Comment: You have to know that the Fed is not stupid

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Michael Nystrom's picture

You have to know that the Fed is not stupid

They have the ability to read the Daily Paul too! lol.

They know as well as anyone else that they can't keep "printing" forever.

Furthermore, they're not "printing" they're creating credit. There is a big difference. Creating credit does no good if there are no borrowers. Thus the Fed is stuck buying up government bonds. I don't think they're buying them directly from the Treasury - they're buying them from primary dealers. (Have to keep up appearances that they're not simply monetizing the debt.)

The article says that either 1) The Fed thinks the economy will recover, or 2) The Fed realizes that the program isn't doing much good. Well it is unlikely #1, and #2 is like, duh.

Maybe they read Ed Rombach's report here on the DP: How to Defuse the Debt Ceiling Time Bomb. Maybe they're getting worried about holding too much USG debt. Maybe they're afraid they're going to get whacked by Congress. Maybe they're worried that they're getting fattened up on debt and then they'll be killed and eaten like a Christmas goose.

It is treacherous up there at the top. The Fed was created by an act of Congress, it could just as easily be killed by Congress, and all the debt they're holding be wiped off the balance sheet with the swipe of a pen. Why not? It was created by a swipe of the pen...

The only way to make sense out of change is to plunge into it, move with it, and join the dance.
- Alan Watts