40 votes

New and Improved! Inflation-free Inflation, from the Federal Reserve

From the if you can't dazzle them with brilliance, baffle them with bullsh*t department:

WASHINGTON (MarketWatch) — Federal Reserve officials are considering a new type of quantitative easing that will attempt to boost the economy without accelerating inflation, according to a report published Wednesday.

Analysts said the new approach would allow the Fed to move despite high oil prices.

Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates, according to a story in The Wall Street Journal.

This “sterilized” quantitative easing, would use reverse-repurchase agreements to keep the money from flowing to bank reserves...

Continue on at MarketWatch

Comment viewing options

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

Let Me Get This Straight

The plan is to print more money to spur growth, but they promise to only spend it on the bonds that were created when they printed some money earlier. That way the new money can't flow into consumption and create inflation? But if the money isn't spent for consumption, then how is it a stimulus? OK, I'm clearly confused, so I'll start over.

A bank needs money (because its insolvent), so the Fed prints some money and loans it to the bank at 0% interest rate. Then the bank uses that money to buy government bonds that pay 2% interest. This is free money for the bank, and now it is a solvent institution (hooray).

Now we want to print more money, but it won't cause inflation because we will only spend it on the interest payments to the current holders of long-term bonds. That again improves the banks balance sheet and makes them more solvent. Now the bank is above its reserve requirement, so it can lend the money back to the Fed, at an even higher interest rate? This results in more free money to the bank.

Would Iran please nuke us.

Can we say

Bond Bubble?

"Always vote your principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost." -John Quincy Adams.

LOL

Try everything but the solution.

Twist! Retroactive Government. Repeating bad mistakes...

Twist and Shout Should Be the Fed’s Next Maneuver
Submitted by Mark Twain on Wed, 09/21/2011

Retroactive Government. Repeating bad mistakes, to the Sound of Music.

Unfortunately, the twist probably won't have much effect. The last time the Fed tried something similar -- in 1961, when “The Twist” was actually atop the hit parade -- it managed to lower long-term rates by a mere 0.15 percentage point, economists estimate. In a 2004 paper, Fed Chairman Ben S. Bernanke himself pooh-poohed the move. Now, with unemployment high, many households still deep in debt and with mortgages tough to get, such a small step is unlikely to generate much spending. ...
http://www.bloomberg.com/news/2011-09-21/the-twist-and-shout...

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

something WICKED this way comes

can these fliggin maniacs be euthanized post haste, dam.

Bulls turn into Bullocks when sterilized.

Sterilizing "legal tender" makes no sense. Waste of time & ...

Never mind.

Perhaps best to sterilize the Fed. Leave bulls alone.

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

hear hear !!

new and improved water, that does not make u wet !!
new and improved fire, which does not burn u !!

this new and improved QE sounds like the above 2 statements to me.

----------------------------
Dr.Ron Paul's 2002 Predictions
http://www.youtube.com/watch?v=zGDisyWkIBM

Lets add

New and improved fat....That does not make you fat!!!

hey

Yea right theyll just do what i talk about in my video get the money from the Discount window http://www.youtube.com/watch?v=ES2nKjlokqY BOOM!

Albert Camus — 'The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.'

They just raised the bar...

More central planning brilliancy! Can't wait to see what they come up with next.

When the American spirit was in its youth, the language of America was different: Liberty, sir, was the primary object. - Patrick Henry

It's starting to become more obvious

that under the debt-based system of fiat paper money, that fewer and fewer people know... who owes, how much, to whom.

And the The Fed is without question down to having absolutely nothing left in their toolbox, except to print.

The Federal Reserve System is a system of usury that redistributes from the poor, to the 'connected' wealthy.

The System does not create wealth, it only consumes it.

"If we lose freedom here there's no place to escape to. This is the last stand on earth." -Ronald Reagan

When they took us off the Gold Standard they took away our money... in order to make it theirs. -OneTinSoldier

Cyril's picture

+1. No doubts, they have now totally gone wild

Some enjoy their most intense sins in the flesh...

Orgies or whatever they're into.

The Fed Reserve crew? Those are obsessed with paper, always more and more paper "money" to print... Whose only purpose is to pass thru their buddies' wallets and pockets first, of course.

I suspect that's their way to climax.

They are nonsense in flesh and bones.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Paper

if they even had to pay for the paper they would stop inflating the money, but when you digitiz false national debt money at no cost its a joke. After all they need not money, they have the keyboard. So IRS Tax immoral extorted theft is not about money collecton. Its about forced submission that goes against your normal morality. Exactly the same tactics used by military on recruits, got to break them down so when we order them to murder they will submit. Its kinda like emotional black mail mental control. It works pretty dam good. MOst people support defend and will even attack you if you tell them that what they call tax you call extorted theft but in reality it is just a control tactic. War is debt, false debt and another control tactic.

sovereign

Republicae's picture

Under a fiat money system

Under a fiat money system there is no such thing as a “Sterilized QE” The entire system depends on inflation to keep it afloat, the entire economy under a fiat monetary system depends on inflation more than actual production. Monetizing debt or printing money out of thin air and then by reversing the process by “borrowing it back” as though there will be no consequence to the action is mumbo jumbo. Either the FED inflates or it doesn’t, there is no effective way to do what it does and make it work, no matter what it does! The fact of the matter is the money supply has been so inflated over the decades that it now takes $22,895.45 to purchase $1000.00 did prior to 1913 when the “dollar” was 100 cents, or another way to put it is that today it takes $1.00 to buy what .04 Cents bought in 1913. Yet, so few see the fact that this country has been turned into a productive serfdom with the people swallowing the ruse that they think they are earning $7, $10, $20 an hour just because that is what is printed on their paychecks when, in fact, they are working for pennies on each of those dollars an hour.

Besides, why do it? That is the real question behind the suggestion of this so-called “Sterilized QE”!

What this points to is an underlying problem this and other governments around the world are having, as well as States, and municipalities that is dumping their bond issues on investors who now know that the risk is far greater than the pay-off. Take the situation in Europe, the deal being pressed upon private bond holders by the EBC, the IMF and others is that the only one guaranteed to get full payment on those bonds is the EBC and all private bond holders will have to subordinate their bond holdings and potentially take the proverbial hair cut.

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

I speak banker,

Let me translate.

LIE LIE LIE buy silver LIE LIE LIE, buy gold, Lie lie lie cuz the oil is going to be 200bucks a barrel anyways, so we are green light for Quantative easing.

Its almost like speaking Ebonix or Jive.

Freedom may be worth searching for.

I have given up on my fellow Americans, (not DPers) as I will not shed one more calorie trying to awaken anyone else who is not a critical thinker and does not have the inherent feeling that something is wrong.

This is about all I could say about it

https://fbcdn-sphotos-a.akamaihd.net/hphotos-ak-snc7/423708_...

Yo dawg, I heard you like being poor, so we debased your currency while we debased your currency, so you can buy less while you buy less!

You just realized that 4/6 faces on federal reserve notes all opposed a central bank.

This is so sad. they are lying the american public right into..

..the face.. they are scumbags!
Vent your anger and inform the masses about these idiots.

We need to inform the sleeping masses that rely solely on the mass media that blacks out Ron Paul or spins his message.
The Mass media and the Fed are sponsored/build by the same people!

These flyers are all free to print to inform the people about whats going on
http://www.mediafire.com/?s4snpbpsts5b3 <- all versions that are available.
- Including flyers geared towards 50+ generation.(If you know a place or neighbourhood with retirees where they might have an impact)

http://www.dailypaul.com/218640/ron-paul-promotional-flyer-f...
please share links.

What a joke.

So they create the national debt from noting of value out of thin air digitized at no cost give the money to their installed puppets who gorge themselves at the trouth the put the false dube upon the public in the form of extorted theft called tax, now to fix the criminal debt slave ponzi scheeme they will create more debt from thin air and use that debt to pay themselves back from the previous false debt they imposed to make it appear that the debt realy isnt so bad. God what a huge huge joke. An insult to everyone.

sovereign

Close to the facts, but no cigar. Fed Reserve System is folly!

"pay [bankers] themselves back from the previous false debt..." - by Sovereign Human, DailyPaul member, 2012

No cigar. "... pay back..."? Your statement implies the impossible. It cannot be paid back. The supposed Monopoly-money system cannot be paid back.

  • It was imagined out of a 1913 banker scam. Monetarily, what is to pay back?
  • Nothing was created to pay back interest.
  • Nothing was recorded about the origin of this supposed paper-money system. Who pays whom? Who done it? When? Where? What session of Congress? What time? What is stated in the Congressional Record December 23, 1913 (during Christmas recess).
  • If every paper-dollar printed incurs National Debt, how it it to be paid back in more debt? Absurd.

Ziegfeld Follies are much more enjoyable, as follies go.

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

you make my point

Ha ha impossible nothing is impossible when you own the money tree.

sovereign

Who ever said money ain't growing on trees?

Many still believe it does.

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

We've been lied to since the FED took FOOD and ENERGY...

...OUT of the main inflation index.

That means gas, heating oil, electricity etc and all food.

I ASK YOU WHAT is more essential to human survival than FOOD and ENERGY?

YET they took those very essentials OUT of the index because if they didn't, there would be a revolt over the real inflation number.

So now they measure things like furniture, automobiles, movies, non-essential retail goods etc.

We CAN'T stop purchasing energy and food. We have no choice.

So it is those two categories which rise highest when they inflate and they should still be included in the inflation numbers they give us.

They are LYING to cover up their monetary mischief.

It's criminal.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Typical of lairs.

THey always tell the next lie to cover the previous lie as if anyone would beleive them. Usually the liar ends up with so many lies that they trip themselves up. That said, a good liare believes their own lies.

sovereign

My bullshit detector went off

My bullshit detector went off so violently that it ran out of batteries.

The running of the Bulls. The Bullocks got caught...

    Bulls cut to Steers... Bullocks.

Don't get caught when the Fed is out to sterilize.

Let 'em Fed Reservers multiply no more.

Sterilize the Fed! The Fed: Loaning you blind, since 1913.

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

Interest and Fees paid by YOU

Love how none of our illustrious representatives ask who pays the interest and what kind of transaction fees there will be.

These will come out of the existing money supply, thus ensuring that someone, somewhere, forecloses on an asset to the banks.

If this is so great and so neutral, why not do 100 times as much?

OR BETTER YET:
give the QE to us and we will lend it back to you at an interest rate and fee. Give everyone a million. IT is our money anyway. Isn't that the FED and Treasury argument?

Pro & Con: Banker bonus - much to do about nothing.

A banker bonus is akin to promising you pay them what you have. They promise "legal tender" 1's & 0's. They sign nothing. You promise to pay forever. You sign unilateral contracts... for credit....

Their Fed Reserve note has two signatures: 1) Rosa Rios, Treasurer of the United States (taxpayer's agent) & 2) Turbo Timmy, the Secretary of Treasury (witness). They create National debt. You pay. Your agent & witness collect a 100,000 plus salary (Latin: salarium - salt money).

    “salarium' leading to the word 'salary', used today to describe wages.”

    “Its reputation can be found in phrases like, "Worth one's salt," meaning, "Worth one's pay," since people were often paid in salt and the word itself is derived from the Latin salarium, or salary.” - The Huffington Post: Kristin Wartman: Change in Season: Why Salt Doesn't Deserve Its Bad Rap

    “Roman soldiers were paid partly in salt rations, “salarium argentums” — the forerunner of the English word salary.”

Similarly, your mortgage has two signatures: 1) Yours & 2) Notary (witnessing you signed). A unilateral contract. You pay. The notary collects a small fee.

    As in: "Rubbing salt into a wound."

Much to do about nothing.

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

Another bank bailout.

The Fed is going to do more of what it has been doing since 2008. The banks are holding worthless bonds and mortgages. They should write them off. That would show that banks are insolvent. That is bad. So, the Fed will pay the banks for the worthless assets, pretending they are worth something. The banks get the cash (See Dire Straits - Money for Nothing) and they do not have to write off the bad assets. To prevent the banks from lending the money, which puts it into circulation and debase the currency, it is going to pay the banks interest to deposit that money back with it. The banks have been doing this since the first bailout. Right now they have 1.6 trillion dollar parked there and the Fed is paying them a quarter of a percent interest on it. This is risk-free income for the banks that they got in exchange for worthless assets. Ka-ching! This "new" tactic is a variation on a theme. It will not boost the economy. There will be no new loans, but the bankers will get their bonuses.

[F]orce can only settle questions of power, not of right. - Clyde N. Wilson

I wonder what the interest rates will be on the reverse repos

Looks like another channel of free money for the banks.

Akin to vanishing paper-money & charging fees.

A bonfire would make a realistic spectacle for all to see... & all to understand. What is the result? Ashes.

What good is it to you when the Repo-man drives away with what you thought was yours?

Ashes to ashes. Dust to dust.

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