[FloridaGirl]

The 1st quarter GDP increase was 0.4% and the 2nd quarter GDP increase was 1.3% which has an average of about .9%. Now compare that with the amount of money pumped into the system via Treasuries purchased and that rate is about 9%.

So it seems that the system would have contracted at an 8% annual rate without the Feds money printing. Isn't that a drepression level? They say we are in a recovery but I believe we are really never left the recession/depression. They just covered it up for a while with printed money. There is a limit to how long you can cover up such a thing.

Getting a .9% GDP increase with 9% added money is not a very good return.

And they're still saying the world has not given up on the Treasuries as they point out that the rate has not increased.

By the way, the Fed is still buying a few billion a week of Treasuries (QE Light).

[Sixstrings]

You're much better on these than I am FloridaGirl..

What I wonder is, I read about so much worldwide demand for our bonds. So is the Fed still monetizing? There's so much demand to get money out of Europe I'd think we won't have any trouble selling bonds after this debt ceiling increase.

[FloridaGirl]

Surprisingly, during QEII, foreign US bond holdings went up about $100 billion (Nov-May, http://www.treasury.gov/resource-center ... ts/mfh.txt). Considering that the Fed bought $200 billion more than the increase in debt, I assume that domestic holders must have sold out $300 billion. But the stock market had been going up over that time so that probably drove movement from bonds paying almost nothing to stocks. Now with stocks going down, there could very well be a flight to safety.

On the other hand, a Chinese rating agency just downgraded US from A+ to A which may drive some Chinese selling.

But consider that the Treasury has been short changing pension plans while the debt ceiling held so they are probably going to have to issue extra Treasuries to make up for that. I also heard that $500 billion dollars worth of Treasuries are coming due this month.

All in all, it's hard to say what the short term demand for Treasuries is but I really doubt there $1.4 trillion a year worth of Treasury demand at anywhere near these rates, especially with this potential default scare.

Any guesses when QE III will be announced?

[Sixstrings]

All in all, it's hard to say what the short term demand for Treasuries is but I really doubt there $1.4 trillion a year worth of Treasury demand at anywhere near these rates, especially with this potential default scare.

Any guesses when QE III will be announced?

US Treasuries will continue to sell until another reserve currency alternative rises. Then we Americans will have a real problem on our hands. The new IMF chief says this is clearly going to happen, just as the world transitioned away from the pound stirling, but she says it will be long term and gradual.

I wonder how the UK made that transition.. and if the situations are in fact comparable, stirling world reserve vs. US dollar world reserve. It's all rather unfair for Americans, the average American never asked for his dollars to be world reserve -- and therefore vulnerable to collapse if and when the world walks away from it.

As for QEIII.. as you've probably read Floridagirl, there's talk about it. How funny that Tea Partiers think they're winning some great anti-Keynsianism battle in Congress while they're ignorant of central banking and its power over the dollar. It makes no sense at all to take one nickel from senior citizens if the Fed will just give another trillion to hedge funds and Wall Street elite.

If the market keeps tanking, the Fed will step in with more QE. They'll pump the market up with hot money. The whole thing is nonsense, that's so damaging to markets. Markets aren't supposed to work that way. The only acceptable QE kind of program should be done through congressional spending -- Great Depression style; jobs programs, infrastructure, real things in the real economy not the bubble on Wall Street.

[Cloud9]

Interesting, I thought the Tea Party came into being because they thought both parties had been bought out by the banks.

[Novus]

Interesting, I thought the Tea Party came into being because they thought both parties had been bought out by the banks.

It is quite obvious now the banks bought out the Tea Party too. I would say it was the cheapest party ever bought. It took the banks less than two years to hijack the party that represented main streets' uprising against wall street and turn it into a movement of corporate brown shirts.

[Revi]

Here's a talk about the Fed. Get through the Avengers and it starts at 6:30 minutes into it.

They talk about how the Fed owns the stock market, and how they drive people into it with very tiny amounts of interest in their savings. "Central Bankers believe they can see the future."

http://www.zerohedge.com/news/jim-grant ... ock-market

[Ferretlover]

Well, really! These people need to read at PO.com. This has been predicted for ages!
Notes show Fed sees ominous signs for economy
By MARTIN CRUTSINGER, Associated Press

(Updated 3:01 p.m. Eastern) WASHINGTON -- The Federal Reserve is leaning toward taking further action to support the struggling U.S. economy. But minutes of the Fed's June meeting show policymakers are at odds over whether the economy needs more help now. …
Many economists predict the Fed will hold off for one more meeting and give the job market a little longer to show improvement. If it doesn't show gains, the Fed could announce some new action at its Sept. 12-13 meeting.
Since the recession, the Fed has bought more than $2 trillion in Treasury bonds and mortgage-backed securities, expanding its portfolio to more than $2.8 trillion. …

MSNBC

[deMolay]

Printing more worthless money to keep the stock market on life support until after the election is not going to save anyone. The US, the EU, Japan, China and India are all collapsing, the bugs are hitting the windshield. The Obama Hopey Changey Thingey is about to hit the wall and go over the cliff. Many hand wringing socialists in the MSM are scrambling for the words to apologise for the worst President in the history of the USA. Biggest failure ever. Let's see if the pathological Liar In Chief and fool you one more time....

[Tanada]

How much longer will the Ponzi scheme hold together?

[Subjectivist]

It's a scary prospect, and a concern that's gotten louder and louder over the past year. In economic circles, it goes by the alliterative name of "secular stagnation." And it's a phrase that Fed watchers are likely to hear more and more in the months ahead.

Recent comments by the vice chairman of the Federal Reserve, Stanley Fischer, indicate questions within the central bank about whether the slow growth that has followed the recent recession could reflect, or at least could potentially morph into, longer-term issues within the economy. And while Fischer avoided the phrase "secular stagnation" in his Monday speech, Minneapolis Fed President Narayana Kocherlakota is planning to host a November symposium that directly addresses the issue of secular stagnation by name, CNBC has learned.

"I think there's a lot of concern about how long this will last, and I think that's certainly high on the agenda right now. At least people are entertaining that possibility now that it could drag on for longer," said Brown University associate professor of economics Gauti Eggertsson, who authored (along with fellow Brown economist Neil Mehrotra) the landmark paper "A Model of Secular Stagnation," which provides an in-depth explanation of how a long period of low growth could come about.

The Federal Reserve is starting to admit hat endless money printing is not a solution. Time to get ready for Great Recession Phase 2. More at the link.
http://www.cnbc.com/id/101914044#_gus

[Pops]

"It is unwise to underestimate human ingenuity," Fischer said.

How often do we hear that yet more and more the economy is one constructed out of pure ingenuity, dreaming up ever more inventive ways for money to make money and nothing else.

What could be more inventive than taking zero interest money from the government and loaning it out at 3-5-10 or more percent?

But we are also very ingenious in reducing the role of humans in the manufacturing of actual stuff. So much so that they are increasingly required only at the last step, the purchasing of the final product.

Kind of presents a conundrum
.

[Subjectivist]

It's official, rates are going up 25 basis points.

The widely anticipated decision, a milestone in the Fed’s postcrisis stimulus campaign, ends a seven-year period in which the Fed held short-term rates near zero. Even as it raises its benchmark interest rate by 0.25 percentage points, to a range of 0.25 to 0.5 percent, however, the Fed emphasized subsequent increases would come slowly.

http://www.nytimes.com/2015/12/17/busin ... .html?_r=0

[ennui2]

This is quite a thread bump. I'm glad this is happening so we can begin to see how people's dire predictions hold out.