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briansd1.
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August 11, 2010 at 3:26 PM #590635August 11, 2010 at 3:34 PM #589599
Rich ToscanoKeymaster[quote=XBoxBoy][quote=Rich Toscano]
(Check today’s admission that the FOMC will engage in further QE for the latest exhibit).
[/quote]I’m assuming you’re referring to the fed’s announcement that they will reinvest principle from treasuries and other securities that have matured and been paid off. How is that quantitative easing? I thought quantitative easing was when the fed printed (created) new money and bought assets with newly created money. If they receive money for maturing securities and then reinvest that money where is the QE? If that’s not what you’re referring to then I’m curious, what policy are you referring to?[/quote]
Yes, you are correct, I was being sloppy in my use of the term.
Definitional quibbles aside, you are right that this does not itself increase their money printing. There was to be an implicit tightening as they let the maturing MBS mature; now they are preventing that tightening. So this is not an actual expansion of their balance sheet, but it is a loosening of policy compared to what they had previously said they would do.
Whatever you call it, I think it still supports the point I was trying to make…
August 11, 2010 at 3:34 PM #589693Rich ToscanoKeymaster[quote=XBoxBoy][quote=Rich Toscano]
(Check today’s admission that the FOMC will engage in further QE for the latest exhibit).
[/quote]I’m assuming you’re referring to the fed’s announcement that they will reinvest principle from treasuries and other securities that have matured and been paid off. How is that quantitative easing? I thought quantitative easing was when the fed printed (created) new money and bought assets with newly created money. If they receive money for maturing securities and then reinvest that money where is the QE? If that’s not what you’re referring to then I’m curious, what policy are you referring to?[/quote]
Yes, you are correct, I was being sloppy in my use of the term.
Definitional quibbles aside, you are right that this does not itself increase their money printing. There was to be an implicit tightening as they let the maturing MBS mature; now they are preventing that tightening. So this is not an actual expansion of their balance sheet, but it is a loosening of policy compared to what they had previously said they would do.
Whatever you call it, I think it still supports the point I was trying to make…
August 11, 2010 at 3:34 PM #590228Rich ToscanoKeymaster[quote=XBoxBoy][quote=Rich Toscano]
(Check today’s admission that the FOMC will engage in further QE for the latest exhibit).
[/quote]I’m assuming you’re referring to the fed’s announcement that they will reinvest principle from treasuries and other securities that have matured and been paid off. How is that quantitative easing? I thought quantitative easing was when the fed printed (created) new money and bought assets with newly created money. If they receive money for maturing securities and then reinvest that money where is the QE? If that’s not what you’re referring to then I’m curious, what policy are you referring to?[/quote]
Yes, you are correct, I was being sloppy in my use of the term.
Definitional quibbles aside, you are right that this does not itself increase their money printing. There was to be an implicit tightening as they let the maturing MBS mature; now they are preventing that tightening. So this is not an actual expansion of their balance sheet, but it is a loosening of policy compared to what they had previously said they would do.
Whatever you call it, I think it still supports the point I was trying to make…
August 11, 2010 at 3:34 PM #590336Rich ToscanoKeymaster[quote=XBoxBoy][quote=Rich Toscano]
(Check today’s admission that the FOMC will engage in further QE for the latest exhibit).
[/quote]I’m assuming you’re referring to the fed’s announcement that they will reinvest principle from treasuries and other securities that have matured and been paid off. How is that quantitative easing? I thought quantitative easing was when the fed printed (created) new money and bought assets with newly created money. If they receive money for maturing securities and then reinvest that money where is the QE? If that’s not what you’re referring to then I’m curious, what policy are you referring to?[/quote]
Yes, you are correct, I was being sloppy in my use of the term.
Definitional quibbles aside, you are right that this does not itself increase their money printing. There was to be an implicit tightening as they let the maturing MBS mature; now they are preventing that tightening. So this is not an actual expansion of their balance sheet, but it is a loosening of policy compared to what they had previously said they would do.
Whatever you call it, I think it still supports the point I was trying to make…
August 11, 2010 at 3:34 PM #590645Rich ToscanoKeymaster[quote=XBoxBoy][quote=Rich Toscano]
(Check today’s admission that the FOMC will engage in further QE for the latest exhibit).
[/quote]I’m assuming you’re referring to the fed’s announcement that they will reinvest principle from treasuries and other securities that have matured and been paid off. How is that quantitative easing? I thought quantitative easing was when the fed printed (created) new money and bought assets with newly created money. If they receive money for maturing securities and then reinvest that money where is the QE? If that’s not what you’re referring to then I’m curious, what policy are you referring to?[/quote]
Yes, you are correct, I was being sloppy in my use of the term.
Definitional quibbles aside, you are right that this does not itself increase their money printing. There was to be an implicit tightening as they let the maturing MBS mature; now they are preventing that tightening. So this is not an actual expansion of their balance sheet, but it is a loosening of policy compared to what they had previously said they would do.
Whatever you call it, I think it still supports the point I was trying to make…
August 11, 2010 at 3:47 PM #589609Eugene
Participant[quote=Rich Toscano]
…which allows them to spend it on something else. (Of course they may spend it on other investments, perhaps that’s what you are getting at).[/quote]Most sellers are going to be institutional and they are not going to spend that money on anything that matters for the inflation. Under normal circumstances, this kind of money creation would lower interest rates and stimulate borrowing. But, since short-term interest rates are already near zero, that’s not going to happen now. There could be a wealth effect / confidence effect if these manipulations lead to stock market growth, but probably not much (unless the Fed starts buying NASDAQ stocks directly).
[quote]They can always cut taxes and finance the difference with newly printed money, which as Bernanke famously noted, would be akin to dropping money from helicopters.[/quote]
As Mark Zandi (former McCain’s advisor, hardly a socialist) estimated back in 2008, direct spending on infrastructure and aid to state governments to preventing state-level layoffs is about 4 to 5 times more effective per dollar spent than extending Bush tax cuts.
August 11, 2010 at 3:47 PM #589703Participant[quote=Rich Toscano]
…which allows them to spend it on something else. (Of course they may spend it on other investments, perhaps that’s what you are getting at).[/quote]Most sellers are going to be institutional and they are not going to spend that money on anything that matters for the inflation. Under normal circumstances, this kind of money creation would lower interest rates and stimulate borrowing. But, since short-term interest rates are already near zero, that’s not going to happen now. There could be a wealth effect / confidence effect if these manipulations lead to stock market growth, but probably not much (unless the Fed starts buying NASDAQ stocks directly).
[quote]They can always cut taxes and finance the difference with newly printed money, which as Bernanke famously noted, would be akin to dropping money from helicopters.[/quote]
As Mark Zandi (former McCain’s advisor, hardly a socialist) estimated back in 2008, direct spending on infrastructure and aid to state governments to preventing state-level layoffs is about 4 to 5 times more effective per dollar spent than extending Bush tax cuts.
August 11, 2010 at 3:47 PM #590238Participant[quote=Rich Toscano]
…which allows them to spend it on something else. (Of course they may spend it on other investments, perhaps that’s what you are getting at).[/quote]Most sellers are going to be institutional and they are not going to spend that money on anything that matters for the inflation. Under normal circumstances, this kind of money creation would lower interest rates and stimulate borrowing. But, since short-term interest rates are already near zero, that’s not going to happen now. There could be a wealth effect / confidence effect if these manipulations lead to stock market growth, but probably not much (unless the Fed starts buying NASDAQ stocks directly).
[quote]They can always cut taxes and finance the difference with newly printed money, which as Bernanke famously noted, would be akin to dropping money from helicopters.[/quote]
As Mark Zandi (former McCain’s advisor, hardly a socialist) estimated back in 2008, direct spending on infrastructure and aid to state governments to preventing state-level layoffs is about 4 to 5 times more effective per dollar spent than extending Bush tax cuts.
August 11, 2010 at 3:47 PM #590346Participant[quote=Rich Toscano]
…which allows them to spend it on something else. (Of course they may spend it on other investments, perhaps that’s what you are getting at).[/quote]Most sellers are going to be institutional and they are not going to spend that money on anything that matters for the inflation. Under normal circumstances, this kind of money creation would lower interest rates and stimulate borrowing. But, since short-term interest rates are already near zero, that’s not going to happen now. There could be a wealth effect / confidence effect if these manipulations lead to stock market growth, but probably not much (unless the Fed starts buying NASDAQ stocks directly).
[quote]They can always cut taxes and finance the difference with newly printed money, which as Bernanke famously noted, would be akin to dropping money from helicopters.[/quote]
As Mark Zandi (former McCain’s advisor, hardly a socialist) estimated back in 2008, direct spending on infrastructure and aid to state governments to preventing state-level layoffs is about 4 to 5 times more effective per dollar spent than extending Bush tax cuts.
August 11, 2010 at 3:47 PM #590655Participant[quote=Rich Toscano]
…which allows them to spend it on something else. (Of course they may spend it on other investments, perhaps that’s what you are getting at).[/quote]Most sellers are going to be institutional and they are not going to spend that money on anything that matters for the inflation. Under normal circumstances, this kind of money creation would lower interest rates and stimulate borrowing. But, since short-term interest rates are already near zero, that’s not going to happen now. There could be a wealth effect / confidence effect if these manipulations lead to stock market growth, but probably not much (unless the Fed starts buying NASDAQ stocks directly).
[quote]They can always cut taxes and finance the difference with newly printed money, which as Bernanke famously noted, would be akin to dropping money from helicopters.[/quote]
As Mark Zandi (former McCain’s advisor, hardly a socialist) estimated back in 2008, direct spending on infrastructure and aid to state governments to preventing state-level layoffs is about 4 to 5 times more effective per dollar spent than extending Bush tax cuts.
August 11, 2010 at 4:08 PM #589629CA renter
Participant[quote=SD Transplant]Here is what Chris Martenson has to say on the subject 🙂
This second round of quantitative easing is meant to lower mortgage rates (boost the housing market) and increase demand for bank loans (grow the economy).
Yet many reading this must be thinking: What deflation? Prices of gasoline, food, health-care, education are all getting more expensive.
Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”
“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”
Martenson thinks we’re “dangerously close” to entering a stage of “stagflation” that crippled the economy and market in the 1970s. “It’s the worst of all possible worlds,” says Martenson. “(Stagflation) really squeezes the workers even harder than any other condition you can experience. Wages are weak. Job growth is weak. The main assets that the average person tends to hold like real estate – that’s going down. On the other side, we are seeing base inflation” in some commodities.
“Stagflation,” as defined by Investopedia, is: a condition of slow economic growth and relatively high unemployment — a time of stagnation — accompanied by a rise in prices, or inflation. The U.S. dealt with this in the 1970s when a recession was met with a spike in global oil prices.
With these risks on the horizon, Martenson is convinced a double-dip recession is imminent, if not already under way: “The early data is saying, ‘weakness still is here’ and we’re going to have to live with this for a while,” he says.
As a result, he’s convinced Fed chairman Ben Bernanke will continue to go back into his “tool box” in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.
But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government[/quote]
Agree very much with this theory, and it IS the worst of all worlds for the vast majority of Americans.
August 11, 2010 at 4:08 PM #589723Participant[quote=SD Transplant]Here is what Chris Martenson has to say on the subject 🙂
This second round of quantitative easing is meant to lower mortgage rates (boost the housing market) and increase demand for bank loans (grow the economy).
Yet many reading this must be thinking: What deflation? Prices of gasoline, food, health-care, education are all getting more expensive.
Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”
“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”
Martenson thinks we’re “dangerously close” to entering a stage of “stagflation” that crippled the economy and market in the 1970s. “It’s the worst of all possible worlds,” says Martenson. “(Stagflation) really squeezes the workers even harder than any other condition you can experience. Wages are weak. Job growth is weak. The main assets that the average person tends to hold like real estate – that’s going down. On the other side, we are seeing base inflation” in some commodities.
“Stagflation,” as defined by Investopedia, is: a condition of slow economic growth and relatively high unemployment — a time of stagnation — accompanied by a rise in prices, or inflation. The U.S. dealt with this in the 1970s when a recession was met with a spike in global oil prices.
With these risks on the horizon, Martenson is convinced a double-dip recession is imminent, if not already under way: “The early data is saying, ‘weakness still is here’ and we’re going to have to live with this for a while,” he says.
As a result, he’s convinced Fed chairman Ben Bernanke will continue to go back into his “tool box” in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.
But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government[/quote]
Agree very much with this theory, and it IS the worst of all worlds for the vast majority of Americans.
August 11, 2010 at 4:08 PM #590258Participant[quote=SD Transplant]Here is what Chris Martenson has to say on the subject 🙂
This second round of quantitative easing is meant to lower mortgage rates (boost the housing market) and increase demand for bank loans (grow the economy).
Yet many reading this must be thinking: What deflation? Prices of gasoline, food, health-care, education are all getting more expensive.
Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”
“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”
Martenson thinks we’re “dangerously close” to entering a stage of “stagflation” that crippled the economy and market in the 1970s. “It’s the worst of all possible worlds,” says Martenson. “(Stagflation) really squeezes the workers even harder than any other condition you can experience. Wages are weak. Job growth is weak. The main assets that the average person tends to hold like real estate – that’s going down. On the other side, we are seeing base inflation” in some commodities.
“Stagflation,” as defined by Investopedia, is: a condition of slow economic growth and relatively high unemployment — a time of stagnation — accompanied by a rise in prices, or inflation. The U.S. dealt with this in the 1970s when a recession was met with a spike in global oil prices.
With these risks on the horizon, Martenson is convinced a double-dip recession is imminent, if not already under way: “The early data is saying, ‘weakness still is here’ and we’re going to have to live with this for a while,” he says.
As a result, he’s convinced Fed chairman Ben Bernanke will continue to go back into his “tool box” in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.
But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government[/quote]
Agree very much with this theory, and it IS the worst of all worlds for the vast majority of Americans.
August 11, 2010 at 4:08 PM #590366Participant[quote=SD Transplant]Here is what Chris Martenson has to say on the subject 🙂
This second round of quantitative easing is meant to lower mortgage rates (boost the housing market) and increase demand for bank loans (grow the economy).
Yet many reading this must be thinking: What deflation? Prices of gasoline, food, health-care, education are all getting more expensive.
Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”
“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”
Martenson thinks we’re “dangerously close” to entering a stage of “stagflation” that crippled the economy and market in the 1970s. “It’s the worst of all possible worlds,” says Martenson. “(Stagflation) really squeezes the workers even harder than any other condition you can experience. Wages are weak. Job growth is weak. The main assets that the average person tends to hold like real estate – that’s going down. On the other side, we are seeing base inflation” in some commodities.
“Stagflation,” as defined by Investopedia, is: a condition of slow economic growth and relatively high unemployment — a time of stagnation — accompanied by a rise in prices, or inflation. The U.S. dealt with this in the 1970s when a recession was met with a spike in global oil prices.
With these risks on the horizon, Martenson is convinced a double-dip recession is imminent, if not already under way: “The early data is saying, ‘weakness still is here’ and we’re going to have to live with this for a while,” he says.
As a result, he’s convinced Fed chairman Ben Bernanke will continue to go back into his “tool box” in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.
But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government[/quote]
Agree very much with this theory, and it IS the worst of all worlds for the vast majority of Americans.
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