[rockdoc123]

I know the spin is that the FED is trying do deny that their action re the Repro system meets the definition of what QE is. Part of the spin seems to be that the purchasing of the securities below a certain amount doesn't count as being a qualitative easing.

Not an expert but my understanding is the Fed was continually doing small purchases and sales to keep the system balanced for several years prior to 2008. Does that mean they have been continually in quantitative easing? Definitions aside I think the issue is whether or not they see this as just trying to get the balance right or instead having to intervene because the system is collapsing and in trouble. The Fed has stated it is the former not the latter.

[shortonoil]

will the rest of the world do regarding the dollar, if the US moves toward isolationism? I don't think they will move to put the euro into the same place. Instead, it is much more likely we would see some sort of crypto thing happen, but put together in a transparent enough fashion that it can be trusted. That might be possible in this information tracking world. But the dollar is not going to fall apart on its own. The dollar is where it is because of Bretton Woods. We may be headed for a post-Bretton Woods world. Even in such a world there would be need for a reserve currency. It just doesn't have to be the dollar.

The FED probably won't be able to hold it together much longer. (see post above). Like QE that is now POMO, that is not QE, they will call it a dollar. So, get ready for a shafting; someone has to make up for $331 trillion in debt, and it isn't going to be FED & Friends.

If is looks like a Skunk, walks like a Skunk, and smells like a Skunk; it will turn out to be a Skunk. Almost every single time!

[GHung]

...............

Not an expert but my understanding is the Fed was continually doing small purchases and sales to keep the system balanced for several years prior to 2008. Does that mean they have been continually in quantitative easing? Definitions aside I think the issue is whether or not they see this as just trying to get the balance right or instead having to intervene because the system is collapsing and in trouble. .......

Get the balance right? What "balance" would that be?

https://srsroccoreport.com/more-black-s ... wo-months/

More Black Swans Arrive As U.S. Debt Balloons $800 Billion In Two Months

For the first half of the year, the U.S. debt balance remained right around the $22 trillion level. However, after the Whitehouse and Congress struck a deal on July 22nd, the debt ceiling was raised, and as we can see in the table above, the U.S. debt jumped $291 billion in one day (August 2nd). The U.S. government was making up for borrowed funds since the beginning of the year.

If we look at the next chart that shows an increase in U.S. debt over the past two weeks, it jumped another $227 billion:

Yep. That's $814 Billion in two months and a week. You guys can hand-wave and dismiss that all you want, but I would say you're as batshit crazy as Trump is if you think that doesn't matter much. Methinks any dream of "balance" flew the coop some time back. But if it makes you feel better .......

Since the beginning of August, the total U.S. federal debt has increased from $22,023 billion to $22,837 billion. Thus, the U.S. public debt has increased by nearly 4% in just two months! Here is the debt table from TreasuryDirect.gov website since August 1st:

What is clear is that the Fed has no choice but to keep insanely extending and pretending,,, JUST A LITTLE BIT LONGER,,,,, until it can't. Do you think there's a Plan B? If so, please share so we can all have a good laugh.

[Armageddon]

The Federal Reserve announcing a $1/2 Trillion (minimum) printing program which does not wish to identify itself as QE4, but rather identifies as transliquidityamplification

Right now it looks like the Fed is at QE 3.95 Trillion, next week should easily bring us QE 4.. Trillion and by next summer we will be looking at QE 4.5 to QE 5 trillion.

[shortonoil]

What is clear is that the Fed has no choice but to keep insanely extending and pretending,,, JUST A LITTLE BIT LONGER,,,,, until it can't. Do you think there's a Plan B? If so, please share so we can all have a good laugh.

With no possible solution to $331 trillion in existing, and growing debt, the FED will keep it up until there are no eligible borrowers remaining. After that they will put in high speed expressways to facilitate the bank runs. Plan B is to get out of Dodge before this blows, and they get hung. Powell is getting his villa on the French Rivera painted next week. They should have papered it with $100 bills, and saved some money.

[rockdoc123]

for those interested in what the Fed is thinking rather than just making stuff up:

https://www.ft.com/content/6c9f36e4-da22-11e9-8f9b-77216ebe1f17

For the second day running, the New York Fed has turned on its fire hose and pumped money into the financial system. There are signs that the $75bn it made available on Wednesday will help calm funding pressure in a geeky but important part of the bond market’s plumbing, the repurchase or repo sector. Many will recall that troubles in the repo market, where banks and investors borrow cash overnight using Treasuries as collateral, were a symptom of funding problems for investment banks in 2008. But that is not the current situation. Instead, this week’s sharp rise in overnight interest rates is a symptom of an issue that has been bubbling away for a couple of years. It ultimately means the US Federal Reserve will have to resume buying more Treasury debt, expanding its balance sheet. During the era of quantitative easing, the Fed injected money into the financial system by buying Treasury and mortgage bonds from banks, which then held that cash as excess reserves with the central bank. Those reserves peaked at $2.9tn in July 2014, and then began to fall. That is because the Fed began shrinking its balance sheet — by ceasing its bond purchases. At the same time, the amount of Treasury debt in circulation has expanded to fund the increasing US budget deficit.

When repo rates spike, as they did this week, that is a sign that the financial system does not have enough cash on hand. Such an outcome was foreseen a couple of years ago, when Lorie Logan, head of market operations and market analysis at the New York Fed, said in May 2017: “Upward pressure on overnight interest rates is the most direct indicator that reserves are becoming scarce.” The current figure of $1.4tn in bank reserves held at the Fed appears large, but much of it is tied up because of regulatory and liquidity requirements, according to analysts. That leaves little spare cash for banks to deploy when it becomes more difficult to borrow money in the repo market. This week’s spike in rates reflects two forces. Companies have pulled cash from money market accounts to pay corporates taxes for their September 15 deadline. Meanwhile, banks have been flooded with recent sales of Treasury debt that they need cash to pay for. The end result has been a spike in the overnight repo rate from about 2.25 per cent to a peak of 10 per cent. Joe LaVorgna at Natixis says: “Rising financing needs effectively drain reserves from the banking system because primary dealers need to [absorb] the Treasury auctions. The ensuing shortfall in reserves leads to a bidding up in the cost of overnight financing.” After the New York Fed’s temporary injections of money into the financial system, many in the market think a lasting solution will require the central bank to start expanding its balance sheet once more, albeit on a modest scale.  Thomas Costerg, senior economist at Pictet argues: “The Fed needs to leave a cushion of bank reserves and they will need to resume [Treasury] purchases.” Analysts at Bank of America Merrill Lynch estimate the Fed will purchase a total of $400bn in Treasuries over the next year. This reflects $250bn that restores “an ‘abundant’ reserve level plus a buffer” of $150bn a year “to maintain this reserve level”.

the author suggests that this may be the first signs that a new QE will happen but right now it isn't.

[GHung]

for those interested in what the Fed is thinking rather than just making stuff up:[.............

Who is making stuff up???? Yes, the subscription only FT NEVER makes stuff up,, right? Meanwhile, the debt numbers I posted above are straight from the government sources without the Finacial Times cheerleading. Then, again, maybe the $800+ billion increase in the debt over about 9 weeks is too scary for you to address without you accusing others of "making stuff up", eh?
Must suck having to make stuff up about other folks supposedly making stuff up just to get through another day.

[shortonoil]

the author suggests that this may be the first signs that a new QE will happen but right now it isn't.

So the banks ran out of money again? That seems to be happening a lot recently. Must be some regulatory glitch, or bad water! We know they have all this spare cash; the FED says $1.4 trillion. They are just having technical difficulties locating it. Someone said that they saw it in the top drawer of a desk next to the coffee pot? It is just temporarily misplaced!

So the FED will pump 2% of the nation's GDP into the banking system and everything will be fixed, forever. They may be able to keep this scam up until next Christmas?

Anyway, the stock market is going nuts over a trade agreement that has not yet been written. That will take 3 more weeks, and the Chinese pinky swore that they would not change their mind. Trump said he world forfeit one piece of chocolate cake. Its as good as done.

If you are investing by a Wall Street broker; get your brain removed. You really don't need it anymore.

[rockdoc123]

Must suck having to make stuff up about other folks supposedly making stuff up just to get through another day.

are you off your meds? I posted a discussion about the Feds activities from an article on FT. Exactly how is that making stuff up?

Do you not think that if the Fed had entered into an aggressive quantitative easing as they have done on several occasions post 2008 there would not be an accelerated hue and cry across all the financial news? Instead, we pretty much have crickets out there.
Powell has stated that the intent of intervention in the repo market is to facilitate short-term lending rather than to stimulate the US economy (which is the point of quantitative easing). The Feds view is the economy is doing fine right now although there are some risk developing, hence temporary intervention rather than full-on quantitative easing. But some here get in a tizzy when the Fed does nothing and then they get in a tizzy when the Fed does anything.

And as to adding $800 billion in debt. At an interest rate of 5% (likely higher than the government would have to pay) that would amount to less than 1% of the 2020 proposed US budget. The current debt payment makes up about 8% of the annual budget so this is not something that will bankrupt the system.

another comment from FT pointing out the difference

https://www.ft.com/content/f228f44c-e9f6-11e9-a240-3b065ef5fc55

In recent weeks, the Federal Reserve Bank of New York has injected billions of cash reserves into short-term lending markets to ease the pressures that bubbled up in September and sent the cost of borrowing cash overnight via repurchase, or repo, agreements as high as 10 per cent.

Those measures have brought the so-called repo rate back within a normal range — about 1.8 per cent — but strategists say such pressures could crop up again without a more permanent fix.

“This was the only sustainable and permanent solution,” said Priya Misra, head of global rates strategy at TD Securities. “The risk is that this gets miscommunicated as QE. Operationally it will look a lot like QE, but it is not.”

[GHung]

Must suck having to make stuff up about other folks supposedly making stuff up just to get through another day.

are you off your meds? I posted a discussion about the Feds activities from an article on FT. Exactly how is that making stuff up?

Do you not think that if the Fed had entered into an aggressive quantitative easing as they have done on several occasions post 2008 there would not be an accelerated hue and cry across all the financial news? Instead, we pretty much have crickets out there.
Powell has stated that the intent of intervention in the repo market is to facilitate short-term lending rather than to stimulate the US economy (which is the point of quantitative easing). The Feds view is the economy is doing fine right now although there are some risk developing, hence temporary intervention rather than full-on quantitative easing. But some here get in a tizzy when the Fed does nothing and then they get in a tizzy when the Fed does anything.

And as to adding $800 billion in debt. At an interest rate of 5% (likely higher than the government would have to pay) that would amount to less than 1% of the 2020 proposed US budget. The current debt payment makes up about 8% of the annual budget so this is not something that will bankrupt the system.

another comment from FT pointing out the difference

https://www.ft.com/content/f228f44c-e9f6-11e9-a240-3b065ef5fc55

In recent weeks, the Federal Reserve Bank of New York has injected billions of cash reserves into short-term lending markets to ease the pressures that bubbled up in September and sent the cost of borrowing cash overnight via repurchase, or repo, agreements as high as 10 per cent.

Those measures have brought the so-called repo rate back within a normal range — about 1.8 per cent — but strategists say such pressures could crop up again without a more permanent fix.

“This was the only sustainable and permanent solution,” said Priya Misra, head of global rates strategy at TD Securities. “The risk is that this gets miscommunicated as QE. Operationally it will look a lot like QE, but it is not.”

Your making stuff up is you constantly insinuating that anyone you disagree with is "making stuff up". Sorry if you are too obtuse to grok that. And I don't do "meds". Maybe you need to double up on yours so you don't come across as being so high-and-mighty.

As for the silly argument about what is and what isn't "QE", please explain how that matters at all when the debt jumps nearly another $trillion in just a few months?
Maybe we should call it something like "revolving debt". That'll fix it.

[shortonoil]

Since the beginning of August, the total U.S. federal debt has increased from $22,023 billion to $22,837 billion. Thus, the U.S. public debt has increased by nearly 4% in just two months! Here is the debt table from TreasuryDirect.gov website since August 1st:

World debt increased by a little over 1% during that same 2 month period. The US government has gone on a spending spree to support its consumer economy. Since no one has any money, and apparently that includes the banks, the FED is QE'ing it into existence. QE is when they start buying government debt with imaginary money. Money that is created without the complimentary economic activity generated from the production of goods and services. $60 billion a month pays for a lot of Walmart cheese cake. This is how banana Republics die; the governments spends money they don't have, and can't raise. Rising debt means that the cash flow is going ever more the negative. When the cash flow stops, so does everything else. Then it ends in a revolution, Constitutional crisis, or a banking collapse.

Take your pick? Every day we are getting closer to any one of them.

In the meantime the debt will keep following the depletion curve, and depletion only goes one way!

[Armageddon]

Global Air Freight Decline Now Worst Since 2008 Financial Crisis

[evilgenius]

This talk about the dollar does make some sense, given Trump's anti-global agenda. What will the rest of the world do regarding the dollar, if the US moves toward isolationism? I don't think they will move to put the euro into the same place. Instead, it is much more likely we would see some sort of crypto thing happen, but put together in a transparent enough fashion that it can be trusted. That might be possible in this information tracking world. But the dollar is not going to fall apart on its own. The dollar is where it is because of Bretton Woods. We may be headed for a post-Bretton Woods world. Even in such a world there would be need for a reserve currency. It just doesn't have to be the dollar.

But one of the biggest weaknesses of crypto is it really is not transparent. The math is so complex, even with open source what's actually going on would only be comprehensible to a small segment of the population. Things could change, but crypto has a LONG way to go to gain serious credibility. Facebook is met with open derision by many, given its lack of trustworthiness and the idea of basing peoples' money on something it is involved with, much less leading. Crypto gets hacked. It's not insured. Visa cards and the dollar can offer security. Crypto isn't in the same league -- and I don't see that changing for decades.

I don't see why Trump himself would make anything existing remotely close to as acceptable as the dollar. Besides, for the umpteenth time, it's not 1944 (or even 1980). It's 2019 and the FX markets provide a far more viable and practical way to trade the major world currencies for anyone with money and a brain than any political agreement like Bretton Woods. Since re practicality, anyone can hold any net currency position they want (long or short) and react nearly instantly to any news if they want to change that position -- things like Bretton Woods are more or less a new point, 75 years later.

Now, in the long run, if the US continues to decline as an economic power, similar to what happened to Great Britian, then eventually, maybe something else like the Chinese Yuan, etc. could take its place, perhaps after some major event causes a big global meeting/agreement. But there's no need for formal announcements / agreements -- if China becomes very dominant over the US economically over time, the currency shift, and change in the value of the dollar, etc. would happen naturally, day by day and year by year, in the FX markets.

Absolutely right! Crypto is not transparent. It is widely used to fund crime and tax evasion. That's why the very scary thing of having to register to participate within the economy is possible. Right now, we're still pre 5g. Our collective imagination hasn't yet begun to think about such things. I refer to Bretton Woods because of the impact it had upon the way that people think. It's the kind of habit that sticks around, even though there aren't any compelling reasons for it to given what you said about markets. I suppose that is akin to how people participate in culture. That kind of habit may not be able to survive American isolationism, especially if artificial intelligence begins to repatriate American manufacturing in the manner that those seeking to "make America great again" are looking for. I don't think an isolationist, self-reliant America bodes well for the dollar as the world's reserve currency. That status works better for the de facto empire.

[evilgenius]

I think the real problem at work here, among all of this criticism of the Fed and TPTB, is that the minimum wage in America ought really to be something like $20 an hour. I don't know what the exact figure should work out to. But I think it lies much closer to $20 than $10.

I referred to how an idea like how Bretton Woods structured the world in the post WWII era as being akin to how people participate within a culture. The way they see things like the minimum wage, and what it means for them as they view the various aspects of their economy, may be just like that.

As it stands, the minimum wage reflects more of a clutching to some sort of safe idea regarding the impact of inflation. Perhaps people know instinctively that participating in an economy with the sort of responsive dynamic that adjusting the minimum wage that way would bring could lead to high inflation. Maybe they remember the wage/price spiral of the Nixon years?

Anyway, the money supply is mostly composed of the impact of borrowing. People who make lower wages have to borrow in order to keep participating. There's an implicit demand built into the scheme when wages don't keep up that pretty much guarantees that the benefits of an expanded money supply will gravitate towards those at the top. The poor aren't borrowing to invest, but to survive. All you need is the Milton Friedman mindset to spread so that it is common to all, such that when the Fed fights inflation they do it almost always in response to increases in worker's wages. It's a recipe for eventual extreme economic inequality.

[Outcast_Searcher]

I think the real problem at work here, among all of this criticism of the Fed and TPTB, is that the minimum wage in America ought really to be something like $20 an hour. I don't know what the exact figure should work out to. But I think it lies much closer to $20 than $10.

To make a flat statement like that re a national US minimum wage is incorrect, IMO. Perhaps in NYC, SF, LA, etc., where the cost of living is very high, a minimum wage of near $20, or even perhaps above $20 might make sense.

However, since I live in KY and know about numerous rural towns near central KY, and what things like rents and fast food costs, to say that minimum wage should be near $20 in low cost of living ares is just wrong. $10 might be too high, and certainly $15 would be much too high in terms of distorting things, driving up prices, making it unfair for people who had earned a wage of, say, double the federal minimal wage by progressing in their ordinary middle class job, etc.

When I worked at IBM, I remember there being tiered benefits with, say, 5 levels, dependent on the cost of living and the cost of said benefits and living generally in a given geographic area. Computers kept track of all that, and it worked rather well, overall.

If we're going to try to "fix" a minimum wage / inequality problem, let's at least approach it in a way that makes some sense. Government is capable of doing that -- IF some planning re the problem is done instead of a "just do something" mentality.

[Armageddon]

QE4 has begun. We now have trillion dollar budget deficits and more Quantitative Easing to finance them. It is important for everyone to understand that this is what it takes to keep our economy from falling into a new Depression. #QE4 #QE #Fed Read more:

https://richardduncaneconomics.com/quan ... ound-four/

[StarvingLion]

Accredited professional Physicist says: "We'll all fucking die"

http://backreaction.blogspot.com/2019/1 ... ticle.html

Sabine Hossenfelder11:22 AM, October 09, 2019
Pu,

I entirely understand that there are and will always be people who cannot comprehend even the simplest statements that I make. I was pointing out that I am entirely aware of the futility of the attempt to talk reason to people. We'll all fucking die from our own fucking dumbness and you can see it right here, in the comments on this blog.

[Outcast_Searcher]

As it stands, the minimum wage reflects more of a clutching to some sort of safe idea regarding the impact of inflation. Perhaps people know instinctively that participating in an economy with the sort of responsive dynamic that adjusting the minimum wage that way would bring could lead to high inflation. Maybe they remember the wage/price spiral of the Nixon years?

Spot on here, I think. (But maybe only for those old enough to have experienced and remember the 70's and 80's which high inflation and interest rates). Being 60, I have vivid memories of the 70's and early 80's inflation and how frightening it was. I remember being delighted and amazed when in my 401'K somewhere around age 25 to 27, I was able to get NO RISK tax deferred interest rates of about 14.5% on something that behaved like a short term bond fund. That seemed more attractive to me than the stock market at that point.

I'm 60. I vividly remember moving my bank account from the "premium" 5.75% "high" "Golden Nest Egg" account I'd had since I started stuffing lawn mowing and snow shoveling money in that at the ripe old age of 12. I moved it to 6 month CD's and rolled those over (you had to do that manually back then) shortly before entering college, say summer of '77.

I remember my teller remarking to a nearby teller "there goes another one", re my transaction. (I guess such accounts were becoming a thing of the past). I don't remember specifically what interest rate I got in '77, but I think it was near 10%. I DO remember getting rates like 15% and 16% near the peak around '81 - '82. I DO remember noticing prices rising in the grocery store every week and certainly EVERY MONTH when I started working, and finding that scary.

Around that time a friend told me he locked in 17% for a 30 month CD. Inflation was so variable, I was "scared" to do that, since I was investing my lifetime savings in CD's.

And working part time in the 70's starting in '76 and noticing the minimum wage, I certainly did figure that minimum wage rises might well be strengthening the wage/inflation spiral, even when such a raise impacted me. It seemed like sheer madness to me.

I remember being delighted and amazed when in my 401'K somewhere around age 25 to 27, I was able to get NO RISK tax deferred interest rates of about 14.5% on something that behaved like a short term bond fund. That seemed more attractive to me than the stock market at that point.

So I will say that if we're going to have a minimum wage policy, we should at least keep an eye on potential inflation, as part of the policy. Hopefully, since automation, etc. MAY have largely decoupled inflation from a tight correlation with wages, hopefully it wouldn't be a significant issue now. But I DON'T think we can just assume that and ignore it if inflation gets to spiraling again.

[StarvingLion]

lOOK OUT BELOW.... EIX stock has been in Total Collapse Mode in the past 5 days...from $76 to $71...Thats Commifornia!

Edison International is a public utility holding company based in Rosemead, California. Its subsidiaries include Southern California Edison, and unregulated non-utility business assets Edison Energy.

[Outcast_Searcher]

QE4 has begun. We now have trillion dollar budget deficits and more Quantitative Easing to finance them. It is important for everyone to understand that this is what it takes to keep our economy from falling into a new Depression. #QE4 #QE #Fed Read more:

https://richardduncaneconomics.com/quan ... ound-four/

And this is different than the "financial newsletters", etc. people have been peddling for the 35ish years I've been paying attention how? Including the first ones I saw, right after the main inflation period from the late 60's through the early 80's, proclaiming hyperinflation, buying gold, etc. was "the thing"? (Getting things exactly wrong, re the trend of the time). And they blamed Washington and debt and deficits. Imagine THAT!

But yeah, we should listen to you instead of the Fed, since your track record re financial predictions is so awesome.

Are you EVER going to talk about finances in context and think about proportions re the overall economy? Re things like the size of the economy, assets vs. debts, etc? Or is that too difficult? Or doesn't that tell the story you want to tell?