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Old 05-14-2013, 09:26 PM   #81
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So we can just keep printing money, and we will never have to pay the piper? Economic theory says otherwise.......
The economic theory as I understand it is that the new money was used to buy bonds. The money ended up sitting in bank reserves, the bonds are on the Fed's books. The plan is that when banks lending goes up, the Fed will sell the bonds and soak up the money.

The only piper to be paid is that the bonds my be sold for less than the Fed paid for them. But there is no hyper inflation in that scenario.

I can get worried that the Fed won't be able to walk the tightrope - selling the bonds just fast enough to head off inflation, but just slowly enough to avoid strangling the recovery. But that's a different issue.
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Old 05-15-2013, 08:50 AM   #82
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Originally Posted by Independent

The economic theory as I understand it is that the new money was used to buy bonds. The money ended up sitting in bank reserves, the bonds are on the Fed's books. The plan is that when banks lending goes up, the Fed will sell the bonds and soak up the money.

The only piper to be paid is that the bonds my be sold for less than the Fed paid for them. But there is no hyper inflation in that scenario.

I can get worried that the Fed won't be able to walk the tightrope - selling the bonds just fast enough to head off inflation, but just slowly enough to avoid strangling the recovery. But that's a different issue.
That sums it up pretty well. The Fed credits the bank for it's purchases in the hope that liquidity is increased and investment increases. Hasn't happened, nor will it. The bottom line is that everyone knows that the Fed manipulates the value of money and thus the value of goods and services and so they have learned to do the opposite of what he wants. We no longer fear inflation or deflation as much as we fear being manipulated into losing our savings, homes, and businesses. Inflation data measure the costs of a basket of goods, not the value. I could give a crap that the costs are stated to be inflating at less than 2%. Their value is plummeting, so in reality the costs are much higher.
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Old 05-15-2013, 09:14 AM   #83
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The bottom line is that everyone knows that the Fed manipulates the value of money and thus the value of goods and services and so they have learned to do the opposite of what he wants. We no longer fear inflation or deflation as much as we fear being manipulated into losing our savings, homes, and businesses.
Not sticking up for the Govt...I have no idea whether their money policy is for the best or not. What I DO know, is that when the banks/financial groups were left more or less alone (which would allow....in their theory...the market to take care of itself)....the crap hit the fan rather badly. You might not trust the Govt folks.....but I trust the banking people a whole lot less....especially after all those people lost their savings, homes, and businesses.
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Old 05-15-2013, 10:18 AM   #84
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Not sticking up for the Govt...I have no idea whether their money policy is for the best or not. What I DO know, is that when the banks/financial groups were left more or less alone (which would allow....in their theory...the market to take care of itself)....the crap hit the fan rather badly. You might not trust the Govt folks.....but I trust the banking people a whole lot less....especially after all those people lost their savings, homes, and businesses.
It would be nice if they both would act as intended.
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Old 05-15-2013, 11:48 AM   #85
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Dr, Lact Hunt asserts (and backs up his assertions with ample references) that debt must be productive - pay for itself and then some, to be good debt. If not, total debt will build up and become a serious drag on the economy.

Here is a nice two page summary of his thoughts - Speech_by_Lacy_Hunt.pdf

If the critics of this thread could explain how Bernanke will exit QE and pay the debt back, or how this thinking is wrong, I would be grateful.
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Old 05-15-2013, 11:59 AM   #86
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Sorry, I don't know how to attach a PDF. Here is a link-

http://www.hoisingtonmgt.com/pdf/Spe..._Lacy_Hunt.pdf
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Old 05-15-2013, 01:16 PM   #87
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Dr, Lact Hunt asserts (and backs up his assertions with ample references) that debt must be productive - pay for itself and then some, to be good debt. If not, total debt will build up and become a serious drag on the economy.

Here is a nice two page summary of his thoughts -

If the critics of this thread could explain how Bernanke will exit QE and pay the debt back, or how this thinking is wrong, I would be grateful.
You haven't been listening. The Feds work will be done when the price of things are so high that everyone can afford them.
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Old 05-15-2013, 01:41 PM   #88
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You haven't been listening. The Feds work will be done when the price of things are so high that everyone can afford them.
Heh heh...

My guess is UE around 6-6.5% and GDP growth around 3ish.
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Old 05-15-2013, 08:36 PM   #89
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Unfortunately, we don't have anything that resembles a free market. The government is entangled in everything and thus the Fed has to work in that framework. It's easy to say that we should just allow deflation, but what do you do about the millions of government workers with constitutionally protected pensions? So you either have to whack the pensions or inflate everyone else's assets. It's not about creating efficient markets. It's about creating markets that are under the complete control of central banks and thus governments. It's a game. Play well.
Constitutionally Protected? I don't believe government pensions should be covered under any sort of contract law. I didn't sign any thing and was born into this liability, how is that a fair deal. As far as the government workers not getting their pensions, they can still get them, if the people decide to fund them through DIRECT taxes. Indirect taxes via inflation and debt are not honest and hide the true costs of the obligations.

Also, the fed does not have to act dishonest just because everyone else is doing it. The fact that they cave in so easily, just shows how weak and petty they are. I refuse to make excuses for these horrible people.
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Old 05-15-2013, 08:40 PM   #90
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So easy to be an armchair quarterback, but let's revisit. YOU are in a meeting with Wall Street crooks CEOS, all who tell you that within days, if not hours, the entire banking system will collapse.

What will you do?

You have 60 sec...
How about call them on their bs and let the chips fall where they may. The reason the whole system will collapse is because it is based on fractional reserve banking. Every single $ has 10 claims against it. They signed up to operate in such an unstable fraudulent system and they have to bear the consequences when it fails.
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Old 05-15-2013, 08:50 PM   #91
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The sky is falling and everybody is evil......possible....not likely.....
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Old 05-15-2013, 09:22 PM   #92
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The sky is falling and everybody is evil......possible....not likely.....
If you are going to make an attack, at least do the kind gesture to point out reasons for your disagreement.
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Old 05-15-2013, 09:44 PM   #93
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The sky is falling and everybody is evil......possible....not likely.....
So they have gotten to you, too?!
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Old 05-15-2013, 09:51 PM   #94
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Poop.....I have been saving some money from my switch from EJones....obviously.....I need to put it in....Govt "anything" since that is what "they" are accused of doing....to....something....Sorry, I have been doing quite well with the run up of the stocks...it's the people without money to put into the market that are TOTALLY screwed. Meaning.....most of the people.
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Old 05-16-2013, 07:36 AM   #95
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The sky is falling and everybody is evil......possible....not likely.....
20% of all children now living in poverty. Up from 14% in 2009.
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Old 05-16-2013, 07:46 AM   #96
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Thanks for a lively thread, time to move on.
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