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CAN Someone explain this to me. I don't speak banker.

Submitted by Expat but still... on Wed, 09/17/2008 - 14:06
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The Treasury Dept. said Wednesday that it would sell $40 billion of debt for the Fed to help the central bank deal with the huge cash crunch in the wake of the credit crisis.

UHHHH I am confused, is that like making us more in debt? Almost half of the aig bailout? I don't know, someone please...

art was found here

http://money.cnn.com/2008/09/17/markets/markets_newyork/inde...

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Yes

Submitted by samadamscw on Wed, 09/17/2008 - 15:15.

When the Treasury 'sells' debt that means it just sold a bond, T-bill or other security to some fool who thinks he will one day be paid back. In essence, they borrowed money.

Yeah, but considering the

Submitted by Republicae on Wed, 09/17/2008 - 15:45.

Yeah, but considering the way the system usually works, the FED, when increasing the money supply, will "write a check" on the Federal Reserve Bank and purchase a Treasury Bond with the "check" it just wrote from "funds" it never really had in the first place, the "check" is deposited and becomes a book entry and thus a credit is issued toward the account, then that money is "loaned" into existence.

So, this sounds a little strange to me, I haven't had time to read up on exactly what is going on, but this sounds unusual. It is almost as though the FED is "writing the check" to the Treasury directly instead of through the Open Market Committee and then depositing the credit in the bond amount into its own account. Like I said, I have't had time today to read up on the transaction, but it sounds very interesting and just a little fishy around the edges.

“Men do not willingly read unpalatable truths of themselves. The people like those best who fool them most by pandering to their vices and flattering their foibles”—Admiral Raphael Semmes.

—

http://militantjeffersonian.com

"Men do not willingly read unpalatable truths of themselves. The People like those best who fool them most, by pandering to their vices and flattering their foibles" Raphael Semmes

tnx

Submitted by Expat but still... on Wed, 09/17/2008 - 18:09.

alot,

—

Freedom may be worth searching for.

Remember, Dont battle the govt with guns(ALONE), Beat them in court, in state legislature, or hire Ron Paul for president.

I recommend that you read this article

Submitted by Brit4RonPaul on Wed, 09/17/2008 - 14:46.

http://en.wikipedia.org/wiki/Money_supply

It helped me to understand how central banks "set" interest rates and "control" the money supply. Of course, actual cash (M0) is only a small fraction of the total money supply (M3).

Note that Ron Paul took Ben Bernanke to task over the fact that the fed no longer publishes the M3 statistic.

Roughly speaking, whenever a central bank or commercial bank sells a bond, that "creates money". Not actual cash, to begin with, but a type of money nonetheless.

The "credit crunch" and "cash crisis" have been caused by individuals and institutions defaulting on their debts. The blame for this can be placed on irresponsible borrowing and irresponsible lending. The central bank's share of the blame centres around their manipulation of interest rates. Specifically, keeping them too low.

-"As for me and my home, we shall read Peter Schiff."

Thanks a bunch, need to read this stuff...

Submitted by Expat but still... on Wed, 09/17/2008 - 15:02.

Freedom may be worth searching for.

Remember, Dont battle the govt with guns(ALONE), Beat them in court, in state legislature, or hire Ron Paul for president.

—

Freedom may be worth searching for.

Remember, Dont battle the govt with guns(ALONE), Beat them in court, in state legislature, or hire Ron Paul for president.

It means the Fed's balance

Submitted by ssg263 on Wed, 09/17/2008 - 14:33.

It means the Fed's balance sheet is already so f'ed up that they need to get a cash injection from a Govt that is $9.5 trillion in debt!!!!

Cash injection is like I am

Submitted by Expat but still... on Wed, 09/17/2008 - 14:45.

Cash injection is like I am hearing, a loan. Could it be the FRB is in FOR LACK of a better desciption. BROKE, INSOLVENT?

—

Freedom may be worth searching for.

Remember, Dont battle the govt with guns(ALONE), Beat them in court, in state legislature, or hire Ron Paul for president.

Good Question.

Submitted by Brit4RonPaul on Wed, 09/17/2008 - 14:59.

Technically not "insolvent" as they always have the option of running the printing presses. But as Peter Schiff pointed out to Steve Forbes, it's basically the same thing as insolvency.

-"As for me and my home, we shall read Peter Schiff."

Fed up at the Fed

Submitted by POW on Wed, 09/17/2008 - 14:16.

It means the U.S. GOV't is going to pull in some markers to unload an apparent liability the FED is stuck with. What that liability is I don't know.
The FED apparently does not feel comfortable about Giving out a loan
without clearing out this liability. 40 billion is not a big liability for the FED..someone is pretty scared that is for sure.
says

thanks for some info

Submitted by Expat but still... on Wed, 09/17/2008 - 14:31.

But my primary confusion is why the treasury dept is doing the dirty work for the fed? It almost appears as if the FRB is going into debt to the US TREASURY....

—

Freedom may be worth searching for.

Remember, Dont battle the govt with guns(ALONE), Beat them in court, in state legislature, or hire Ron Paul for president.