Apparently there are not enough buyers of Treasury bonds -so to avoid the interest rate going up, the Fed has decided to print money to buy the bonds. Essentially, the Treasury bonds are our collective national debt, and printing more currency devalues the currency in the system - so we are paying down our debt by making the money less valuable - so in effect, everyone with money is essentially paying, which includes foreign governments who hold currency. Still why does the Fed buy from Goldman?
Good answer Mukansamonkey. Taxes are paid to give value to the dollar. The debt is "rolled over" and refinanced on a regular basis. Theoretically, if there were enough goods and services to meet the demand of deficit spending, there would not be any inflation. But some inflation is good for the debt. If there is 3% inflation, the amount owed on a fixed rate treasury note is reduced by 3% in real dollars.
China and others with US dollars buy our treasuries at $50 Billion to $60 billion per WEEK.
Good answer Mukansamonkey. Taxes are paid to give value to the dollar. The debt is "rolled over" and refinanced on a regular basis. Theoretically, if there were enough goods and services to meet the demand of deficit spending, there would not be any inflation. But some inflation is good for the debt. If there is 3% inflation, the amount owed on a fixed rate treasury note is reduced by 3% in real dollars.
China and others with US dollars buy our treasuries at $50 Billion to $60 billion per WEEK.
No, rocking, you don't understand. Nobody is ever paying this money back, ever. Because "this money" is simply the dollars that exist in your wallet and in your bank account. If it was all "paid back", the dollar wouldn't exist, as there wouldn't be any left in use. $600 billion isn't inflationary as long as unemployment is high and interest rates are so low. It's called a liquidity trap. Also, China won't want their money back anytime soon because it'd create inflation for them.
@Samatt281 What???????????????????? if tax payers dont have to pay back this money then why do politicians raise taxes to fix the deficit? If this were who in the heck is paying back this money??? Do you really think china wont ever want the money its lent us back?
All arguments aside, it is unconstitutional to have a central bank. It is unconstitutional to tax and spend for the object of benevolence. It is unconstitutional to have money that is not backed by gold or silver.
@AroundSun The Constitution gives Congress the power to lay and collect taxes, and to coin money and regulate its value. The constitution also gives the government the power to make any and all laws which are necessary and proper to carry out the execution of any of its powers. The courts have also stated, a long time ago, that it is constitutional for the US to have a national bank. Things that the constitution allows cannot be unconstitutional just because someone doesn't like them.
@supernatural890098 Yes, to tax for and spend on anything WITHIN its enumerated powers. Yes, they must coin money backed by gold or silver. The founders feared central banks more than they feared armies. Necessary and proper clause, yes, once again, to perform the functions necessary WITHIN the enumerated powers. If you think QE is stimulating our economy, you're in a dreamland! The FED caused the current mess we are in. We have been off of the gold standard for decades!
@supernatural890098 The Federal Reserve can't be audited by congress. They are allowed to maintain their secrecy. They don't buy bonds from the treasury if they don't want to. It is all private. No more federal than FEDEX. PRIVATE BANK CONTROLLING US CURRENCY. Tell me where the constitution authorizes private banks to play god with the economy. The FED is nothing more than a revolving door between the government and big business. It is the 4th branch of government. It is corruption.
@mothanahussein83 information helps when people understand wht the presidensts are doing we can demand the right change and will know what what to change !!!
Look at the increasing prices of commodities (food, gas, cotton, electricity, etc) in this country. We don't have a shortage of supply and no real increase of demand. That leaves the devaluation of the dollar via printing money (QE1, QE Lite, and QE2) as the primary culprit.
You know a weasel is about to avoid the issue when it opens up with a thesis statement, "lets not jump to conclusions!" It does not even seem that this video addresses the video it is a response to.
Bullsh.. it is not inflationary. OPEC had to raise the prices instantly. Import costs went up instantly. Food costs went up instantly. The world says that you are devaluing the currency - eg - just printing it up. If this video is right then why is the world having a cow over it? Why are those foreign entities invested in the dollar having a cow? - I understand your point about making less liability on the balance sheets for the fed banks, but sugar coating the bad news kills your credibility.
The video piece is miss-leading. Big Time. The matter is not a re-ordering of finance. The matter is a Ransacking of this U.S. Republic and its Sovereignty which resides in the U.S. Citizen, and covered by the Republican elite, the Republican Rear Guard. Whether Liberal or Conservative, they are Globalist bring down, not the government of the U.S.A. but the Sovereignty of the United States which resides in the real U.S. Citizens and their discretion.
That guy doesn't understand the principles of inflation !
Pumping money (like with QE & QE2) in the market is done either by idiots or criminals to generate short terms artificial "UPs" in bad times, and making econoimy in the future even worser!
@HousekaterClaudio no mately, you don't understand...if the Government, sorry, the Fed, owns some of it's own debt where's the problem?
The private sector simply reinvests its savings in other financial assets, again, no problem. Demand hasn't increased or supply decreased or money increased so again...no problem.
Granted it's not particularly helpful...but neither is it unhelpful.
Simply, it's trading $600 billion in notes that sell at a premium (above face value) and pay interest, for cash that does not sell at a premium and does not pay interest.
No matter how you color it, it is not a good thing.
See how china and Russia are no longer trading in dollars, cuz they know as soon as the fed(via jpm and hsbc) can no longer supress precious metals the dollar will crash. Jpm sold many millions of UNBACKED silver naked short positions. Remember seeing on cspan our congressmen stated that they were told that there would be martial law if they did not bail out the banks so they can keep manipulating the market, questions?
That and the federal reserve system does nothing but manipulate the market to funnel wealth from the real economy into the banks. Google how jpm and hsbc are being sued for market manipulation in pm markets, mainly silver. Also their fractional reserve system created all of the bubbles because of deregulation of reserve requirements, as a result we have more credit than actual wealth. Today's economy is imaginary wake up.
@doko7777 I like how max keiser put it, it's like people have Stockholm syndrome in that they think the fed has our best interest in mind. Fact is all we would need to do is enact executive order 11110 , the currency has been changed many times in American history and we need it now. Fiat currency=bannana it does nothing but depriciate in value.
@those who do not understand this, google a bit, he's not making a difficult point at all, it's very clear.
@those pushing for "toss" the current currency model... your recall 08 and 09 and we're still in this mess. ..Well, switching" the currency model will be orders of magnitude more disruptive to the american people and the rest of the world. I feel you exhibit the same knee-jerk ignorant reaction that would have you protesting in the streets within 48hrs of the "switch". You are clueless.
Possibly the most retarded vid on YouTube, you can try to justify our fiat fractional reserve system all you want but this is just another way for the fed to prop it up. I think you missed the point of the original video in that this whole system makes no sense and the only rational thing we can do is toss it and do as jfk Lincoln and Jackson did, print our own pm backed currency.
bullshit ! the fed buying securities creates money, this video is a LIE !! the treasuries don't even exist until created to be specifically bought by the fed- it's not like they are sitting there waiting to be bought by someone else- the us government creates the treasuries as needed to get more money and spend more- and yes it expands the money supply greatly- just look at prices NOW- $8.99 for a magazine at Walmart, and gas is $3.09- that is INFLATIONARY
don't even try to defend the fed's qe program- whoever put up this video is an asswipe, or a fed employee or fed toadie/troll. Every major investor knows the dollar is screwed
wow. Limited scope and some simplifications? how about more like absolutely no idea what you're talking about in the slightest. This is the most nonsensical gibberish I've ever seen on the economy. I'm not sure who "taught" you this but you should stop listening to that source and learn more about how money works.
Fed prints money to use by Americans at a price. Money is debt form day one . Government goes further into debt for this money. Banks trade tresuries for dollars and then loan some of those dollars at a ratio of 10 to 1 at higher rates than before QE. Banks take most of those dollars and SPECULATE . Stocks rise creating new bubble. Monetary supply increase creating inflation.
Competing currencies can solve American peoples problems and cure the monopolization of the central banking cartel....and throw wall street into a tailspin without completely ruining retirees
If the banks hold more dollars than they _MUST_ loan the dollars in order to make money. The problem with the current situation is that the banks can suck on T-Bills and _NOT_ loan money. If people are afraid of too much money in the system causing inflation then it is time for them to learn that the only way to remove the money is with a tax. T-Bills merely park money in a pen and slow velocity.
Since the Fed is the originator of the American Dollar when the fed buys something that money is not transferred from any where it is created by the reduction of the purchasing power of the other dollars in the economy.
Sorry to Wreck your theory but the simple FACT that the Untied States Banking System is NOT a Government institution. The FED is a privately owned business. Go back and reread the banking laws. December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law creating decentralized central bank to balanced the competing interests of private banks and the Federal Government.
This video is incorrect. While it is true that there is a swap between treasuries and federal reserve notes, the difference is in the effects. When the banks possess Federal Reserve Notes instead of Treasury Bonds, they can legally INFLATE the number of those dollars at a ratio of 10:1 to their reserve, out of thin air which they can then loan out into the economy, or (more likely) invest into the stock market. This 10:1 expansion of the money supply reduces the value of each dollar. Inflation
Just because you take $5 from your left pocket and put it in your right pocket doesn't mean you now have $5 more to spend. Sheesh...World's largest ponsi scheme.
So what you are suggesting is that these credit swaps the fed is doing with the bank balances is ok? Remember, the credit swaps that were part of the underlying mess? The bad debt of the banks is being transfered to the taxpayers via debt to the fed that we now owe. Remember, the fed loans us the money at interest. We end up paying for the banks bad debt in the end, rather than the banks. I also have been trying to understand this complicated issue. It is another form of bail out.
Debt is good from the Fed's viewpoint according to Mr. Bernake himself while answering questions from congress. The reason is because we pay interest on the money it prints and lends to us. So debt is good just as your debt on your car is good for your bank. The debt we owe the Fed is not repaid. We pay interest with our taxes. The money printed pays for the increased spending. It is free money for the government to spend because it does not pay it off, just collect taxes to pay the interest.
After investigating the facts presented in each video, I came to the conclusion that economics is a voodoo science, meaning the system is so complex, the same data can validate contradictory claims. The analyst's paradigm has the greatest impact on results from an economic study.
I am also reminded that figures don't lie but liars can figure. I want to know the basic assumptions of the current economic rating system before I accept anything I hear on economics as truth.
oh i see... so it's perfectly fine for the fed to screw over everyone who owns these 'dollars' while helping everyone who owns these 'treasuries', because anyone who isn't a complete idiot owns a wide diversity of dollars, treasuries, bonds, stocks, options, real estate, etc etc. The people who have not protected themselves in this way deserve to have money stolen from them.
so they are just swapping money for treasuries. That's great! Except the creation of dollars to trade for another persons treasuries leaves more dollars in the system then before. Thus there is now more dollars, but the same amount of money. That is inflation. Nice try.
The girl has a dude's voice now. This video is freaky enough without that though, who the hell is going to believe that what the fed has been doing is a positive thing. Nice try NWO. The hypnotic mantras of "everything is fine", "government is good","pay your taxes, and take your flu shot", doesn't work anymore.
coninued 4; The gov't/banks must be involved in the currency system in order to profit from it. To understand how gov't/banks profit from our currency system, you need to sit down and open your mind to math and human behavior and wrap your head around the ideas of inflation and interest rates. It's really a beautifully devised scam, and makes Madoff look like a rookie. The amazing part of it is that we the people have been actively supporting this "theory" for decades.
contnued 5: The argument for quantitative easing for the purpose of benefiting our trade with other nations is another beautifully thought out scam. Mathematically, the argument holds true. Quantitative easing improves global trade because it devalues the dollar. Devaluing of the dollar is synonymous with inflation, so I don't understand the above videos inflation argument. The same global trade benefit could be achieved via currency adjustment tarriffs, without harming our currency at home.
In other words, the banks and the federal reserve have hijacked the "people's" system of exchanging goods and turned it into a profit making mechanism for those at the top of the chain. Currency systems in general were designed to make it easier for me and joe blow to exchange our goods/services with another. Otherwise without a currency system, joe blow and I could only exchange goods/services if both of us had something that the other wanted, at the same time. Pretty simple idea huh?
cont: As long as joe blow and I were using gold as our currency, then the federal reserve and the banks served very little purpose in regards to the exchanges that occurred between joe blow and I. BUT, the banks somehow convinced us that it would be good for us if we allowed them to hold our gold, and in return they would give us paper currency that represented that we had X amount of gold at the bank. It was easier to carry paper than that pesky heavy gold.
Once we had bought into the idea of trusting the banks to convert our dollars to gold, then we became very accepting of the dollar being as good as gold. Therein lies the danger; anytime that a crook has develops your trust, then you're screwed. As time progressed, the gov't decided to float our currency and actually made it illegal to hold gold for a while. The gov't convinced us that a floating currency was needed in order to finance a war that we couldn't afford (red flag).
It's important to realize the benefit that the gov't/banks gain by having its citizens accept that paper money is equal to gold. It is much cheaper for our gov't to create paper money, than it is to mine gold. It's even cheaper to create emoney. Furthermore, if the people still traded with gold, then we wouldn't be dependent on the gov't for our currency. We could simply mine it, and then trade with it. BUT, that idea does not allow for gov't/bank intervention.
What's with the whole argument over inflation or not? Isn't the whole point of quantitative easing to create inflation in order to cause people to start spending money? (ie the money will have less future value, so people will want to exchange it for real value)
@ytburro The question is how much? Contrary to the belief of some, inflation is not a binary. We actually need an inflation rate of around 5% for a couple of years at least. And if you don't want the inflation then you have to increase the taxes or cut military spending. There is no justice at all in cutting Social Security because that system has been in surplus for a long time.
The missing issue is that under QE the FED purchases T-Bills directly from the Treasury, as opposed to the open market. In the open market, owners of T-bills decide the opportunity cost of holding public debt relative to all other investments, and exchange ownership among them (not just cash) to suit their risk/reward profile, which may or may not circulate. Under QE the government spending forces the money into circulation, even if the rest of the economy doesn't want it.
@bombthrower77 That may not be relevant. What is important is that the 18 or so secondary market dealers in T-bills are not picked and chosen for some special treatment based on being the government's pet or whipping boy. The FED purchase of T-Bills will reduce the national debt and the value of the dollar, and the dollar denominated treasuries. A tax increase might be preferable. But with the morons running the government it ain't hapnin
1) In japan quantitative easing was regarded as bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price, with the same money the government is putting into the bank.
@affiliate30 What is this??? I see a comment that indicates a little knowledge about how the system actually works. But the Treasury sells T-Bills to all buyers in an auction. And interest paid to the FED on the short term loans prior to the public auctions is typically transferred to the Treasury. Whether the price of the auctioned Treasuries is high or low depends on opinions of the buyers concerning future economic trends.
@chartalist "And interest paid to the FED on the short term loans prior to the public auctions is typically transferred to the Treasury."
Like I said, to believe that the fed and the government is buying T-Bills from the banks is stupid, the government sells T-Bills to the Fed at the beginning of the money creation process. In any case if the banks are buying T-Bills it has to be with government money indirectly from the Fed which holds the government as a debtor.
1) Quantitative easing was regarded in Japan as a bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price with the same money the government is putting into the bank.
1) Quantitative easing was regarded in Japan as a bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price with the same money the government is putting into the bank.
@timothwc Well the value of the dollar is currently higher than it was when QE2 started and the October CPI printed the smallest year over year increase on record. What metric are you using to gauge inflation?
So the Goldman Sachs buys a $10 T-bill whereby it loans the treasury $10 for a duration and rate. The treasury now has the $10 to use as it sees fit for the duration. Then the Fed purchases the $10 T-bill from the Goldman Sachs whereby the Fed gives the Goldman Sachs $10 plus the rate. So where in the world does the Fed get the $10 to buy the T-bill from the Goldman Sachs? Seems to me that we now have $20 in circulation. Inflationary if you ask me.
@drbobec The stuffing of money into interest bearing mattresses called T-Bills simply corals money (impounds it so as to prevent its circulation). This effects the velocity of money as opposed to the quantity. All forms of money are liabilities of the US government (the government include the FED). The quantity of money (all forms) is equal to the amount of money spent into existence and not reclaimed via taxation. But banks can't make people borrow so the money lies dormant anyway.
@chartalist Last time I checked the federal government was running a massive deficit and selling T-bills to finance it. To me that means the money is being spent by the government and is in fact in circulation, not stuffed in a mattress. The banks are buying them because right at the moment it's easy money and with the QEII they are assured not to get stuck with long term T-bills at todays rate when the FED is forced to raise rates because of all the liquidity they are pumping in.
@drbobec The purchase of T-Bills removes the money from the active money pool (m3) and keeps it from multiplying (tax revenues) in the economy through further exchanges. Money spent into the economy by government does return more in tax revenues than simply cutting taxes. But allowing the banks to profit from holding T-Bills is pretty stupid. It is the exact opposite of what stimulus spending is designed to do.
Respond to this video... This video gets too technical and is thus rather worthless. The reality is a lot simpler in that banks can't make people borrow no matter how much money the banks have. And if people do not borrow and invest/spend then there is no inflation. But the national debt will have been reduced by $600B. A very good idea. If this causes inflation, the FED will cut the purchases. If not then the FED is retiring debt and improving trade relationships.
@chartalist Yeah I did bang it out rather quickly and I do agree I did not really have a good way to articulate it all. The narrative is terrible. You are making some good comments though, thanks for that; much more articulate than I.
@drbobec You are essentially correct to say that the money supply is being increased if you are talking about M3. But the theory that claims an increase in the money supply causes economic overheating and inflation is pig manure. At present the interest rates are rock bottom and there is no investment. Inflation would cause the FED to increase interest rates. That is the scenario we want; the ability of the FED to use interest rates for control.
@drbobec If you see some of my previous comments (it's been a few days, lol) the fed is creating the cash of out thin air to purchase the bonds and expand its balance sheet (probably just changing numbers on a spreadsheet almost). @charalist elucidates the differences with velocity, levels of the money supply, and the Fed balance sheet very well. The 600B amount remains roughly the same with the banks; they are actually losing some money as they are now receiving a lower rate.
Hilarious, this is why economics has disappeared up it's own arse and cannot see the bare faced facts in front of it.
Listen to all the gobbledigook in this video. It's all complicated crap, with lots of technical terms.
Economics is not that hard. It's supply, demand, and allocation of capital and credit. it's not a science as economists will have you believe, but when it is approached like this, the fundamentals are totally forgotten in the face of new complex theories. Terrible video.
@bootsyjam Well it seems like "gobbledigook" because the point is that the fundamentals at the federal level are vastly different than at the state/individual level of "commonsense" balance sheets. With the Fed as the central bank of a nation that is the sole supplier of a non-controvertible currency in a floating exchange rate system, the government is never revenue constrained (neither taxes nor bonds fund spending). Our neoclassical concepts fall apart and that is what makes it seem weird.
This video is factually wrong. T-Bills are liabilities of the Treasury Department (US Government). Dollars (Federal Reserve Notes) are liabilities of the Federal Reserve.
T-Bills are not legal tender and do not circulate as currency. Dollars do. Issuing dollars amounts to an expansion of the monetary base. Issuing T-Bills does not. Expanding the monetary base is inflation, rising prices are the consequence.
Please correct these mistakes or remove the video.
@17Spartacus76 says that increasing the money supply is always inflationary. And that the result will be rising prices. But banks cannot make people borrow money. The myth of the bank multiplier concerning fractional reserves is simply wrong. The fact that banks have money to lend does not increase lending if no one wants to borrow. The FED will be causing a decrease in interest rates at the retail level. We have underutilized capacity so inflation won't happen.
That is not necessary for inflation. The government can, and does, borrow and spend the money instead. Just look at any hyperinflation throughout history. You really think it was private individuals borrowing all that money into existence?
The fractional reserve multiplier is a fact. Anyone with any knowledge of the banking system knows this. It's first year economics.
Your comments are even more ignorant than this video.
@17Spartacus76 Is that money multiplier crap still part of first year econ? WOW!! No wonder there are so many economic and banking illiterates. Why is it the righties can see only no inflation and hyperinflation. Inflation is running at about one percent and in a healthy economy it runs between 2 and 3.5. And until we have much greater capacity utilization we will not have inflation. But why worry? If we get too much inflation the FED can do what it needs.
Wrong again. The money multiplier is a built in feature of the banking system. Read any manual from the Fed (I personally like 'Modern Money Mechanics'). You might as well be denying that cars have engines.
Hate to break it to you, but the CPI is not a good measure of inflation, so your figures are bogus. Garbage in, garbage out as they say.
By accusing me of being a 'rightie' (which I'm not) you've exposed yourself as a political ideologue and therefore not credible.
@17Spartacus76 I am most certainly not denying that the banks can lend about 10 times the reserves they have. So all the monkey dung about the money multiplier is true. The point is that it is meaningless if people do not want to borrow. I will continue to accuse you of being a rightie so long as you cling to the notion that banks having money to lend causes inflation. An they won't lend if T-Bills pay well and inflation is low. I am proud of my reality base.
@17Spartacus76 So what's your point? My claim remains the same. The fact that the banks _CAN_ create loans based on the multiplier doe not mean that the banks _WILL_ do so. As I have said all along: The banks can't force people to borrow money. As to the spending of the government we have no disagreement. And the stimulus was supposed to pump up the economy by channeling money to the bottom side.
IT DOESN'T MATTER IF PEOPLE ARE BORROWING, THE GOVERNMENT WILL.
How can I make this any clearer to you? Why don't you just look at the last 10 hyperinflations in history. Do you really think the people in Zimbabwe were borrowing their way in to hyperinflation or was the government doing it for them??
@17Spartacus76 It seems that you are the dense one. I agreed in my last post concerning the spending of government. Inflation is not always hyper and it certainly isn't some religious test of truth. And until you learn to leave fundamentalism behind and embrace rationality you will have a problem.
@17Spartacus76 Required reserve requirements have fallen over the last two decades. Savings accounts have zero reserve requirements. Majority of checking accounts are sweep accounts that allow banks to shift into savings overnight and avoid reserve requirements. Most deposits are borrowed into existence and lent out again. Empirical evidence shows that fiat money creation lags credit money creation by several quarters, contradicting the Money Multiplier model. Fiat does not "seed" credit money.
Empirical evidence shows that fiat money systems only survive a few decades. The money multiplier is a built in feature of the fractional reserve system allows for credit expansion, which creates booms and busts.
Fiat money (Fed notes) becomes bank reserves and as those funds are lent and re-deposited, the money supply expands (multiplies). This is not my opinion, it is stated right in the Fed's own manual. You would do well to study one before making another comment.
@17Spartacus76 Yes, I read and acknowledge the link which you mentioned. It is a public info piece explaining a simplified Money Multiplier Model as it may theoretically operate in our economy; defining something to be the case does not make it so. Empirical observations of the mechanics of fiat and credit money creation in our economy contradicts the Money Multiplier Model; in reality, new credit money has been shown to be created several quarters before new credit money.
@17Spartacus76 Look at the disastrous Fannie Mae. It extended credit at will and had almost nonexistent reserves. The Treasury provided reserves only after it imploded.
Fannie and Freddie imploded because of an increase in the rate of mortgage defaults. They either owned or guaranteed over $5 trillion worth of them.
Have you ever read an annual report from Fannie or Freddie? Do you even know how those firms operate? Do you have any idea how the securitization process works?
@17Spartacus76 There is no need to be derisive; I am open to discussion and correction. They are highly leveraged GSEs limited to buying single/multi home mortgages. I was referring to the July 2008 Congressional Research Report which stated that "The regulatory capital surplus amounted to 0.50% of the $4.934 trillion and 1.03% of the risk-based capital surplus." Is that not a dearth of reserves? If I am incorrect then hopefully you are better able to explain it to me, given your background.
Without reading the report and getting the full context I can't be 100% sure what the $4.934 trillion is that they're mentioning.
Your quote simply says that Fanny was leveraged to the hilt. Regulatory capital determines how many policies an insurance company (like Fannie) can underwrite, and your quote merely says they reached the limit. Put another way, they're saying that Fannie can only underwrite another $24.6b of mortgage guarantees.
@17Spartacus76 That # So if they borrow money to leverage and lend, and minimize reserves to maximize profit, how were they able to achieve such high leverage? I do not think that they were exempt from the reserve requirements imposed on banks. Did they have special lower requirements? How would a Money Multiplier Model account for such leverage?
Fannie was regulated by a different agency than banks (OFHEO). They don't have 'reserves' in the banking sense. They have 'capital', or 'risk adjusted capital'. Those numbers are used to determine how many policies Fannie is allowed to underwrite at any point in time. Throughout the last decade, the ratio between available capital and guarantees was lowered and they also received billions from the government so that they could keep underwriting more mortgage guarantees.
@17Spartacus76 QE2 is simply altering the term structure of that 600B of issued government debt; this is accomplished by swapping that defined rate and duration of the debt with the low rate reserves that have no effective duration. The October CPI printed the lowest y.o.y. increase in history. I do not see inflation taking hold where there is no private sector demand for debt, impaired private sector balance sheets, and slack in the productive capacity of the economy.
Please help me understand why anyone would consider money as a liability to the government and not just a unit of exchange. If I have $100 in my pocket, what liability is that to the government? The government doesn't owe anything on that cash, its already out there in circulation. They used to have to hold that equivalent worth in gold, but not anymore. Now the government doesn't have to secure anything to back that $100. Now its all just 00s and 01s. That's why they can just print money.
@513habs : Government pays dollars into the economy as government does what the people elected it to do. It buys goods and services with dollars. The dollars are then the only mechanism that can discharge a tax liability owed to the government. It is like government LOANED itself the money to build a battleship. Taxation id the repayment of the loan. Government must recognize the discharge of a tax liability when taxes are paid. Taxes create the demand for fiat money.
@513habs Yes it was awkward wording; I apologize for rushing the video. I was attempting to illustrate the fact that as the sole supplier of the non-convertible currency, the government must spend it into existence and thus is "deficit-ing" its accounts whenever it is spending dollars. The size of the federal deficit is reflecting the amount of government spending. The debt crisis with which we should be concerned is that of the impaired balance sheets of the private sector.
This is bullshit, because cash is not JUST a liability, it is also a unit of exchange, whereas nobody takes a stack of t Bills to the grocery store, nor does a bank deliver a stack of t bills to a borrower to buy a car or a house; it writes a check. The impact of the cash is it's SPENDABLE, whereas for the overwhelming majority of economic agents, T bills AREN'T
Nice video! Come check out my reply to QE2 Explained on my youtube page. It's fricken hilarious. But Tea Partiers beware: you may not like what you see!
You're correct in saying that both cash & bonds are government debt, but the creation of the Fed's cash to buy the bonds is the problem. Prometheus7 is correct in his post above.
Michael Pento spells it out well in the link below. He begins with your own points about cash and bonds both being government debt, but then continues the issue to its ultimately problematic end.
financialsense [dot] com [slash] node [slash] 3174
Btw I appreciate you honest effort in encouraging discussion & debate.
@InTomorrowsNews Thanks, I am curious to learn more about it as well. Thanks for showing me how to embed links as well lol. I think Pento improperly defines inflation as an increase in the money supply. True inflation will occur only when too many dollars are chasing too few goods. Velocity and turnover and very important as @chartalist says. There exists slack in economic capacity and a private sector with little demand for no debt. Oct CPI recently printed the lowest y.o.y. change on record.
No matter how convoluted you make the process. Printing money/Quantitative Easing/ whatever the hell they want to lie about it one thing remains true. More money flooding the market always equals inflation! I suggest anyone confused read up on Ludwig Von Mises' take of the Fiat Monetary System. He had it right all along. All Keynesian economies end up self-imploding! Bring back Free Market Economy!!
@swizzlecheeks Spoken like a true Randroid and a monetary idiot. I won't confuse it at all. The FED will be retiring $600B of the national debt by paying it off right now with money created from thin air just as all money is created. If this process creates an unacceptable level of inflation then the FED will curtail the buying and/or increase the interest rates. That is what the FED does.
Increase the interest rates? What, did you read that in a Bernanke Comic Book? LOL! I'd like to see them TRY to raise the rates by just 1 or 2%. It still wouldn't be enough but you think the economy is BAD now?? LOL! Good luck with that one!
How do you figure debt is paid off by the Fed just pulling money out of their asses and saying, "here's some new money". Do you even get that money is debt? Yes, the paper they print is nothing more than an IOU!! Guess who gets to pay that IOU?
@swizzlecheeks This is not a Keynesian economy at all; I did not see us running surplus in a rainy day fund in the past decades as he would has guided. The money is not flooding the market. The banks are actually losing some money as they will be earning much less interest on the same amount now that it is reserves. Velocity and turnover are critical, as is the productive capacity of the economy as a whole.
Please, explain to me exactly what type of economy the U.S. runs off, if not Keynesian? Surplus in a rainy day fund? LOL! What surplus? The banks are sitting on the money in fear of lending to insolvent companies. Hard to tell when the gov. is Secretly bailing out Too Big To Fails. LOL. Banks losing money on less interest? Well, how much interest are they paying for the money they are given? I recommend you research the economies of Zimbabwe, Argentina, and the Weimar Rep...
@swizzlecheeks This is not a Keynesian economy at all; I did not see us running surplus in a rainy day fund in the past decades as he would has guided. The money is not flooding the market. The banks are actually losing some money as they will be earning much less interest on the same amount now that it is reserves. Velocity and turnover are critical, as is the productive capacity of the economy as a whole.
@lungcancercure the Austrian definition of inflation is the expansion of the money supply. the Keynesian definition is that inflation is a rise in prices, caused by some mythical spaghetti-monster. only one of these was created by someone not in a self-induced acid binge.
@lungcancercure From early 2008 to early 2009 the FED created 8,5 trillion dollars, in loan guarantees and liquid money to pump up the financial sector. The result was _NOT_inflation. The inflation had already occurred in real estate and oil. The FED was matching the money supply to the ridiculous levels of speculative credit. That part is over. Now we try to reclaim some of the stolen value.
@lungcancercure No matter how much money the banks have, they cannot force people to borrow from them. If the banks have tons of money, they can simply buy T-Bills and take the difference between the discount rate and the yield on the treasuries. That is where we currently sit. QE2 is designed to take that option away in small chunks. But this is the point where the money multiplier may become a problem. Have the banks used the multiplier to leverage their T-Bill holdings?
@lungcancercure No matter how much money I have, I can't MAKE you borrow it from me. Right now the banks have more money than God. Yet we can't get a loan on reasonable terms. Meanwhile, the banks make money every day from the T-Bills they hold and the #%$^@& FED pays them interest on reserves. If the FED pays interest on reserves then the banks don't need the T-Bills. But then, who cares what the banks need? They've had it good long enough.
@z4nizzle If the debt is owed to the FED and the Treasury gets all the interest on the debt held by the FED then the debt may as well not exist. It is totally sterile. Hence, the purchase of T-Bills by the FED is an expansion of liquid money in the system. According to people that subscribe to dinosaur banking multiplier theory that will cause inflation via dollar devaluation. It is a question of amount and the effect on the current account (trade). inflation is not always hyper.
But you can always trust Americans to degrade the English language and contribute to bastardising definitions.
Use your brain yanky. If liberal was a market stance, what do you think they'd fucking be doing? Liberalising market. Come on. Work it out. There's a good boy.
@NoobTube2010 Thank you for the deflection that shows me that you misunderstand how it works. It shows that you are not willing to consider that your current view may be ill-informed.
@Senexx1 No, it's a simply demonstration cynicism and sarcasm that has eluded you. I will tell you one thing about my view. Trading one piece of paper created from nothing for another piece paper created from nothing doesn't really do a lot to discredit the "money printing" conclusion that most people can see. These silly paper promises made by the corporate purchased government and the differences in their "attributes" do not invoke a lot of confidence. This is failure backed by failure.
@NoobTube2010 Internet Users really need to learn that sarcasm is done in italics which I realise is not possible here but the sarcasm could have been conveyed by the means of smileys. Nonetheless, they're misinformed by the mechanics of it all. Where does money come from? Nowhere. Just like that $10 in your pocket. The only constraint on money is inflation. Just because you are "printing money" (which is a misnomer by the way) does not mean there will be inflation.
@Senexx1 "Printing money" and "quantitative easing" are distinctions without significant differences.
If you get drunk and take a joy ride in a car, it doesn't mean you will have a wreck.
So sure, nothing is 100% certain, but they are certainly gambling with your $ and the game is fixed. The $10 that comes to my pocket a couple of years from now will be worth less, but it enters the market at full (non-diluted) purchasing power through government chosen entry points (e.g. AIG, and "not" YOU!).
@NoobTube2010 And I suppose you think a zephyr and a tornado are distinctions without significance too because they're both wind. I do not know what AIG is in this context I'm not a US Citizen or resident and would not want to be. Inflation is determined by the productive capacity of the economy, if you increase productivity, i.e. employ more people then inflation will not rise. However that is getting a little away from QE. This video is correct, the original is false and ill-informed.
@Senexx1 This video is a flaccid response to the original. The point to the original is that extremely few privileged people are getting a pass on looting all of the world, and particularly those who hold U.S. dollars. We dollar holders are paying for it. This is unAmerican, fascist behavior. The government has been bought by these privileged few and every bill they pass continues to benefit them at the expense of dollar holders. Cost of living will get much worse over the next few years.
Ooooooh! I get it now! So the bailout of financial institutions and automotive industries are not really increasing the money supply! The government should use their same quantitative magic on our housing loans and credit card bills! All is clear to me now. Recession be gone.
The issue is that the amount od CASH in circulation increases. If I have a treasury bond and want to buy some corm futures then in most circumstances I would have to sell my treasury to buy corm. It is the amount of cash (M1, M2, M3, TMT true money supply...) that matters and the velocity of money. Look around you. Everything is going up in price. The dollar. pound etc are being debased.
I live in UK. Food up at least 10% this year. Cinema tickets up 20%. Restaurants are reducing portions.
@888kevo Yes the increase in commodities is troublesome. Its tough to attribute those summer and fall runs to QE2 though as QE2 didn't start until Nov 15th, lol. I have expressed concern over margin compression but these short-term speculative "votes" of the market are not necessarily correct. Did $140/bbl crude bring us rampant inflation in the rest of 2008 and into 2009?
1.) I'm not a tea-bagger or libertarian. 2.) I'm not a supporter of libertarian values either.
As you discuss quantitative...er...inflation the rate/duration of the liability refers to how long the debt remains. It is still debt. Changing the duration still means the Fed is using a Ponzi scheme to cover wall st.
The fact remains that banksters are losing too much money in bad business practices and forcing the public and global economies to pay for their crimes/misdealings.
You need to explain this shit to China.
MultiShadow1969 6 months ago
Apparently there are not enough buyers of Treasury bonds -so to avoid the interest rate going up, the Fed has decided to print money to buy the bonds. Essentially, the Treasury bonds are our collective national debt, and printing more currency devalues the currency in the system - so we are paying down our debt by making the money less valuable - so in effect, everyone with money is essentially paying, which includes foreign governments who hold currency. Still why does the Fed buy from Goldman?
dsgraphita 7 months ago
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Good answer Mukansamonkey. Taxes are paid to give value to the dollar. The debt is "rolled over" and refinanced on a regular basis. Theoretically, if there were enough goods and services to meet the demand of deficit spending, there would not be any inflation. But some inflation is good for the debt. If there is 3% inflation, the amount owed on a fixed rate treasury note is reduced by 3% in real dollars.
China and others with US dollars buy our treasuries at $50 Billion to $60 billion per WEEK.
Samatt281 8 months ago
Good answer Mukansamonkey. Taxes are paid to give value to the dollar. The debt is "rolled over" and refinanced on a regular basis. Theoretically, if there were enough goods and services to meet the demand of deficit spending, there would not be any inflation. But some inflation is good for the debt. If there is 3% inflation, the amount owed on a fixed rate treasury note is reduced by 3% in real dollars.
China and others with US dollars buy our treasuries at $50 Billion to $60 billion per WEEK.
Samatt281 8 months ago
No, rocking, you don't understand. Nobody is ever paying this money back, ever. Because "this money" is simply the dollars that exist in your wallet and in your bank account. If it was all "paid back", the dollar wouldn't exist, as there wouldn't be any left in use. $600 billion isn't inflationary as long as unemployment is high and interest rates are so low. It's called a liquidity trap. Also, China won't want their money back anytime soon because it'd create inflation for them.
mukansamonkey 8 months ago
The Federal Reserve does NOT need revenue or has to borrow to spend.
The Federal Reserve creates the money by aggreement and spends by crediting bank accounts.
The Federal Reserve does NOT owe itself. It is NOT taxpayer's money.
The ONLY negative of deficit spending is the possibility of inflation.
Samatt281 10 months ago
@Samatt281 What???????????????????? if tax payers dont have to pay back this money then why do politicians raise taxes to fix the deficit? If this were who in the heck is paying back this money??? Do you really think china wont ever want the money its lent us back?
rockingForever17 8 months ago
All arguments aside, it is unconstitutional to have a central bank. It is unconstitutional to tax and spend for the object of benevolence. It is unconstitutional to have money that is not backed by gold or silver.
AroundSun 11 months ago 2
@AroundSun The Constitution gives Congress the power to lay and collect taxes, and to coin money and regulate its value. The constitution also gives the government the power to make any and all laws which are necessary and proper to carry out the execution of any of its powers. The courts have also stated, a long time ago, that it is constitutional for the US to have a national bank. Things that the constitution allows cannot be unconstitutional just because someone doesn't like them.
supernatural890098 11 months ago
@supernatural890098 Yes, to tax for and spend on anything WITHIN its enumerated powers. Yes, they must coin money backed by gold or silver. The founders feared central banks more than they feared armies. Necessary and proper clause, yes, once again, to perform the functions necessary WITHIN the enumerated powers. If you think QE is stimulating our economy, you're in a dreamland! The FED caused the current mess we are in. We have been off of the gold standard for decades!
AroundSun 11 months ago
@supernatural890098 The Federal Reserve can't be audited by congress. They are allowed to maintain their secrecy. They don't buy bonds from the treasury if they don't want to. It is all private. No more federal than FEDEX. PRIVATE BANK CONTROLLING US CURRENCY. Tell me where the constitution authorizes private banks to play god with the economy. The FED is nothing more than a revolving door between the government and big business. It is the 4th branch of government. It is corruption.
AroundSun 11 months ago
If $600 billion is not inflationary, then let the Bernanke issue $600 trillion and we can all live like the Goldman Sachs.
hungrybill 1 year ago 14
"Never mind that man behind the curtain, I am the great and powerful wizard of FED."
SirWinstonChurchill 1 year ago 2
The funny thing about this video response is that the cartoon on the left is talking to himself.
wcmastermind 1 year ago
gibberish. plain and simple more hyper-inflation.
palovlm07 1 year ago
hello id10t. Printing money CANT EVER BE A SOLUTION to economic issues. the US dollar isn't backed by anything tangible.
In other words, every dollar printed is government DEBT!
myarbonnecoaches 1 year ago 3
@myarbonnecoaches this a great way to teach !!
petuniamighty 1 year ago
Damn. I feel fucking dumb. I'm still struggling to keep up with some of these concepts.
HeyRuka 1 year ago
@HeyRuka lol, too much talking not much doing. Like the fkng cartoons help...
mothanahussein83 1 year ago
@mothanahussein83 information helps when people understand wht the presidensts are doing we can demand the right change and will know what what to change !!!
petuniamighty 1 year ago
Trollin
HeyRuka 1 year ago
Not an inflationary plan?
Look at the increasing prices of commodities (food, gas, cotton, electricity, etc) in this country. We don't have a shortage of supply and no real increase of demand. That leaves the devaluation of the dollar via printing money (QE1, QE Lite, and QE2) as the primary culprit.
gat867 1 year ago
@gat867 Remember, Ben Bernanke's stated goal is to create inflation using Quantitative Easing.
gat867 1 year ago
BULLSHIT! He was right the first time.
The Fed is all make believe!
btr2oz 1 year ago
You know a weasel is about to avoid the issue when it opens up with a thesis statement, "lets not jump to conclusions!" It does not even seem that this video addresses the video it is a response to.
clemonsx90 1 year ago
Bullsh.. it is not inflationary. OPEC had to raise the prices instantly. Import costs went up instantly. Food costs went up instantly. The world says that you are devaluing the currency - eg - just printing it up. If this video is right then why is the world having a cow over it? Why are those foreign entities invested in the dollar having a cow? - I understand your point about making less liability on the balance sheets for the fed banks, but sugar coating the bad news kills your credibility.
TalkerOne 1 year ago
The video piece is miss-leading. Big Time. The matter is not a re-ordering of finance. The matter is a Ransacking of this U.S. Republic and its Sovereignty which resides in the U.S. Citizen, and covered by the Republican elite, the Republican Rear Guard. Whether Liberal or Conservative, they are Globalist bring down, not the government of the U.S.A. but the Sovereignty of the United States which resides in the real U.S. Citizens and their discretion.
republic327 1 year ago
Economic Bullshit!
That guy doesn't understand the principles of inflation !
Pumping money (like with QE & QE2) in the market is done either by idiots or criminals to generate short terms artificial "UPs" in bad times, and making econoimy in the future even worser!
Thats not naive, that's criminal!
HousekaterClaudio 1 year ago
@HousekaterClaudio no mately, you don't understand...if the Government, sorry, the Fed, owns some of it's own debt where's the problem?
The private sector simply reinvests its savings in other financial assets, again, no problem. Demand hasn't increased or supply decreased or money increased so again...no problem.
Granted it's not particularly helpful...but neither is it unhelpful.
WillOrng 1 year ago
Simply, it's trading $600 billion in notes that sell at a premium (above face value) and pay interest, for cash that does not sell at a premium and does not pay interest.
No matter how you color it, it is not a good thing.
jimbrady1776 1 year ago
The Ben Bernanke is an evil kitten. Or an evil bear. What the fuck is that thing anyway?
angstotheclown 1 year ago
major moll fail
metapatriot 1 year ago
See how china and Russia are no longer trading in dollars, cuz they know as soon as the fed(via jpm and hsbc) can no longer supress precious metals the dollar will crash. Jpm sold many millions of UNBACKED silver naked short positions. Remember seeing on cspan our congressmen stated that they were told that there would be martial law if they did not bail out the banks so they can keep manipulating the market, questions?
Xsteppin 1 year ago
That and the federal reserve system does nothing but manipulate the market to funnel wealth from the real economy into the banks. Google how jpm and hsbc are being sued for market manipulation in pm markets, mainly silver. Also their fractional reserve system created all of the bubbles because of deregulation of reserve requirements, as a result we have more credit than actual wealth. Today's economy is imaginary wake up.
Xsteppin 1 year ago
@doko7777 I like how max keiser put it, it's like people have Stockholm syndrome in that they think the fed has our best interest in mind. Fact is all we would need to do is enact executive order 11110 , the currency has been changed many times in American history and we need it now. Fiat currency=bannana it does nothing but depriciate in value.
Xsteppin 1 year ago
@those who do not understand this, google a bit, he's not making a difficult point at all, it's very clear.
@those pushing for "toss" the current currency model... your recall 08 and 09 and we're still in this mess. ..Well, switching" the currency model will be orders of magnitude more disruptive to the american people and the rest of the world. I feel you exhibit the same knee-jerk ignorant reaction that would have you protesting in the streets within 48hrs of the "switch". You are clueless.
doko77777 1 year ago
@doko77777 sorry for assuming, she or he.
doko77777 1 year ago
Possibly the most retarded vid on YouTube, you can try to justify our fiat fractional reserve system all you want but this is just another way for the fed to prop it up. I think you missed the point of the original video in that this whole system makes no sense and the only rational thing we can do is toss it and do as jfk Lincoln and Jackson did, print our own pm backed currency.
Xsteppin 1 year ago
bullshit ! the fed buying securities creates money, this video is a LIE !! the treasuries don't even exist until created to be specifically bought by the fed- it's not like they are sitting there waiting to be bought by someone else- the us government creates the treasuries as needed to get more money and spend more- and yes it expands the money supply greatly- just look at prices NOW- $8.99 for a magazine at Walmart, and gas is $3.09- that is INFLATIONARY
tunnelportterror 1 year ago
don't even try to defend the fed's qe program- whoever put up this video is an asswipe, or a fed employee or fed toadie/troll. Every major investor knows the dollar is screwed
tunnelportterror 1 year ago
wow. Limited scope and some simplifications? how about more like absolutely no idea what you're talking about in the slightest. This is the most nonsensical gibberish I've ever seen on the economy. I'm not sure who "taught" you this but you should stop listening to that source and learn more about how money works.
markemark1005 1 year ago
booo
rich232399 1 year ago
Fed prints money to use by Americans at a price. Money is debt form day one . Government goes further into debt for this money. Banks trade tresuries for dollars and then loan some of those dollars at a ratio of 10 to 1 at higher rates than before QE. Banks take most of those dollars and SPECULATE . Stocks rise creating new bubble. Monetary supply increase creating inflation.
pezmedia 1 year ago
Competing currencies can solve American peoples problems and cure the monopolization of the central banking cartel....and throw wall street into a tailspin without completely ruining retirees
teecuzbruh 1 year ago
Apparently facts hurt people's brains.
DorkusTyranus 1 year ago
If the banks hold more dollars than they _MUST_ loan the dollars in order to make money. The problem with the current situation is that the banks can suck on T-Bills and _NOT_ loan money. If people are afraid of too much money in the system causing inflation then it is time for them to learn that the only way to remove the money is with a tax. T-Bills merely park money in a pen and slow velocity.
chartalist 1 year ago
Was this made by the Ben Bernank?
swift4grizz 1 year ago 41
@swift4grizz Yes, with some help from the Goldman Sachs.
rebby11 1 year ago 6
Since the Fed is the originator of the American Dollar when the fed buys something that money is not transferred from any where it is created by the reduction of the purchasing power of the other dollars in the economy.
Some might go as far as to call this Inflation.
funquibble 1 year ago
This Video is a Lie:
Sorry to Wreck your theory but the simple FACT that the Untied States Banking System is NOT a Government institution. The FED is a privately owned business. Go back and reread the banking laws. December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law creating decentralized central bank to balanced the competing interests of private banks and the Federal Government.
funquibble 1 year ago
This video is incorrect. While it is true that there is a swap between treasuries and federal reserve notes, the difference is in the effects. When the banks possess Federal Reserve Notes instead of Treasury Bonds, they can legally INFLATE the number of those dollars at a ratio of 10:1 to their reserve, out of thin air which they can then loan out into the economy, or (more likely) invest into the stock market. This 10:1 expansion of the money supply reduces the value of each dollar. Inflation
weylondobranski 1 year ago
Just because you take $5 from your left pocket and put it in your right pocket doesn't mean you now have $5 more to spend. Sheesh...World's largest ponsi scheme.
evofd 1 year ago
Just because you take $5 from your left pocket and put it in your right pocket doesn't mean you now have $5 more to spend. Sheesh...
evofd 1 year ago
So what you are suggesting is that these credit swaps the fed is doing with the bank balances is ok? Remember, the credit swaps that were part of the underlying mess? The bad debt of the banks is being transfered to the taxpayers via debt to the fed that we now owe. Remember, the fed loans us the money at interest. We end up paying for the banks bad debt in the end, rather than the banks. I also have been trying to understand this complicated issue. It is another form of bail out.
AmericanSilverEagle 1 year ago
Debt is good from the Fed's viewpoint according to Mr. Bernake himself while answering questions from congress. The reason is because we pay interest on the money it prints and lends to us. So debt is good just as your debt on your car is good for your bank. The debt we owe the Fed is not repaid. We pay interest with our taxes. The money printed pays for the increased spending. It is free money for the government to spend because it does not pay it off, just collect taxes to pay the interest.
AmericanSilverEagle 1 year ago
Wonder why they felt compelled to post this response? Original hit too close to the truth?
schnocky1 1 year ago
After investigating the facts presented in each video, I came to the conclusion that economics is a voodoo science, meaning the system is so complex, the same data can validate contradictory claims. The analyst's paradigm has the greatest impact on results from an economic study.
I am also reminded that figures don't lie but liars can figure. I want to know the basic assumptions of the current economic rating system before I accept anything I hear on economics as truth.
guralp08 1 year ago
oh i see... so it's perfectly fine for the fed to screw over everyone who owns these 'dollars' while helping everyone who owns these 'treasuries', because anyone who isn't a complete idiot owns a wide diversity of dollars, treasuries, bonds, stocks, options, real estate, etc etc. The people who have not protected themselves in this way deserve to have money stolen from them.
TheBigAmbiguous 1 year ago
so they are just swapping money for treasuries. That's great! Except the creation of dollars to trade for another persons treasuries leaves more dollars in the system then before. Thus there is now more dollars, but the same amount of money. That is inflation. Nice try.
diablo98188 1 year ago
The girl has a dude's voice now. This video is freaky enough without that though, who the hell is going to believe that what the fed has been doing is a positive thing. Nice try NWO. The hypnotic mantras of "everything is fine", "government is good","pay your taxes, and take your flu shot", doesn't work anymore.
ijavier78 1 year ago
why is this money thing so complicated...is it just meant to distract we the people from porn ?
3timesoneminusone 1 year ago
coninued 4; The gov't/banks must be involved in the currency system in order to profit from it. To understand how gov't/banks profit from our currency system, you need to sit down and open your mind to math and human behavior and wrap your head around the ideas of inflation and interest rates. It's really a beautifully devised scam, and makes Madoff look like a rookie. The amazing part of it is that we the people have been actively supporting this "theory" for decades.
TheMicpat 1 year ago
contnued 5: The argument for quantitative easing for the purpose of benefiting our trade with other nations is another beautifully thought out scam. Mathematically, the argument holds true. Quantitative easing improves global trade because it devalues the dollar. Devaluing of the dollar is synonymous with inflation, so I don't understand the above videos inflation argument. The same global trade benefit could be achieved via currency adjustment tarriffs, without harming our currency at home.
TheMicpat 1 year ago
In other words, the banks and the federal reserve have hijacked the "people's" system of exchanging goods and turned it into a profit making mechanism for those at the top of the chain. Currency systems in general were designed to make it easier for me and joe blow to exchange our goods/services with another. Otherwise without a currency system, joe blow and I could only exchange goods/services if both of us had something that the other wanted, at the same time. Pretty simple idea huh?
TheMicpat 1 year ago
cont: As long as joe blow and I were using gold as our currency, then the federal reserve and the banks served very little purpose in regards to the exchanges that occurred between joe blow and I. BUT, the banks somehow convinced us that it would be good for us if we allowed them to hold our gold, and in return they would give us paper currency that represented that we had X amount of gold at the bank. It was easier to carry paper than that pesky heavy gold.
TheMicpat 1 year ago
continued 2;
Once we had bought into the idea of trusting the banks to convert our dollars to gold, then we became very accepting of the dollar being as good as gold. Therein lies the danger; anytime that a crook has develops your trust, then you're screwed. As time progressed, the gov't decided to float our currency and actually made it illegal to hold gold for a while. The gov't convinced us that a floating currency was needed in order to finance a war that we couldn't afford (red flag).
TheMicpat 1 year ago
continued 3;
It's important to realize the benefit that the gov't/banks gain by having its citizens accept that paper money is equal to gold. It is much cheaper for our gov't to create paper money, than it is to mine gold. It's even cheaper to create emoney. Furthermore, if the people still traded with gold, then we wouldn't be dependent on the gov't for our currency. We could simply mine it, and then trade with it. BUT, that idea does not allow for gov't/bank intervention.
TheMicpat 1 year ago
What's with the whole argument over inflation or not? Isn't the whole point of quantitative easing to create inflation in order to cause people to start spending money? (ie the money will have less future value, so people will want to exchange it for real value)
mitchblatt1dot1com 1 year ago
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Gold Standard Act of 1900...
Leon Czolgosz - Emma Goldman
U.S. President William McKinley assassinated.
Think about it.
SirWinstonChurchill 1 year ago
Holy crap is this guy serious? T-bills are NOT LIQUID
atldru15 1 year ago
Sorry. Printing money and putting it into circulation (whether or not it first is used to purchase treasuries for the Fed) creates inflation.
Also, i don't trust the Fed any more than I trust the banks.
ytburro 1 year ago
@ytburro The question is how much? Contrary to the belief of some, inflation is not a binary. We actually need an inflation rate of around 5% for a couple of years at least. And if you don't want the inflation then you have to increase the taxes or cut military spending. There is no justice at all in cutting Social Security because that system has been in surplus for a long time.
chartalist 1 year ago
The ridiculous system they just described is better that free market capitalism with sound money how....?
assgrabberb 1 year ago
The missing issue is that under QE the FED purchases T-Bills directly from the Treasury, as opposed to the open market. In the open market, owners of T-bills decide the opportunity cost of holding public debt relative to all other investments, and exchange ownership among them (not just cash) to suit their risk/reward profile, which may or may not circulate. Under QE the government spending forces the money into circulation, even if the rest of the economy doesn't want it.
bombthrower77 1 year ago
@bombthrower77 That may not be relevant. What is important is that the 18 or so secondary market dealers in T-bills are not picked and chosen for some special treatment based on being the government's pet or whipping boy. The FED purchase of T-Bills will reduce the national debt and the value of the dollar, and the dollar denominated treasuries. A tax increase might be preferable. But with the morons running the government it ain't hapnin
chartalist 1 year ago
1) In japan quantitative easing was regarded as bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price, with the same money the government is putting into the bank.
affiliate30 1 year ago
@affiliate30 What is this??? I see a comment that indicates a little knowledge about how the system actually works. But the Treasury sells T-Bills to all buyers in an auction. And interest paid to the FED on the short term loans prior to the public auctions is typically transferred to the Treasury. Whether the price of the auctioned Treasuries is high or low depends on opinions of the buyers concerning future economic trends.
chartalist 1 year ago
@chartalist "And interest paid to the FED on the short term loans prior to the public auctions is typically transferred to the Treasury."
Like I said, to believe that the fed and the government is buying T-Bills from the banks is stupid, the government sells T-Bills to the Fed at the beginning of the money creation process. In any case if the banks are buying T-Bills it has to be with government money indirectly from the Fed which holds the government as a debtor.
affiliate30 1 year ago
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1) Quantitative easing was regarded in Japan as a bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price with the same money the government is putting into the bank.
affiliate30 1 year ago
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1) Quantitative easing was regarded in Japan as a bad practice. 2) The fed only used to set up Prime rate. 3) how is this type of quantitative easing not bad? In the money making process, the fed is the first one to buy treasuries from the government in exchanged for the money being "printed", meaning that the treasuries which this video assumes the banks hold had to be bought directly or indirectly from the fed at lower price with the same money the government is putting into the bank.
affiliate30 1 year ago
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affiliate30 1 year ago
@timothwc Well the value of the dollar is currently higher than it was when QE2 started and the October CPI printed the smallest year over year increase on record. What metric are you using to gauge inflation?
fortuitouscomment 1 year ago
So the Goldman Sachs buys a $10 T-bill whereby it loans the treasury $10 for a duration and rate. The treasury now has the $10 to use as it sees fit for the duration. Then the Fed purchases the $10 T-bill from the Goldman Sachs whereby the Fed gives the Goldman Sachs $10 plus the rate. So where in the world does the Fed get the $10 to buy the T-bill from the Goldman Sachs? Seems to me that we now have $20 in circulation. Inflationary if you ask me.
drbobec 1 year ago
@drbobec The stuffing of money into interest bearing mattresses called T-Bills simply corals money (impounds it so as to prevent its circulation). This effects the velocity of money as opposed to the quantity. All forms of money are liabilities of the US government (the government include the FED). The quantity of money (all forms) is equal to the amount of money spent into existence and not reclaimed via taxation. But banks can't make people borrow so the money lies dormant anyway.
chartalist 1 year ago
@chartalist Last time I checked the federal government was running a massive deficit and selling T-bills to finance it. To me that means the money is being spent by the government and is in fact in circulation, not stuffed in a mattress. The banks are buying them because right at the moment it's easy money and with the QEII they are assured not to get stuck with long term T-bills at todays rate when the FED is forced to raise rates because of all the liquidity they are pumping in.
drbobec 1 year ago
@drbobec The purchase of T-Bills removes the money from the active money pool (m3) and keeps it from multiplying (tax revenues) in the economy through further exchanges. Money spent into the economy by government does return more in tax revenues than simply cutting taxes. But allowing the banks to profit from holding T-Bills is pretty stupid. It is the exact opposite of what stimulus spending is designed to do.
chartalist 1 year ago
Respond to this video... This video gets too technical and is thus rather worthless. The reality is a lot simpler in that banks can't make people borrow no matter how much money the banks have. And if people do not borrow and invest/spend then there is no inflation. But the national debt will have been reduced by $600B. A very good idea. If this causes inflation, the FED will cut the purchases. If not then the FED is retiring debt and improving trade relationships.
chartalist 1 year ago
@chartalist Yeah I did bang it out rather quickly and I do agree I did not really have a good way to articulate it all. The narrative is terrible. You are making some good comments though, thanks for that; much more articulate than I.
fortuitouscomment 1 year ago
@drbobec You are essentially correct to say that the money supply is being increased if you are talking about M3. But the theory that claims an increase in the money supply causes economic overheating and inflation is pig manure. At present the interest rates are rock bottom and there is no investment. Inflation would cause the FED to increase interest rates. That is the scenario we want; the ability of the FED to use interest rates for control.
chartalist 1 year ago
@drbobec If you see some of my previous comments (it's been a few days, lol) the fed is creating the cash of out thin air to purchase the bonds and expand its balance sheet (probably just changing numbers on a spreadsheet almost). @charalist elucidates the differences with velocity, levels of the money supply, and the Fed balance sheet very well. The 600B amount remains roughly the same with the banks; they are actually losing some money as they are now receiving a lower rate.
fortuitouscomment 1 year ago
Hilarious, this is why economics has disappeared up it's own arse and cannot see the bare faced facts in front of it.
Listen to all the gobbledigook in this video. It's all complicated crap, with lots of technical terms.
Economics is not that hard. It's supply, demand, and allocation of capital and credit. it's not a science as economists will have you believe, but when it is approached like this, the fundamentals are totally forgotten in the face of new complex theories. Terrible video.
bootsyjam 1 year ago
@bootsyjam Well it seems like "gobbledigook" because the point is that the fundamentals at the federal level are vastly different than at the state/individual level of "commonsense" balance sheets. With the Fed as the central bank of a nation that is the sole supplier of a non-controvertible currency in a floating exchange rate system, the government is never revenue constrained (neither taxes nor bonds fund spending). Our neoclassical concepts fall apart and that is what makes it seem weird.
fortuitouscomment 1 year ago
This video is factually wrong. T-Bills are liabilities of the Treasury Department (US Government). Dollars (Federal Reserve Notes) are liabilities of the Federal Reserve.
T-Bills are not legal tender and do not circulate as currency. Dollars do. Issuing dollars amounts to an expansion of the monetary base. Issuing T-Bills does not. Expanding the monetary base is inflation, rising prices are the consequence.
Please correct these mistakes or remove the video.
17Spartacus76 1 year ago
@17Spartacus76 says that increasing the money supply is always inflationary. And that the result will be rising prices. But banks cannot make people borrow money. The myth of the bank multiplier concerning fractional reserves is simply wrong. The fact that banks have money to lend does not increase lending if no one wants to borrow. The FED will be causing a decrease in interest rates at the retail level. We have underutilized capacity so inflation won't happen.
chartalist 1 year ago
@chartalist
"But banks cannot make people borrow money."
That is not necessary for inflation. The government can, and does, borrow and spend the money instead. Just look at any hyperinflation throughout history. You really think it was private individuals borrowing all that money into existence?
The fractional reserve multiplier is a fact. Anyone with any knowledge of the banking system knows this. It's first year economics.
Your comments are even more ignorant than this video.
17Spartacus76 1 year ago
@17Spartacus76 Is that money multiplier crap still part of first year econ? WOW!! No wonder there are so many economic and banking illiterates. Why is it the righties can see only no inflation and hyperinflation. Inflation is running at about one percent and in a healthy economy it runs between 2 and 3.5. And until we have much greater capacity utilization we will not have inflation. But why worry? If we get too much inflation the FED can do what it needs.
chartalist 1 year ago
@chartalist
Wrong again. The money multiplier is a built in feature of the banking system. Read any manual from the Fed (I personally like 'Modern Money Mechanics'). You might as well be denying that cars have engines.
Hate to break it to you, but the CPI is not a good measure of inflation, so your figures are bogus. Garbage in, garbage out as they say.
By accusing me of being a 'rightie' (which I'm not) you've exposed yourself as a political ideologue and therefore not credible.
17Spartacus76 1 year ago
@17Spartacus76 I am most certainly not denying that the banks can lend about 10 times the reserves they have. So all the monkey dung about the money multiplier is true. The point is that it is meaningless if people do not want to borrow. I will continue to accuse you of being a rightie so long as you cling to the notion that banks having money to lend causes inflation. An they won't lend if T-Bills pay well and inflation is low. I am proud of my reality base.
chartalist 1 year ago
@chartalist
Chartalist: "So all the monkey dung about the money multiplier is true."
vs.
Chartalist: "The myth of the bank multiplier concerning fractional reserves is simply wrong."
You're a funny guy :)
If people do not borrow and spend, the government will. What do you think the stimulus is all about?
"you cling to the notion that banks having money to lend causes inflation"
I'm not clinging to that notion at all. Pay closer attention next time, sport.
17Spartacus76 1 year ago
@17Spartacus76 So what's your point? My claim remains the same. The fact that the banks _CAN_ create loans based on the multiplier doe not mean that the banks _WILL_ do so. As I have said all along: The banks can't force people to borrow money. As to the spending of the government we have no disagreement. And the stimulus was supposed to pump up the economy by channeling money to the bottom side.
chartalist 1 year ago
@chartalist
Are you really this dense?
IT DOESN'T MATTER IF PEOPLE ARE BORROWING, THE GOVERNMENT WILL.
How can I make this any clearer to you? Why don't you just look at the last 10 hyperinflations in history. Do you really think the people in Zimbabwe were borrowing their way in to hyperinflation or was the government doing it for them??
17Spartacus76 1 year ago
@17Spartacus76 It seems that you are the dense one. I agreed in my last post concerning the spending of government. Inflation is not always hyper and it certainly isn't some religious test of truth. And until you learn to leave fundamentalism behind and embrace rationality you will have a problem.
chartalist 1 year ago
@17Spartacus76 Required reserve requirements have fallen over the last two decades. Savings accounts have zero reserve requirements. Majority of checking accounts are sweep accounts that allow banks to shift into savings overnight and avoid reserve requirements. Most deposits are borrowed into existence and lent out again. Empirical evidence shows that fiat money creation lags credit money creation by several quarters, contradicting the Money Multiplier model. Fiat does not "seed" credit money.
fortuitouscomment 1 year ago
@fortuitouscomment
Empirical evidence shows that fiat money systems only survive a few decades. The money multiplier is a built in feature of the fractional reserve system allows for credit expansion, which creates booms and busts.
Fiat money (Fed notes) becomes bank reserves and as those funds are lent and re-deposited, the money supply expands (multiplies). This is not my opinion, it is stated right in the Fed's own manual. You would do well to study one before making another comment.
17Spartacus76 1 year ago
@17Spartacus76 Yes, I read and acknowledge the link which you mentioned. It is a public info piece explaining a simplified Money Multiplier Model as it may theoretically operate in our economy; defining something to be the case does not make it so. Empirical observations of the mechanics of fiat and credit money creation in our economy contradicts the Money Multiplier Model; in reality, new credit money has been shown to be created several quarters before new credit money.
fortuitouscomment 1 year ago
@fortuitouscomment Lol. woops. And by that I meant "new credit money has been shown to be created several quarters before new fiat money."
fortuitouscomment 1 year ago
@fortuitouscomment
"Empirical observations of the mechanics of fiat and credit money creation in our economy contradicts the Money Multiplier Model"
No, it doesn't. Why do you think there's multiples measures of monetary aggregates?
"in reality, new credit money has been shown to be created several quarters before new credit money."
I've worked in accounting and finance for 5 years and can say with absolute certainty that you have no idea what you're talking about.
17Spartacus76 1 year ago
@17Spartacus76 Lol. woops. And by that I meant "new credit money has been shown to be created several quarters before new fiat money."
fortuitouscomment 1 year ago
@17Spartacus76 Look at the disastrous Fannie Mae. It extended credit at will and had almost nonexistent reserves. The Treasury provided reserves only after it imploded.
fortuitouscomment 1 year ago
@fortuitouscomment
Fannie and Freddie imploded because of an increase in the rate of mortgage defaults. They either owned or guaranteed over $5 trillion worth of them.
Have you ever read an annual report from Fannie or Freddie? Do you even know how those firms operate? Do you have any idea how the securitization process works?
You're in way over your head here.
17Spartacus76 1 year ago
@17Spartacus76 There is no need to be derisive; I am open to discussion and correction. They are highly leveraged GSEs limited to buying single/multi home mortgages. I was referring to the July 2008 Congressional Research Report which stated that "The regulatory capital surplus amounted to 0.50% of the $4.934 trillion and 1.03% of the risk-based capital surplus." Is that not a dearth of reserves? If I am incorrect then hopefully you are better able to explain it to me, given your background.
fortuitouscomment 1 year ago
@fortuitouscomment
Without reading the report and getting the full context I can't be 100% sure what the $4.934 trillion is that they're mentioning.
Your quote simply says that Fanny was leveraged to the hilt. Regulatory capital determines how many policies an insurance company (like Fannie) can underwrite, and your quote merely says they reached the limit. Put another way, they're saying that Fannie can only underwrite another $24.6b of mortgage guarantees.
17Spartacus76 1 year ago
@17Spartacus76 That # So if they borrow money to leverage and lend, and minimize reserves to maximize profit, how were they able to achieve such high leverage? I do not think that they were exempt from the reserve requirements imposed on banks. Did they have special lower requirements? How would a Money Multiplier Model account for such leverage?
fortuitouscomment 1 year ago
@fortuitouscomment
Fannie was regulated by a different agency than banks (OFHEO). They don't have 'reserves' in the banking sense. They have 'capital', or 'risk adjusted capital'. Those numbers are used to determine how many policies Fannie is allowed to underwrite at any point in time. Throughout the last decade, the ratio between available capital and guarantees was lowered and they also received billions from the government so that they could keep underwriting more mortgage guarantees.
17Spartacus76 1 year ago
@17Spartacus76 Ah, okay the 0.5% is surplus above the capital requirement? I'm out for a while thanks for the discussion.
fortuitouscomment 1 year ago
@17Spartacus76 QE2 is simply altering the term structure of that 600B of issued government debt; this is accomplished by swapping that defined rate and duration of the debt with the low rate reserves that have no effective duration. The October CPI printed the lowest y.o.y. increase in history. I do not see inflation taking hold where there is no private sector demand for debt, impaired private sector balance sheets, and slack in the productive capacity of the economy.
fortuitouscomment 1 year ago
@fortuitouscomment
Your comment contains all of the fallacies that I've already addressed. Please don't waste my time by repeating your errors over and over again.
17Spartacus76 1 year ago
@17Spartacus76 Ouch? I think? Sorry just scrolling down after a few days. End up seeing the most recent first. So it goes.
fortuitouscomment 1 year ago
@17Spartacus76 Ouch? I think? Sorry just scrolling down after a few days. End up seeing the most recent first. So it goes.
fortuitouscomment 1 year ago
Please help me understand why anyone would consider money as a liability to the government and not just a unit of exchange. If I have $100 in my pocket, what liability is that to the government? The government doesn't owe anything on that cash, its already out there in circulation. They used to have to hold that equivalent worth in gold, but not anymore. Now the government doesn't have to secure anything to back that $100. Now its all just 00s and 01s. That's why they can just print money.
513habs 1 year ago
@513habs : Government pays dollars into the economy as government does what the people elected it to do. It buys goods and services with dollars. The dollars are then the only mechanism that can discharge a tax liability owed to the government. It is like government LOANED itself the money to build a battleship. Taxation id the repayment of the loan. Government must recognize the discharge of a tax liability when taxes are paid. Taxes create the demand for fiat money.
chartalist 1 year ago
@513habs Yes it was awkward wording; I apologize for rushing the video. I was attempting to illustrate the fact that as the sole supplier of the non-convertible currency, the government must spend it into existence and thus is "deficit-ing" its accounts whenever it is spending dollars. The size of the federal deficit is reflecting the amount of government spending. The debt crisis with which we should be concerned is that of the impaired balance sheets of the private sector.
fortuitouscomment 1 year ago
This is bullshit, because cash is not JUST a liability, it is also a unit of exchange, whereas nobody takes a stack of t Bills to the grocery store, nor does a bank deliver a stack of t bills to a borrower to buy a car or a house; it writes a check. The impact of the cash is it's SPENDABLE, whereas for the overwhelming majority of economic agents, T bills AREN'T
engma32835 1 year ago 2
Lies.....
PatriotReport 1 year ago
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Come check out my reply to QE2 Explained on my youtube page. It's fricken hillarious. But Tea Partiers beware: you may not like what you see!
MoralMoney 1 year ago
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Nice video! Come check out my reply to QE2 Explained on my youtube page. It's fricken hilarious. But Tea Partiers beware: you may not like what you see!
MoralMoney 1 year ago
You're correct in saying that both cash & bonds are government debt, but the creation of the Fed's cash to buy the bonds is the problem. Prometheus7 is correct in his post above.
Michael Pento spells it out well in the link below. He begins with your own points about cash and bonds both being government debt, but then continues the issue to its ultimately problematic end.
financialsense [dot] com [slash] node [slash] 3174
Btw I appreciate you honest effort in encouraging discussion & debate.
InTomorrowsNews 1 year ago
@InTomorrowsNews Thanks, I am curious to learn more about it as well. Thanks for showing me how to embed links as well lol. I think Pento improperly defines inflation as an increase in the money supply. True inflation will occur only when too many dollars are chasing too few goods. Velocity and turnover and very important as @chartalist says. There exists slack in economic capacity and a private sector with little demand for no debt. Oct CPI recently printed the lowest y.o.y. change on record.
fortuitouscomment 1 year ago
This is crap.
jamo387 1 year ago
F*&k Keynes!
odinismforus 1 year ago
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Good video! Come check out my version of a reponse to the video they are referring to.
MoralMoney 1 year ago
No matter how convoluted you make the process. Printing money/Quantitative Easing/ whatever the hell they want to lie about it one thing remains true. More money flooding the market always equals inflation! I suggest anyone confused read up on Ludwig Von Mises' take of the Fiat Monetary System. He had it right all along. All Keynesian economies end up self-imploding! Bring back Free Market Economy!!
swizzlecheeks 1 year ago
@swizzlecheeks Spoken like a true Randroid and a monetary idiot. I won't confuse it at all. The FED will be retiring $600B of the national debt by paying it off right now with money created from thin air just as all money is created. If this process creates an unacceptable level of inflation then the FED will curtail the buying and/or increase the interest rates. That is what the FED does.
chartalist 1 year ago
@chartalist Ha thanks. the farther down I read the more I see you have already been answering. Well explained, Sir. I am learning from you now.
fortuitouscomment 1 year ago
@chartalist
Increase the interest rates? What, did you read that in a Bernanke Comic Book? LOL! I'd like to see them TRY to raise the rates by just 1 or 2%. It still wouldn't be enough but you think the economy is BAD now?? LOL! Good luck with that one!
How do you figure debt is paid off by the Fed just pulling money out of their asses and saying, "here's some new money". Do you even get that money is debt? Yes, the paper they print is nothing more than an IOU!! Guess who gets to pay that IOU?
swizzlecheeks 1 year ago
@swizzlecheeks This is not a Keynesian economy at all; I did not see us running surplus in a rainy day fund in the past decades as he would has guided. The money is not flooding the market. The banks are actually losing some money as they will be earning much less interest on the same amount now that it is reserves. Velocity and turnover are critical, as is the productive capacity of the economy as a whole.
fortuitouscomment 1 year ago
@fortuitouscomment
Please, explain to me exactly what type of economy the U.S. runs off, if not Keynesian? Surplus in a rainy day fund? LOL! What surplus? The banks are sitting on the money in fear of lending to insolvent companies. Hard to tell when the gov. is Secretly bailing out Too Big To Fails. LOL. Banks losing money on less interest? Well, how much interest are they paying for the money they are given? I recommend you research the economies of Zimbabwe, Argentina, and the Weimar Rep...
swizzlecheeks 1 year ago
@swizzlecheeks This is not a Keynesian economy at all; I did not see us running surplus in a rainy day fund in the past decades as he would has guided. The money is not flooding the market. The banks are actually losing some money as they will be earning much less interest on the same amount now that it is reserves. Velocity and turnover are critical, as is the productive capacity of the economy as a whole.
fortuitouscomment 1 year ago
Complete nonsense. To claim that adding money to the money supply doesn't produce inflation is so stupid it can't be adequately described.
This has to be shill work. No one could buy this crap unless they were paid to believe it.
lungcancercure 1 year ago 19
@lungcancercure the Austrian definition of inflation is the expansion of the money supply. the Keynesian definition is that inflation is a rise in prices, caused by some mythical spaghetti-monster. only one of these was created by someone not in a self-induced acid binge.
T0NNiX 1 year ago
@lungcancercure From early 2008 to early 2009 the FED created 8,5 trillion dollars, in loan guarantees and liquid money to pump up the financial sector. The result was _NOT_inflation. The inflation had already occurred in real estate and oil. The FED was matching the money supply to the ridiculous levels of speculative credit. That part is over. Now we try to reclaim some of the stolen value.
chartalist 1 year ago
@lungcancercure No matter how much money the banks have, they cannot force people to borrow from them. If the banks have tons of money, they can simply buy T-Bills and take the difference between the discount rate and the yield on the treasuries. That is where we currently sit. QE2 is designed to take that option away in small chunks. But this is the point where the money multiplier may become a problem. Have the banks used the multiplier to leverage their T-Bill holdings?
chartalist 1 year ago
@lungcancercure No matter how much money I have, I can't MAKE you borrow it from me. Right now the banks have more money than God. Yet we can't get a loan on reasonable terms. Meanwhile, the banks make money every day from the T-Bills they hold and the #%$^@& FED pays them interest on reserves. If the FED pays interest on reserves then the banks don't need the T-Bills. But then, who cares what the banks need? They've had it good long enough.
chartalist 1 year ago
Let's solve the debt...with more debt! Brilliant! You liberals are so stupid you make my head spin
z4nizzle 1 year ago 15
@z4nizzle If the debt is owed to the FED and the Treasury gets all the interest on the debt held by the FED then the debt may as well not exist. It is totally sterile. Hence, the purchase of T-Bills by the FED is an expansion of liquid money in the system. According to people that subscribe to dinosaur banking multiplier theory that will cause inflation via dollar devaluation. It is a question of amount and the effect on the current account (trade). inflation is not always hyper.
chartalist 1 year ago
@z4nizzle liberal =/= socialist.
Liberal is a social stance not a fiscal stance.
But you can always trust Americans to degrade the English language and contribute to bastardising definitions.
Use your brain yanky. If liberal was a market stance, what do you think they'd fucking be doing? Liberalising market. Come on. Work it out. There's a good boy.
hippydude89 1 year ago
@z4nizzle I see you have Ronald Reagan vids in your favourites. Ever heard of fuckin neoliberalism? Classical liberalism?
Oh I get it. You just like mirroring bill o'reilly and glenn beck.
hippydude89 1 year ago
Thankfully there is someone out there that gets it fortuitouscomment. Thank you.
As for everyone else, listen to the thing then where does the ten dollar note in your wallet come from? How did it get there?
Senexx1 1 year ago
@Senexx1 I used quantitative easing to get my $10 note!
How did you get yours?
How did Henry Paulson get his?
NoobTube2010 1 year ago
@NoobTube2010 Thank you for the deflection that shows me that you misunderstand how it works. It shows that you are not willing to consider that your current view may be ill-informed.
Senexx1 1 year ago
Comment removed
NoobTube2010 1 year ago
@Senexx1 No, it's a simply demonstration cynicism and sarcasm that has eluded you. I will tell you one thing about my view. Trading one piece of paper created from nothing for another piece paper created from nothing doesn't really do a lot to discredit the "money printing" conclusion that most people can see. These silly paper promises made by the corporate purchased government and the differences in their "attributes" do not invoke a lot of confidence. This is failure backed by failure.
NoobTube2010 1 year ago
@NoobTube2010 Internet Users really need to learn that sarcasm is done in italics which I realise is not possible here but the sarcasm could have been conveyed by the means of smileys. Nonetheless, they're misinformed by the mechanics of it all. Where does money come from? Nowhere. Just like that $10 in your pocket. The only constraint on money is inflation. Just because you are "printing money" (which is a misnomer by the way) does not mean there will be inflation.
Senexx1 1 year ago
@Senexx1 "Printing money" and "quantitative easing" are distinctions without significant differences.
If you get drunk and take a joy ride in a car, it doesn't mean you will have a wreck.
So sure, nothing is 100% certain, but they are certainly gambling with your $ and the game is fixed. The $10 that comes to my pocket a couple of years from now will be worth less, but it enters the market at full (non-diluted) purchasing power through government chosen entry points (e.g. AIG, and "not" YOU!).
NoobTube2010 1 year ago
@NoobTube2010 And I suppose you think a zephyr and a tornado are distinctions without significance too because they're both wind. I do not know what AIG is in this context I'm not a US Citizen or resident and would not want to be. Inflation is determined by the productive capacity of the economy, if you increase productivity, i.e. employ more people then inflation will not rise. However that is getting a little away from QE. This video is correct, the original is false and ill-informed.
Senexx1 1 year ago
@Senexx1 This video is a flaccid response to the original. The point to the original is that extremely few privileged people are getting a pass on looting all of the world, and particularly those who hold U.S. dollars. We dollar holders are paying for it. This is unAmerican, fascist behavior. The government has been bought by these privileged few and every bill they pass continues to benefit them at the expense of dollar holders. Cost of living will get much worse over the next few years.
NoobTube2010 1 year ago 2
Ooooooh! I get it now! So the bailout of financial institutions and automotive industries are not really increasing the money supply! The government should use their same quantitative magic on our housing loans and credit card bills! All is clear to me now. Recession be gone.
NoobTube2010 1 year ago
The issue is that the amount od CASH in circulation increases. If I have a treasury bond and want to buy some corm futures then in most circumstances I would have to sell my treasury to buy corm. It is the amount of cash (M1, M2, M3, TMT true money supply...) that matters and the velocity of money. Look around you. Everything is going up in price. The dollar. pound etc are being debased.
I live in UK. Food up at least 10% this year. Cinema tickets up 20%. Restaurants are reducing portions.
888kevo 1 year ago
@888kevo Yes the increase in commodities is troublesome. Its tough to attribute those summer and fall runs to QE2 though as QE2 didn't start until Nov 15th, lol. I have expressed concern over margin compression but these short-term speculative "votes" of the market are not necessarily correct. Did $140/bbl crude bring us rampant inflation in the rest of 2008 and into 2009?
fortuitouscomment 1 year ago
1.) I'm not a tea-bagger or libertarian. 2.) I'm not a supporter of libertarian values either.
As you discuss quantitative...er...inflation the rate/duration of the liability refers to how long the debt remains. It is still debt. Changing the duration still means the Fed is using a Ponzi scheme to cover wall st.
The fact remains that banksters are losing too much money in bad business practices and forcing the public and global economies to pay for their crimes/misdealings.
Durkheim123 1 year ago
The prob