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burger40

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: December 04, 2010, 03:09:21 PM

Insanity is doing the same thing over and over again while expecting different results, that is what we have in Washington.

it is unconscionable! our gov't and the fed keep doing crap and none of it works, then their reaction is well gee we just need to do more of the same things except bigger and better i guess and so they keep going. they never say "you know maybe all this stuff we're doing is counter-productive, perhaps we should go back to square one and re-evaluate.

the best analogy i can think of is bringing a broke car to your mechanic and after weeks he's racked up a huge bill and your car is still just as broke as before. instead of the mechanic trying something different he says well gee that just means i need to keep doing the same thing just more of it......would that fly in the real world... no! only in gov't and intelligentsia can you witha  straight face continue to prescribe the same treatment over and over (more and bigger stimulus and more quantitative easing) despite it showing zero signs of paying off.
 
http://money.cnn.com/2010/12/03/news/economy/ben_bernanke_60_minutes/index.htm

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville

burger40

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#1 : December 04, 2010, 03:27:05 PM

http://www.huffingtonpost.com/rep-bernie-sanders/a-real-jaw-dropper-at-the_b_791091.html

self-proclaimed socialist (Sen Sanders-I Vermont) wants to audit the FED and bring to light the trillions in near-zero interest loans they've been doling out to banks since '08. the right should seize this issue and take advantage of the fact that they have common ground with teh far left here. both believe (for different reasons) that the FED is doing disastrous things (for the right it is that the FED is manipulating the free market by allowing them to give banks free money which then gets lent out to consumers who pay 18% interest on credit cards and for the left it is that people who are already wealthy i.e. Wall Street Bankers are getting more free money to profit off of).

please work with Sanders republicans, this is a rare situation where you can actually find common ground with someone like Sanders and do this country a huge, huge favor at the same time!

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville

Skull and Bones

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#2 : December 04, 2010, 05:23:36 PM

My father in law who was a Vermont police officer and is basically a "diito head" surprisingly use to be good friends with Sanders and supported him when he ran for mayor of Burlington.  When I asked him how he could support a "socialist" he said while he didn't agree with his politics he knew him to be a good and honest man.


John Galt?

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#3 : December 04, 2010, 07:32:17 PM

The FED has been buying and selling Treasuries since their inception. It is one of their most effective means of tweaking rates and money supply. But I don't EVER recall a Fed Chairman PUBLICLY ANNOUNCING IT. Just the opposite, most Chairmen have gone out of the way to avoid any indications of FOMC directions.



Insanity is doing the same thing over and over again while expecting different results, that is what we have in Washington.

it is unconscionable! our gov't and the fed keep doing crap and none of it works, then their reaction is well gee we just need to do more of the same things except bigger and better i guess and so they keep going. they never say "you know maybe all this stuff we're doing is counter-productive, perhaps we should go back to square one and re-evaluate.


Actually, FOMC activity or QE as Bernake calls it, absolutely does work. It is a very effective way to adjust rates and adjust the money supply. But note the word "adjust" as in nudge, slightly move, or bump, not vastly change or correct for massive global events. And even then, for it to be effective, it has to be done quietly. If it is publicly announced on 60 Minutes, then speculators will just buy up T-bonds now and sell them into the Feds buying for a quick gain or T holders will sell earlier than otherwise to take advantage of the Fed's buying.

What Bernake is trying to do is treat a shark attack with a band-aid. FOMC activity is most effective at RAISING rates/lowering MS and slowing an overheated economy down. It is less effective (but still works) at encouraging recovery from a MILD RECESSION (like the Fall 1990 recession or the 2001 recession) but the bigger the change needed, the less effective it is.

The best use of FOMC activity was by Greenspan between 1992-1999 where he used it to slow growth early in the boom, extending the boom, then increasing MS/lowering rates slightly to sustain the steady growth, then more selling of Ts to shrink MS/raise rates to counteract the "irrational exuberance" of the late 90s (thereby preventing inflation and lessening the impact of the eventual dot-com collapse). Again it was most effective at steering, not reversing direction. It was good at keeping the economy growing at a target rate, nudging it down if it got too hot, nudging it up if things started to slow.

Bernake doesn't seem to understand that this tool is a tool of adjustment, not a tool of hard change. Bernake is trying to use a wood chisel like it was a chainsaw. Making a 6 foot 1000lb chisel is not the way to chop down a tree.


bradentonian

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#4 : December 04, 2010, 10:46:35 PM

a good and honest man.

He's clearly in the wrong profession


burger40

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#5 : December 06, 2010, 01:53:31 PM

The FED has been buying and selling Treasuries since their inception. It is one of their most effective means of tweaking rates and money supply. But I don't EVER recall a Fed Chairman PUBLICLY ANNOUNCING IT. Just the opposite, most Chairmen have gone out of the way to avoid any indications of FOMC directions.



Insanity is doing the same thing over and over again while expecting different results, that is what we have in Washington.

it is unconscionable! our gov't and the fed keep doing crap and none of it works, then their reaction is well gee we just need to do more of the same things except bigger and better i guess and so they keep going. they never say "you know maybe all this stuff we're doing is counter-productive, perhaps we should go back to square one and re-evaluate.


Actually, FOMC activity or QE as Bernake calls it, absolutely does work. It is a very effective way to adjust rates and adjust the money supply. But note the word "adjust" as in nudge, slightly move, or bump, not vastly change or correct for massive global events. And even then, for it to be effective, it has to be done quietly. If it is publicly announced on 60 Minutes, then speculators will just buy up T-bonds now and sell them into the Feds buying for a quick gain or T holders will sell earlier than otherwise to take advantage of the Fed's buying.

What Bernake is trying to do is treat a shark attack with a band-aid. FOMC activity is most effective at RAISING rates/lowering MS and slowing an overheated economy down. It is less effective (but still works) at encouraging recovery from a MILD RECESSION (like the Fall 1990 recession or the 2001 recession) but the bigger the change needed, the less effective it is.

The best use of FOMC activity was by Greenspan between 1992-1999 where he used it to slow growth early in the boom, extending the boom, then increasing MS/lowering rates slightly to sustain the steady growth, then more selling of Ts to shrink MS/raise rates to counteract the "irrational exuberance" of the late 90s (thereby preventing inflation and lessening the impact of the eventual dot-com collapse). Again it was most effective at steering, not reversing direction. It was good at keeping the economy growing at a target rate, nudging it down if it got too hot, nudging it up if things started to slow.

Bernake doesn't seem to understand that this tool is a tool of adjustment, not a tool of hard change. Bernake is trying to use a wood chisel like it was a chainsaw. Making a 6 foot 1000lb chisel is not the way to chop down a tree.
Greenspan's infinite period of ultra low interest rates provided much of the fuel that created the dot com bubble, the housing bubble, etc etc.

The FED's mandate should simply be to grow the money supply with the economy and keep inflation stable at a low consistent rate allowing investors and businesses to be able to plan.

i'm surprised a free market guy like you is happy with an org like the FED constantly sowing the seeds of future destruction by doing short term things to boost stock markets and the economy but creating epic disasters in the future.

finally you can already see the ill effects of all the QE around the world and the cheap credit from the FED looking for areas to invest in. it is finding its home in commodities which is the wthe CPB is up over 20%, my dad si a farmer and has been profiting wildly off the insanely high corn and soybean prices but that is helping to hurt lots of other businesses that purchase said commodities and the inflated price we are seeing now.

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville

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#6 : December 07, 2010, 08:29:04 PM

The FED has been buying and selling Treasuries since their inception. It is one of their most effective means of tweaking rates and money supply. But I don't EVER recall a Fed Chairman PUBLICLY ANNOUNCING IT. Just the opposite, most Chairmen have gone out of the way to avoid any indications of FOMC directions.



Insanity is doing the same thing over and over again while expecting different results, that is what we have in Washington.

it is unconscionable! our gov't and the fed keep doing crap and none of it works, then their reaction is well gee we just need to do more of the same things except bigger and better i guess and so they keep going. they never say "you know maybe all this stuff we're doing is counter-productive, perhaps we should go back to square one and re-evaluate.


Actually, FOMC activity or QE as Bernake calls it, absolutely does work. It is a very effective way to adjust rates and adjust the money supply. But note the word "adjust" as in nudge, slightly move, or bump, not vastly change or correct for massive global events. And even then, for it to be effective, it has to be done quietly. If it is publicly announced on 60 Minutes, then speculators will just buy up T-bonds now and sell them into the Feds buying for a quick gain or T holders will sell earlier than otherwise to take advantage of the Fed's buying.

What Bernake is trying to do is treat a shark attack with a band-aid. FOMC activity is most effective at RAISING rates/lowering MS and slowing an overheated economy down. It is less effective (but still works) at encouraging recovery from a MILD RECESSION (like the Fall 1990 recession or the 2001 recession) but the bigger the change needed, the less effective it is.

The best use of FOMC activity was by Greenspan between 1992-1999 where he used it to slow growth early in the boom, extending the boom, then increasing MS/lowering rates slightly to sustain the steady growth, then more selling of Ts to shrink MS/raise rates to counteract the "irrational exuberance" of the late 90s (thereby preventing inflation and lessening the impact of the eventual dot-com collapse). Again it was most effective at steering, not reversing direction. It was good at keeping the economy growing at a target rate, nudging it down if it got too hot, nudging it up if things started to slow.

Bernake doesn't seem to understand that this tool is a tool of adjustment, not a tool of hard change. Bernake is trying to use a wood chisel like it was a chainsaw. Making a 6 foot 1000lb chisel is not the way to chop down a tree.
Greenspan's infinite period of ultra low interest rates provided much of the fuel that created the dot com bubble, the housing bubble, etc etc.

The FED's mandate should simply be to grow the money supply with the economy and keep inflation stable at a low consistent rate allowing investors and businesses to be able to plan.

i'm surprised a free market guy like you is happy with an org like the FED constantly sowing the seeds of future destruction by doing short term things to boost stock markets and the economy but creating epic disasters in the future.

finally you can already see the ill effects of all the QE around the world and the cheap credit from the FED looking for areas to invest in. it is finding its home in commodities which is the wthe CPB is up over 20%, my dad si a farmer and has been profiting wildly off the insanely high corn and soybean prices but that is helping to hurt lots of other businesses that purchase said commodities and the inflated price we are seeing now.


I didn't say I'm happy with what the FED is doing NOW. What the FOMC did under Greenspan and earlier is completely different than this NEW version of QE. The biggest difference is before the FOMC could ONLY buy Treasuries with THEIR OWN FUNDS. Now they are using newly printed money straight from Congress and the Treasury/Mint to buy Congress and the T's debt?? Huge difference between talking money Banks deposited with the FED (money already issued, but temporarily out of circulation) and using that to buy Ts, and Printing and Issuing NEW CURRENCY to buy the debt. Under the old system, their was a natural limit to the FOMC's intervention, under this new system, it is Wiemer Republic V.2.0.


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#7 : December 08, 2010, 08:19:07 PM

It is almost like they seek to create runaway inflation.  Surely a nervous time.

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burger40

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#8 : December 13, 2010, 01:10:50 AM

i agree they aren't the same but i'm not going to let greenspan off the hook still (that he isn't as big an idiot as bernanke gives me little comfort). it seemed initially like you were supporting this QE2 policy so i am glad that i was mistaken.

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville
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