Did the Federal Reserve cause the market correction?

Are you saying were living an unsustainable lifestyle on borrowed money?
 
indiajust said:
The purpose of a central bank is to fund the government, no matter how wasteful or profligate that government becomes. The consequence is currency destruction, since taxes are visible and eventually opposed, but economists can manipulate policy, create QE and then take trillions right out the front door. Oceans 11 monetary policy, via boredom and PhD quackery.
The Fed inflates the bubbles, but is usually far enough away from the scene of the crime when it pops to avoid the blame. Financial bubbles are unstable, like a pile of loose marbles, stacked beyond the angle of repose. Snow avalanches are a similar analogy. Anything can be the proximate trigger to release the bubble, but the ultimate cause is artificially low cost of money (low interest rates).
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With all due respect, your first sentence is just plain wrong, which destroys the credibility of your entire post. Perhaps you need to take an elementary economics course before posting further.

The Fed has nothing to do with funding the government. The Fed regulates banks and manages the money supply.

The "Fed" has three main functions. They are to provide and maintain an effective payments system, supervise and regulate banking operations, and conduct monetary policy.
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The fed has failed at all three. Perhaps they should take your economics course.
 
Wow! I'm going to start watching for black helicopters! Do you guys think a tinfoil hat would help at all?
 
Free bird said:
The fed has failed at all three. Perhaps they should take your economics course.
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I guess that we'll agree to disagree.... the banking system is running well, inflation is low and stable, and unemployment is low... not perfect, but pretty good IMO.
 
pb4uski said:
With all due respect, your first sentence is just plain wrong, which destroys the credibility of your entire post. Perhaps you need to take an elementary economics course before posting further.

The Fed has nothing to do with funding the government. The Fed regulates banks and manages the money supply.
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So when the Fed majically created money via various QE programs and then purchased trillions of government loans, which it still carries on its "balance sheet" it was not funding the government? And it does not still do so?



And when the Fed suppresses interest rates, that has nothing to do with a government that would default if it had to pay market rates?


Follow the money. Not the rhetoric. Or have you forgotten economics as well as etiquette?
 
Yeah you make a good point. Hopefully we can prosper despite the glaring issues. I just need my luck to hold out another 20 years.
 
I'm dumb as a post & I have no etiquette. I was told I was perfect for the internet.
 
indiajust said:
So when the Fed majically created money via various QE programs and then purchased trillions of government loans, which it still carries on its "balance sheet" it was not funding the government? And it does not still do so?



And when the Fed suppresses interest rates, that has nothing to do with a government that would default if it had to pay market rates?


Follow the money. Not the rhetoric. Or have you forgotten economics as well as etiquette?
Click to expand...

No, not funding the government... the Fed bought existing debt from member banks... none of the money went to the government... it went to member banks to provide liquidity for lending. The government did benefit indirectly in that the demand of QE purchases held interest rates low.

Your spelling could use improvement too... majically?
 
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Hey now PB keep er in the holster. Sheriff is is about to run someone in on drunk & disorderderly. Were not all good spellers. I fat finger this fangled deevice all the time. No offense
 
If you are going to use the arcane structure of the Fed to hide from truth, there can be no middle ground.


The Fed is the ultimate GSE, more destructive than the lesser GSE's, Fannie and Freddie, that it aided and abetted while creating the worldwide credit bubble that popped in 2009. It is a tool of empire, both financial and economic. It centralizes financial and economic power in a largely unaccountable priesthood. It serves its owners, the US banking system; and its masters, FedGov. All the rest is smoke and mirrors. Don't fight the Fed, they directly control the price of money, the interest rate itself.


I remember when majic was an acceptable alternative spelling. It appears time has moved on. It just feels more majical to me than magic. You're right, majic is gone. And hopefully the third (and final?) US Central Bank will join it in the graveyard. But I don't think I will live long enough to see the return of free market capitalism in the US. Hoping that the empire will re-learn an old trick is magical thinking.
 
OldShooter said:
Wow! I'm going to start watching for black helicopters! Do you guys think a tinfoil hat would help at all?
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Don't forget to use a ground strap on that helmet! Can't block them CIA radio waves without a ground strap !
Of course GravitySucks Ground Strap are the only E-R.org certified ground straps.
 
I totally agree with W2R. The talking heads want engagement and the best emotions for engagement are fear and anger. They are in the business of selling ads, not investing. To a very large extent investors need to lose the news. But if everyone is fearful I am generally happy. When everyone is happy, I am generally concerned. And when I don't know what to do, I do nothing. I have lost the most money by selling ie. by getting smoked out of excellent but volatile companies that went on to staggering multiples back when I used to listen, and made most of the money doing little to nothing.
 
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I do miss the aluminium foil headgear. Kidding aside, don't fight the fed says it all. The US is half the worlds economic output. So the price of credit for half the planet is controlled by a handful of very strange people inside a convoluted organizational structure that is extremely secretive whose cryptic communiques are analysed like the stoned pronouncements from the oracles at Delphi.
The irony and comedy of the situation are hilarious. That this is confused with free market capitalism is equally laughable.
The Fed is a antique bull in an increasingly interconnected china shop of world wide commerce. I don't think the need for institutional change is a tinfoil statement.
 
Might try your hand at writing novel. You seem to have a knack. I’m impressed.
 
indiajust said:
I do miss the aluminium foil headgear. Kidding aside, don't fight the fed says it all. The US is half the worlds economic output. So the price of credit for half the planet is controlled by a handful of very strange people inside a convoluted organizational structure that is extremely secretive whose cryptic communiques are analysed like the stoned pronouncements from the oracles at Delphi.
The irony and comedy of the situation are hilarious. That this is confused with free market capitalism is equally laughable.
The Fed is a antique bull in an increasingly interconnected china shop of world wide commerce. I don't think the need for institutional change is a tinfoil statement.
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OK, got it. Almost as good as "nattering nabobs of negativism."

Please give us a summary of your academic and professional credentials and your professional experience in macroeconomics so that we can e evaluate the likelihood that your opinions have value.
 
Credentialing and policing the internet blogosphere? Including mainstream media? Or is some media more equal than others?
 
Tin foil hat or not, I prefer a relatively independent body, with an economics/finance background, rather than 535 Congresscritters and the POTUS all trying to set policy according to whether it improves their chance of reelection...
 
HFWR said:
Tin foil hat or not, I prefer a relatively independent body, with an economics/finance background, rather than 535 Congresscritters and the POTUS all trying to set policy according to whether it improves their chance of reelection...
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Agreed. For all its flaws, the Fed is far preferable to management of the economy the way they do it, for example, in Turkey or South Africa.

The whole deal, though, is arguably based on a foundation of sand. Nate Silver's book "the signal and the noise" has a very interesting chapter on economic forecasting that essentially concludes that it is impossible.

IMO it's probably like Churchill's observation on democracy (https://winstonchurchill.org/resources/quotes/the-worst-form-of-government/). The US central banking system is probably be the worst system except for all the others that have been tried.
 
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woof. Also in agreement. The creature from Jekyll Island has many warts. The risk in advocating change to the Fed is the real possibility of taking a step backward, which no one wants. I have no desire to experience the currency chaos of Venezuela, South Africa, Turkey... (fill in the blank). Yet I admire the decentralized approach of Hong Kong and Switzerland. Can we gain access to the upside while avoiding the downside? Or is that impossible? I'm obviously on the hopeful side. But wary.



The US was setup without a central bank, operated about half the time without it, and had quite a run. The days of running a country on an explicit gold standard are long gone. That part of the constitution has been dead for well over a century. Ain't coming back. The Fed is on the Mall for a reason, the illusion of political independence is thin.


I lost a career, 2 relationships, and barely survived a forced march to renovate and sell a house. From my perspective, eliminating the Fed can help limit this kind of misery from being inflicted on the next generations. An emotional choice.


Without interest rate manipulation, the cost of perpetual war cannot be deferred with debt. Military adventurism of the empire would be more expensive and less prevalent.


Less war, less chaos, more freedom... what's not to love?
 
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