Uncle Ben goes shopping

The Federal Reserve is trying to stimulate the economy by buying billions of dollars worth of bonds from banks. Senior Editor Paddy Hirsch explains how that's supposed to work

Category:

Education

Tags:

• uncle
• ben
• treasury
• fed
• bonds
• buybacks
• economy
• business
• paddy
• hirsch
• marketplace
• whiteboard

[Tnat1on]

1. Fed bought toxic assets from the banks.

2. Then Fed gave free money for the banks.

3. Now Fed is buying those worthless US bonds?

This will end up by Fed holding all the crap and guess who will need the bail out then! All the common people will suffer the consequences of this wealth redistribution very soon!

END THE FED!

[jhardknox]

More drugs for the drug addict. What a plan.

[metals0999]

About 80% of US bank retail lending (ie. to the average public) has been for purchasing property. The remaining 20% has been for everything else from consumer credit (read credit cards) and businesses. VERY little of bank lending is about building the production base.

[chrissis111]

Are you Irish, Australian or English?  Love your accent but I can't figure out where it is from.

[LibertyMike1]

Nice drawing of Bernanke!

[onetrackmind1973]

what happen when the shoes that are bought are from out of the country?

[ristau]

He's improving his doodles with time, Uncle Ben has a few more features now.

[aidanqn]

I echo many people here when I say that persistently loading up on debt is not a good idea.

I'm trying to get my head around other arguments about debt. The idea is that money is "created" by banks in order to lend to people. It's just a fiction. Banks charge interest on the money they lend out. The argument boils down to this: if all money is principal, then where does the interest come from? The inevitable answer is: by expanding the money supply, which is inherently inflationary.

[crazysoccerman14]

so these subsequent bank loans are low interest, right?

[wyrmguard]

awesome video as always! kinda funny I just experienced something - the other day at the post office they tell me my cc isn't working, so I go to a random atm and withdraw $200 - apparently something wasn't right at the post office eh - but now I got to pay $5 in cash advance fees so yea >.> my cc is working though ...

[rifeforstrife]

And where does the Federal Reserve get the money to hand off to the banks? By first crediting its own account with money it creates ex nihilo ("out of nothing"). $5 billion? Think again. By flooding the economy with a trillion or more additional dollars - the mentioned amount in the newest round of Quantitative Easing - they assure that every dollar we earn or spend is worth even less. Devalue the currency, encourage borrowing and spending - and everything will be fine.

Nope.

[GoldSilver588]

Well the "gaps" are very easy to fix, that is, when the banks lend the money to the people or manufactures, attach a condition saying "YOU DON'T NEED TO PAY BACK !"

... Then people and manufactures will borrow and spend every penny they can get from bank, and get the system going and booming again, and that, will fix all the problem.