.

http://www.bloomberg.com/news/2010-11-01/fed-likely-to-annou...

Where will they get the $500B? They'll conjure it up from the ether with black magic Fed spells. Easy like pie - what could possibly go wrong?

The Telegraph: China's commerce ministry fired an irate broadside against Washington on Monday. "The continued and drastic US dollar depreciation recently has led countries including Japan, South Korea, and Thailand to intervene in the currency market, intensifying a 'currency war'. In the mid-term, the US dollar will continue to weaken and gaming between major currencies will escalate," it said.

http://www.telegraph.co.uk/finance/currency/8103462/QE2-risk...

Something to remember about the Law of Unintended Consequences: It is a law.



Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Thanks!. Posted at the Daily Tea Party for Tea Party education!

Thank you!

http://dailyteaparty.com/2010/11/04/the-feds-215-decree-wher...

"it is good for the establishment to adopt liberty ideology, but it is not good for those who have already adopted liberty to fall to the feet of the establishment." ~ Annica2

What makes ME so mad, is that

What makes ME so mad, is that the FED keeps saying they are a private business. If they are private, and we did not elect them, why can they meddle in the lives of Americans with all they do? It is more awaited to listen to THEM than the President! I think I am going to look more into this Federal Reserve Act, that RP spoke about, yesterday..

Thomas Hoenig, President of the KC Fed...

Check out this quote from the WSJ about Hoenig.

"Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, who described the move before the meeting as a "bargain with the devil," was the lone dissenter in a 10-1 vote of the Fed's policy committee. He said the risks of additional government bond purchases outweighed the benefits."

I've always thought Hoenig was the only person at the Fed who had their head on right. He is to the Fed what Ron Paul is to the US Congress. He has always been an inflation hawk, and has been a single dissenting vote in a lot of the Fed's policy meetings. I know we all hate the Fed and would rather see it abolished than anything, but while it is still around, we need Hoenig as Fed Chairman!

http://online.wsj.com/article/SB1000142405274870350690457559...

Thanks Mike

so we have one friend on the inside.

LL on Twitter: http://twitter.com/LibertyPoet
sometimes LL can suck & sometimes LL rocks!
http://www.dailypaul.com/203008/south-carolina-battle-of-cow...
Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

Fed is desperate to sink US

Fed is desperate to sink US economy. Why does it want to try so many times the failed stimulus plans? Obviously not to help Americans, but to help their buddies and ruin the economy.

No it is not "Printed out of thin Air"

(This was intended to be a reply to a comment below but accidentally posted to the main tread, don't know how to move it now, please see below to understand the context)

This money is a loan and attached to DEBT, not "Printed out of thin Air" Big difference! The banksters want this paid back with interest! It actually wouldn't be as bad if the Government issued it's own currency rather than borrowing it from the Fed. This is why you are hearing the mainstream media mention "money being printed out of thin air" It's all about getting us to redirect our frustration at anything but the real culprits. Think about it, the banksters could care less that we are mad as long as they are not on the receiving end of it. If they can just get us shaking our fist at "thin air" instead of them, they will be quite content, and we will not have solved the problem.

please listen to some of the free Archives of "Crash" by George Whitehurst Berry on GCN:

http://www.gcnlive.com/programs/crashAreYouReady/archives.php

I agree.

I wish the mainstream media would pay more attention to our massive deficit and the dangers associated with it. However, hearing comments about money being "printed out of thin air" on your average, run-of-the-mill newscast is still jaw-dropping and a small step in the right direction. Very few Americans are aware that our money isn't backed by anything, and if this educates a few people or causes them to question the absurdity of it, then I'll take the small victory. Such a statement isn't something you would have heard in the media a few short years ago.

It is to be expected (not supprising) that the media would

report this,
The problem is the media is implying that it's the Government that is "printing" (as most here should know most of this is not physical FRN's so "print" is a misleading term) the money "out of thin air"
They (the mainstream media) do not make the connection that it is the Federal Reserve banksters that LOAN money that they pulled out of thin air and then charge interest on it! This is the main reason we have deficit. There would be no deficit if it was the Government was actually creating the money instead of borrowing it, and no need for most taxes.
The mainstream media has been talking about deficits for a long time, and now about money "printed out of thin air"
BUT THEY ARE NOT MAKING THE CONNECTION BETWEEN THE TWO!
The Fed and all their pals know Americans are angry, so they have to divert that somewhere other than themselves, they have no problem with us getting upset at "thin air"
The root of the issue IS NOT PRINTING MONEY OUT OF THIN AIR, IT IS THAT IT IS BORROWED AND THE FED WANTS US TO PAY IT BACK WITH INTEREST!

Again please go listen to George Whitehurst Berry

http://www.gcnlive.com/programs/crashAreYouReady/archives.php

oops

double post

Ron Paul for speaker of the house.

It is time that Ron Paul take a leadership role in the government and speaker of the house is the perfect position to take on the road to president.
If the R3volution movement allow a Neo-con such as John Boehner to take control, it will lead to a Neo-con taking over the presidency in 2012.
grant

where is jzneff to tell us

where is jzneff to tell us that this is all normal and don't worry...

Today I went to a coin shop in Ann Arbor.

Have been trying to buy palladium for the last week at coin shops in MIchigan. I cannot find it anywhere. Try and you will see. Just want you to know that I support you on silver, but I suggest buying palladium as well. It will eventually pass gold and then pass platinum.
Buy palladium.
Paul-lad-I-am
Ron Paul for speaker of the house, now!!!
grant

Debbie's picture

Thank you for this tip!!

.

Debbie

Just heard about this on the

Just heard about this on the radio during a headline news segment. The announcer literally said, "The Fed will get the $600 by printing it out of thin air" They actually said this on a mainstream radio network! And it was even one of those political talk radio shows. It was just news. Couldn't believe it.

No it is not "Printed out of thin Air"

This money is a loan and attached to DEBT, not "Printed out of thin Air" Big difference! The banksters want this paid back with interest! It actually wouldn't be as bad if the Government issued it's own currency rather than borrowing it from the Fed. This is why you are hearing the mainstream media mention "money being printed out of thin air" It's all about getting us to redirect our frustration at anything but the real culprits. Think about it, the banksters could care less that we are mad as long as they are not on the receiving end of it. If they can just get us shaking our fist at "thin air" instead of them, they will be quite content, and we will not have solved the problem.

please listen to some of the free Archives of "Crash" by George Whitehurst Berry on GCN:

http://www.gcnlive.com/programs/crashAreYouReady/archives.php

Reporting the truth. How embarrassing.

"To error is human. To tell the truth is not news... Not news as reported." - Twain, 2010

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

SteveMT's picture

Great UK headline: "Fed prints another $600bn..."

Fed prints another $600bn to keep US recovery on track
The US Federal Reserve is to pump another $600bn (£370bn) into the economy over the next eight months in a bid to resuscitate America's flagging recovery.
By Philip Aldrick and Emma Rowley
Published: 7:49PM GMT 03 Nov 2010

The latest round of quantitative easing (QE) comes on top of the $1.7 trillion already completed and is intended "to promote a stronger pace of recovery", the Fed said. It is changing tack, however, buying US government bonds instead of corporate debt and mortgage-backed securities. Existing QE will be rolled over, but also recycled into treasuries.

By the end of June, the Fed expects to have bought $850bn to $900bn of treasuries – roughly $110bn a month, $75bn of which will be additional QE. The Fed also kept inerest rates at 0pc to 0.25pc, where they have been since December 2008.

http://www.telegraph.co.uk/finance/economics/8108735/Fed-pri...

It isn't the sum you get.... (reflection of 175 years)

"It isn't the sum you get, it's how much you can buy with it, that's the important thing; and it's that that tells whether your wages are high in fact or only high in name."
- A Connecticut Yankee in King Arthur's Court

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Its Madoff-Enronist

Its Madoff-Enronist Masochism.

How on earth can this help the economy? I mean, has anyone caught in the vicious circle of paying off one credit card with another EVER improved their lot?

I thought the deal was supposed to be that Bernanke bought toxic mortgages, penny stocks and junk bonds from Goldman, JP Morgan, and his other drinking buddies put fresh money in "the market place" (ha ha ha) and was supposed to yield a warmer economy?

And I thought that scheme was utterly criminal. But this Madoff-Enronist self-inflicted financial gunshot wound is much worse...

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Economy: Truth? ... Your Moneies Worth: Wages High or Low?

"Truth is the most valuable thing we have. Let us economize it."
- Following the Equator, Pudd'nhead Wilson's New Calendar

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Doing God's work.

http://www.youtube.com/watch?v=pD38Tz8as-c

Who knew God was into forgery?

Love or fear? Choose again with every breath.

Michael Nystrom's picture

Jive - Bernanke Calls Agency Bonds Guarantee ‘Important’

to Stability.

http://www.businessweek.com/news/2010-07-22/bernanke-calls-a...

July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the U.S. government needs to maintain its guarantee on mortgage-backed bonds issued by Fannie Mae and Freddie Mac to preserve financial stability.

“It is very important for financial stability and confidence that we make good that guarantee,” Bernanke said.

- - - - - -

Stability! Ha. Because the Fed is holding $1.25 trillion of them! Removing the guarantee would be highly destabilizing -- to the Fed!

Garrett said it was not normal for the Fed to buy securities of an agency under federal conservatorship. Bernanke said the Federal Reserve Act permits purchases of agency securities.

“We may have gone down different a road than we have ever gone down in U.S. history where the Federal Reserve has engaged in buying a security that is not a Treasury, that is not guaranteed by the full faith and credit of the United States for its lifetime,” Garrett said.

- - - - - -

http://www.businessweek.com/news/2010-07-22/bernanke-calls-a...

The Fed is a risk, since the guarantee might only be temporary. Congress could revoke it, but it indeed would be destabilizing for other large investors (i.e. China).

So yes, the Fed bought a lot of crap during QE I, but it was guaranteed. They wouldn't have bought it otherwise, and I doubt they'll do it again.

The Fed is a bank, and it operates like any bank. It has no intention of losing money.

Ultimately the guarantee comes from the full taxing power of the Government. i.e., it comes on our backs.

He's the man.

The Fed has no intention of losing money. Nor loaning money.

The Fed loans no money. It creates "legal tender"

"Legal Tender" may be partially grown on trees. Saw dust is a byproduct of lumber milling. It is an ingredient that may be used to create paper. Mix with cotton and make durable "Legal Tender": Good for "Faith Based Currency."

"The Fed is a bank, and it operates like any bank. It has no intention of losing money." - Michael Nystrom, 2010

The Fed has no intention of loaning any money. No intention of using its own. It loans other people's wealth. It creates "Legal Tender" to serve as receipts for the debt it immaculately creates.

Oddly, these debt receipts are in vogue as currency:

  • Commerce.
  • Funding project
  • Make-Believe we are financially rich or poor

Banks seldom lend what they have. They make accounting entries. Somehow, through stealth, pen strokes or calculations they immaculately create "Legal Tender."

"That's all folks." - Porky Pig

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

The Fed is timing this very dangerous move...

... to coincide with the elections.

They are already trying to lay the groundwork for a propaganda campaign blaming the GOP/Tea Party for the collapse of the dollar.

Incredible?
When has that ever stopped the MSM?

The Washington Post had an article "reporting" that foreign markets were nervous about the prospect of Tea Party politicians cutting taxes, increasing the U.S. deficit, and weakening the dollar.

Its all OUR fault don't you know.

******************************
The Virtual Conspiracy

SteveMT's picture

And Obama timed his trip with both Fed announcement...

and elections.

Just another one of those coincidences.

The yield curve is rising

The yield curve is rising right across the board. Thirty minutes into QE 2.0, it appears already to be a failure.

I just heard on Bloomberg that the Fed has also removed its self-imposed restriction on what percentage of its balance sheet treasuries (or anything) can be.

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

Wow the charts

for today in gold, the dollar, and stocks are amazing.

The Fed's power is truly unprecedented...

"A living Constitution is a dead one" -Ron Paul

Un-Audited, Un-told, Un-spoken, Un-founded, Un-just...

Un-worthy...

Some report they & the boys set up the Immaculate Money Fountain (IMF). Alas, you would have to ask Uncle Ben or Timmy, our IMF Representatives on Immaculate Money.

End the Fed: Loaning you blind, since 1913.

End the IMF: Loaning the Fed blind, since they want other people's wealth.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

The Immaculate Money Fountain! THAT is where those bubbles

come from!

WHO PUT SOAP SUDS N THE IMMACULATE MONEY FOUNTAIN?

Love or fear? Choose again with every breath.

Jumping shorts

Ha! My shorts on 30-year bonds are jumping. (Don't you just love it when your shorts jump?) I gambled that the Fed would only buy T-bonds at the short end, five and ten years. And that's what they announced.

The End of Empire is kind of fun when you play it as a video game.

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln