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THE Federal Reserve Thread pt 2 (merged)

Discussions about the economic and financial ramifications of hydrocarbon depletion.

Re: Fed divided, asks banks how many trillions they should p

Unread postby pstarr » Thu 28 Oct 2010, 13:08:44

Plantagenet wrote:the current recession was partly triggered by the $147 oil peak of 2008.

The weak, jobless Obama recovery
So which is it? Do you have any idea? Is this World Financial Crisis a consequence of a few overpriced homes and a market crash in Cincinnati, Oh. (that is what supposedly sparked the meltdown), Obama's bad economic policy, or Peak Oil? Or are you going to waffle and say all three---but mostly Obama? I expect the latter.

Truth is the World is in Collapse and It ain't getting better. No amount of QE2-# is going to bring back the good ole days. Expect more unemployment and slower response time here at PO.com. :twisted:
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Re: Fed divided, asks banks how many trillions they should p

Unread postby Mesuge » Thu 28 Oct 2010, 13:27:10

Hm, it seems you are quite underestimating the ruling gang of the U.S.
They enjoy docile domestic public, lapdog paid for left-right, even "liberal and progressive new media", Repukratic form of government, global military power and what have you. Are you going to trash it? No, there is a lot of stuff to be yet milked out of the US and the world. Wake me up when the USD/EUR par is ~1:3 and/or the U.S. choppers are seizing Royal Saudi 747 full of incomming gold bricks on its home airport, as seen on CNN live.

PS Six, thanks for the article anyway, this was just a general rant..
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Re: Fed divided, asks banks how many trillions they should p

Unread postby The_Toecutter » Mon 01 Nov 2010, 17:33:02

Mesuge wrote:Wake me up when the USD/EUR par is ~1:3 and/or the U.S. choppers are seizing Royal Saudi 747 full of incomming gold bricks on its home airport, as seen on CNN live.


Such a scenario could potentially occur tomorrow... the dollar is still useful largely because of all of the handouts to the banks, and the same trick is not going to work forever. One day, due to a series of trigger events(some of which may have already occurred), Americans are going to realize it's just paper, and the real DOOM will begin. :twisted:
The unnecessary felling of a tree, perhaps the old growth of centuries, seems to me a crime little short of murder. ~Thomas Jefferson
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Re: Fed divided, asks banks how many trillions they should p

Unread postby Ludi » Mon 01 Nov 2010, 19:52:10

The_Toecutter wrote: One day, due to a series of trigger events(some of which may have already occurred), Americans are going to realize it's just paper, and the real DOOM will begin. :twisted:



Really? What will happen?
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Re: Fed divided, asks banks how many trillions they should p

Unread postby The_Toecutter » Tue 02 Nov 2010, 00:22:17

Assuming that nothing is done to remedy the problem, hyperinflation; the American dollar is not backed by any real assets, and there are far more dollars in circulation(through the swapping of derivatives) than all of the tangible assets on Earth combined are currently worth.

We could instead have a more favorable outcome where the banks are forced to wipe away all of the bad and fraudulent debt(some banks have over-leveraged themselves as much as 40:1, most have sold the same debt to multiple parties, ect.). I don't think that will happen, especially judging from the actions of Congressmen from both parties.
The unnecessary felling of a tree, perhaps the old growth of centuries, seems to me a crime little short of murder. ~Thomas Jefferson
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Re: Fed divided, asks banks how many trillions they should p

Unread postby Mesuge » Tue 02 Nov 2010, 06:15:48

Toe, at the moment, it seems, it all depends on the creditor nations, e.g. if the euros figure out in their analysis, they can shift most of their exports into eurasia/china, they will dump the "peg" to petrodollar, eat the price of worthless US paper etc., simple cost/benefit analysis. Similarly, the world's raw material exporting countries, who take major part in the recycling of petrodollars, also the chinese are brainstorming how to minimize losses, when reseting the current order of things. I guess we are not at that trigger on/off switch moment yet, getting close, they are all still in panic mode what to do next. So, expect a few more years of crazy standstill, however some trigger event can hasten it overnight, and that would be DOOM, at least temporarily.
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Re: Fed divided, asks banks how many trillions they should p

Unread postby Newfie » Tue 02 Nov 2010, 07:10:18

Do you think US military size/strength is of any consideration to the Euro countries????

Do they wonder what would happen if the US went Weimer and then descended into a totalitarian regime?

My guess is "not" but only because I don't think the Euro pols are any/much better than American pols.

Not sure what the scariest scenario is here, other than my complete inability to foresee which will occur (of these any many more) with any certainty.
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Re: Fed divided, asks banks how many trillions they should p

Unread postby Mesuge » Tue 02 Nov 2010, 11:16:58

Gone postal, going Weimar?
Well, that's a good question, scenario. If history is the judge the likely subplot in that case of truely global fast crashing is that many of these U.S. mil. bases around the world will be only partly relocated home, partly sold on black market and to creditor hosting nations, partly occupied by their renegate commanders etc.

What's the real strenght of the U.S. mil projecting power though?
It's the clockwork system 24/365, where several battlegroups, jets and what have you are ready to strike every minute, day and night, resupply, repair, rinse and repeat. The level of complexity to prop up such system is rather insane, so some would argue, it takes a little wave at home (funding, political instability) and it goes puff into million pieces.

In order that system to not be effective anymore, you need supply-links problems, in terms of energy, parts, personel. And that won't happen without a truely total systemic crash. Because you can always screw up the domestic issues and prop up the mil. boys instead. As example take the Russians during coldwar, they axed, or simply underdeveloped the consumer sector and placed more % of national income into the mil-industrial complex. The U.S. is not there yet, still too much fat laying on the streets.

So, I doubt we are there today, I guess the U.S. can walk into the pawnshop for a few more years. Also, the Weimar scenario is quite radical one in terms of timing, and as you said are the other prepared for such sudden dis-equilibrium? Everybody seems to be on the bandwagon make this transition as smooth as possible (rest of big global players), in their self-interest not rock the boat, obviously. But trigger event can create havoc.

Imagine, e.g. one good chunk of former battlegroup going with Gulf money (gold) as mercenaries with new master. Crazy and unpatriotic, impossible? Well, the living standard of many of these people is quite good, but suddenly going 2020 home to ~30-40% official unemployment and beyond crazy politics? Or continue your hobby like daily flying jets (and sometimes killing people), getting the paycheck in hard money, relocate family into Emirates "paradise" etc. You have got 5minutes on that decision, your admiral/general is a "father figure" you have known for 20 odd years, and now he sais "fuckit, I'm not going back to that hellhole, .. Congress now full of mexican druglords, .., third government in less than 6months, .."
Hm..

Lots of weird, low probability scenarios out there.
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Re: Fed divided, asks banks how many trillions they should p

Unread postby The_Toecutter » Tue 02 Nov 2010, 18:47:36

Mesuge wrote:Gone postal, going Weimar?
Well, that's a good question, scenario. If history is the judge the likely subplot in that case of truely global fast crashing is that many of these U.S. mil. bases around the world will be only partly relocated home, partly sold on black market and to creditor hosting nations, partly occupied by their renegate commanders etc.


I could imagine many weapons getting into the wrong hands because of this.

What's the real strenght of the U.S. mil projecting power though?
It's the clockwork system 24/365, where several battlegroups, jets and what have you are ready to strike every minute, day and night, resupply, repair, rinse and repeat. The level of complexity to prop up such system is rather insane, so some would argue, it takes a little wave at home (funding, political instability) and it goes puff into million pieces.

In order that system to not be effective anymore, you need supply-links problems, in terms of energy, parts, personel. And that won't happen without a truely total systemic crash. Because you can always screw up the domestic issues and prop up the mil. boys instead. As example take the Russians during coldwar, they axed, or simply underdeveloped the consumer sector and placed more % of national income into the mil-industrial complex. The U.S. is not there yet, still too much fat laying on the streets.


This system is designed to use force to seize what it needs. I don't see it failing unless it is either defeated in combat or ordered to stand down by those in power(unlikely).

No funding? Seize peoples' property after declaring a state of emergency and crack down on 'tax evasion', shooting or jailing anyone who doesn't comply. No oil? Seize it from other nations. Political instability? Go back home and make things stable, even if it means shitting all over the constitution, putting 'checkpoints' everywhere, having the ability to detain anyone and confiscate anything, ect. The legislation is already in place to allow such a scenario to occur...

Seems far more likely in the U.S., that if a crisis threatens the existence of our military-industrial complex, that totalitarianism will be used to extend its existence, than for it to wither away and die. The worst part is that a lot of Americans would agree with it.

So, I doubt we are there today, I guess the U.S. can walk into the pawnshop for a few more years.


In some places, those days may be numbered:

http://www.philly.com/dailynews/columnists/ronnie_polaneczky/20100618_Ronnie_Polaneczky__Shop_owner_rips_new_pawn_law.html

Article: It requires operators of pawn shops and precious-metals businesses (think cash-for-gold) to snap a digital photo of each customer and to obtain both an electronic imprint of the client's left thumb and a copy of the client's state-issued photo ID.


In a real fiscal emergency, the government of the U.S. would readily implement such a measure nationwide. Remember the gold confiscation under FDR? This would be a means to help enforce that should the government decide it is in their interest once again...

Also, the Weimar scenario is quite radical one in terms of timing, and as you said are the other prepared for such sudden dis-equilibrium? Everybody seems to be on the bandwagon make this transition as smooth as possible (rest of big global players), in their self-interest not rock the boat, obviously. But trigger event can create havoc.

Imagine, e.g. one good chunk of former battlegroup going with Gulf money (gold) as mercenaries with new master. Crazy and unpatriotic, impossible? Well, the living standard of many of these people is quite good, but suddenly going 2020 home to ~30-40% official unemployment and beyond crazy politics? Or continue your hobby like daily flying jets (and sometimes killing people), getting the paycheck in hard money, relocate family into Emirates "paradise" etc. You have got 5minutes on that decision, your admiral/general is a "father figure" you have known for 20 odd years, and now he sais "fuckit, I'm not going back to that hellhole, .. Congress now full of mexican druglords, .., third government in less than 6months, .."
Hm..

Lots of weird, low probability scenarios out there.


There's so many of those weird, low probability scenarios that some of them are going to come true with time... Who'd have thought, for example, that the U.S. government would use a terrorist attack as an excuse to strip Americans of their liberties, and then attack another country for oil that had nothing to do whatsoever with said attacks using the attacks as an excuse? Who would have thought that a wellhead for a random oil rig would have failed, causing massive destruction of ocean life within the area affected, and exposing millions of people to carcinogens?

Given that the 'Weimar Scenario' has so many similar examples in history, especially after massive quantitative easing and bank bailouts had become fiscal policy, I think over the long term such a scenario in the U.S. is virtually guaranteed(barring a massive plague that causes a dieoff, nuclear war, ect.). WHEN it will happen, there's no precise way of knowing... I can say with confidence, however, that the U.S. is trending in that direction; seen various commodity prices lately? Combine this with a fiscal policy that has historically lead to massive inflation in other nations that have adopted similar policies. Time will tell what is going on, but something is rotten in the U.S.
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Fed buys $7.2e9 in first QE2 buyback

Unread postby mattduke » Sun 14 Nov 2010, 21:33:47

The Federal Reserve Bank of New York bought $7.229 billion in Treasury bonds on Friday, the first operation as the central bank engages in a second round of quantitative easing to support lending and spending.

Don't miss the comments section.
http://www.marketwatch.com/story/fed-bu ... 12-1138470

Please recall Bernanke's testimony before Congress where he stated:
“Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” Bernanke said in response to a question. “The Federal Reserve will not monetize the debt.”

http://www.bloomberg.com/apps/news?pid= ... mj05AcqWHo
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Daniel_Plainview » Sun 14 Nov 2010, 21:41:28

The Federal Reserve Bank of New York bought $7.229 billion in Treasury bonds on Friday, the first operation as the central bank engages in a second round of quantitative easing to support lending and spending.

... And so it begins ....
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby mattduke » Sun 14 Nov 2010, 21:51:07

Long treasuries actually hit their highs a couple months ago during the anticipatory buildup to QE2. That's when I put on a short trade. I've been waiting years to go short and I think I nailed the top within two weeks, thank you very much. Since then, the long bonds have been dropping despite these purchases, and TBT is up over 20% off the lows. Sure, they can rally again in case of the euro crisis du jour, but it's all downhill from here.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Tyler_JC » Mon 15 Nov 2010, 20:00:24

[not to be a name dropper...but...]

This afternoon I gave a presentation before a few economists at the Federal Reserve Bank of Boston. Not only do these people support QE2. They actually think it doesn't go far enough.

They even liked my group's suggestion that we offer negative interest rates on excess reserves held at the Fed (i.e. we punish banks that aren't lending out their excess cash).

QE2 is not the last round of money printing, not by a long shot.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Sixstrings » Mon 15 Nov 2010, 20:11:34

Tyler_JC wrote:This afternoon I gave a presentation before a few economists at the Federal Reserve Bank of Boston. Not only do these people support QE2. They actually think it doesn't go far enough.


And not a one of those guys has to worry about the cost of eggs, bacon or a gallon of gas.

[not to be a name dropper...but...]


Yes, I am impressed you give presentations to the Federal Reserve. 8O Too bad you're not a doomer though, missed opportunity there.

They even liked my group's suggestion that we offer negative interest rates on excess reserves held at the Fed (i.e. we punish banks that aren't lending out their excess cash).


That won't work Tyler, and you and the Fed guys you spoke to should know that. The banks still won't lend. They'll just buy more stocks or commodities. Negative interests rates will only aggravate the coming inflation. But I guess that's their plan, eh? That hyperinflation will save us?

QE2 is not the last round of money printing, not by a long shot.


You're right.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Tyler_JC » Mon 15 Nov 2010, 23:57:05

I'm being coy here. I went to the Fed as part of a university competition, not in any professional capacity.

Negative interest rates on excess reserves would encourage them to lend more money to consumers/businesses or even just hand out larger dividends to shareholders.

Most of the money being held at the Fed is actually coming from traditional banks, not Goldman Sachs. These kinds of banks don't speculate in the stock market.

They don't want hyperinflation. They want the price level to rise about 10%, giving a little unearned home equity to the millions of people currently sitting on underwater mortgages.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby sparky » Tue 16 Nov 2010, 00:45:53

.
The QE2 is pretty controversial across the board
economists are totally divided , the majority just hate it
Foreign finances ministers are pretty vocal about it

but , as far as the Germans and Chineses are concerned ,
....I don't remember them screaming the dollar was overvalued ( as it was for the last twenty years )
....the dollar is an U.S. government device , they can do with it whatever they wish
if other were using it , as an international means of exchange that is they problem

Tough titties ,
the reserve bank concern is above all American concern
it's nice to be nice to everybody but , that's not the point really

Mr Bernanke has been doing pretty good so far , the whole economy didn't go into a catastrophic melt down as it very well have done
It looks like he is flying by sight in the fog
I'm not sure he fully know what he is doing , probably nobody else does
that is missing the main object ,
he is in charge and he is doing something , you can blame him but you can't fault him for hiding in the paper bushes
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Keith_McClary » Tue 16 Nov 2010, 14:01:38

Image
Quantitative Easing Explained
Don't go asking me for 7 minutes of your life back.
===============================================================
They seem to believe that if they say "Bakken, Brazil, offshore, tar sands, technology" enough times in a row, it will make $100-a-barrel oil go away.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Sixstrings » Tue 16 Nov 2010, 16:56:44

Keith_McClary wrote:Image
Quantitative Easing Explained
Don't go asking me for 7 minutes of your life back.


Wow, great video. :lol:

And 860,695 views in just the last 5 days.. at least the truth is getting out.
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Sixstrings » Tue 16 Nov 2010, 17:03:17

Tyler_JC wrote:These kinds of banks don't speculate in the stock market.


There's nothing legally stopping them though right? Glass–Steagall was repealed under Clinton.

They want the price level to rise about 10%, giving a little unearned home equity to the millions of people currently sitting on underwater mortgages.


So you think high inflation is going to be great for most Americans? What if wages don't correspondingly rise, or if there's no jobs recovery (which is a given). How is higher and rising prices on everything going to help most folks?

I guess you're assuming corporations will share higher profits with employees and it will trickle down. But why would they do that when there's already a huge surplus of labor in the US and a bottomless pit of cheap labor in Asia?
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Re: Fed buys $7.2e9 in first QE2 buyback

Unread postby Keith_McClary » Tue 16 Nov 2010, 22:14:37

Sixstrings wrote:Wow, great video. :lol:

And 860,695 views in just the last 5 days.. at least the truth is getting out.

BTW, it was made with xtranormal's "TEXT-to-MOVIE":
If you can type,
you can make movies...

Anyone inspired to make the Oscar-winning PO movie?
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