Fed Reserve to monetize?

[Independent]

Correct! Congress is responsible,.. Or, better definition , IRResponsible!

The FRBoard plays the enabler ,..like Congress as addict and FRB as the pusher.

" I guess I should warn you, If I turn out to be particularly clear, you've probably misunderstood what I've said".
-Alan Greenspan.

I'm glad that we don't have Alan Greenspan at the FRB any longer.

I agree that Congress, the president, and the voters are responsible for huge
federal deficits in an economy that seems to be booming. IMO, that will end very badly for the US.

I don't see that the Fed has much to do with that. As long as inflation rates are low, they are supposed to manage for low unemployment.

 

[GrayHare]

This thread reminds me of the song Everybody Knows.

And everybody knows that the Plague is coming
Everybody knows that it's moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But there's gonna be a meter on your bed
That will disclose
What everybody knows

 

[Independent]

Feel like a dog with a bone.... don't want to let go of this one, as I think I realize what is happening.

Basically and over simplified, the government is printing money, and buying its' own debt. Hard to understand, but it's like building a house on a sea of mud, and it is illegal. Here's a Federal Reserve article that explains why it is illegal, and cannot be done.

https://www.federalreserve.gov/faqs/money_12853.htm

I don't think that article says it is illegal for the Fed to buy US debt. In fact, it has always done that. That's how it gets money into the economy.

The article in the OP says the Fed is buying directly (or nearly directly) from the Treasury auctions, instead of buying previously issued debt on the open market. Either way, the Fed buys treasuries.

I've never understood why the Fed isn't supposed to buy directly at auctions. I agree with the article that some big bank is getting paid for doing nothing when the Fed waits a day before buying "in the market". That doesn't seem to be necessary.

This 2011 Fed article may be saying that adding bank reserves to the system normally results in more lending, and hence more "money", but that in the deep recession bank lending wasn't driven by reserves. Also, they seem to be making a distinction between physical currency and the total base money supply. They say they don't print physical money to buy Treasuries.

 

[imoldernu]

I don't think that article says it is illegal for the Fed to buy US debt. In fact, it has always done that. That's how it gets money into the economy.

The article in the OP says the Fed is buying directly (or nearly directly) from the Treasury auctions, instead of buying previously issued debt on the open market. Either way, the Fed buys treasuries.

I've never understood why the Fed isn't supposed to buy directly at auctions. I agree with the article that some big bank is getting paid for doing nothing when the Fed waits a day before buying "in the market". That doesn't seem to be necessary.

This 2011 Fed article may be saying that adding bank reserves to the system normally results in more lending, and hence more "money", but that in the deep recession bank lending wasn't driven by reserves. Also, they seem to be making a distinction between physical currency and the total base money supply. They say they don't print physical money to buy Treasuries.

I confess... I don't understand, either... The article infers that the Fed bought before the Auction...

....anyway... a link that may or may not be worth considering.

https://www.greenwichtime.com/business/article/Corporate-debt-nears-a-record-10-trillion-and-14870792.php[/URL]

My soft mind wonders how companies borrow from a fund that provides the money from increasing its' own debt. (yours and ours).

 

[imoldernu]

Watch Monday Dec. 16...

.... an announcement on the next Fed move.

I won't pretend to understand the depth of this, but for those who, like me, are fascinated by the way our economy works, one more link.

https://www.moneyshow.com/articles/tebiwkly08-53095/repo-architect-issues-dire-warning/

A few observations.
As the economy looks better, it brings out customer confidence.
Low interest rates encourage buying. Especially buying/borrowing at low interest rates. At the same time... longer terms. Think automobiles and 72 month payout (possibly 84 months ... soon.). Already resulting in faster turnover, with continuing extension of debt held by the banks.

Banks, to maintain liquidity, receive ever increasing Fed support... thus the Monday announcement.

https://finance.yahoo.com/news/fed-aims-half-trillion-dollar-210110759.html

One more heavy article about MMT (Modern Monetary Theory), which some say is the basis of the Chinese Economy. You may see how this works in our economy.... ie. low taxes for the proletariat, and wealth residing in the unmoveable fortunes of the wealthy.
https://www.creditwritedowns.com/

 

[imoldernu]

While this doesn't get much attention, the story continues. In the cited article...
https://www.peakprosperity.com/bubbles-are-brutal/
Look at the planning chart fo $$$ infusion through January.

Since so little is written about this,I wonder why?

My instinct tells me to watch for some of the fringe effects as a precursor to major changes in the bubble, but yeah... how to tell the difference between a patch, and a permanent leak. Easy.... just sell at the peak.

 

[dd564]

I try not to worry about things like this.

Bottom line:
Am I better off than 50% of my neighbors. If so, I'll be okay.