| Author |
 Topic  |
|
|
Nickelless
Administrator
USA
5580 Posts |
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/14/2008 : 07:20:37
|
Are they trying to hit a certain level of money or an interest rate? They are trying to hit an interest rate, over night rate is 2%. They create FRN to buy treasuries, which increases the price of the T-Bills. (The interest rate of a T-bill is an inverse function of its price, so the price going up means the rate is going down) If liquidity starts to come out of the wood works, then T bill rates would drop more therefor the Fed sells treasuries driving the price down.
They are basically using the interest rates (price of money) to tell if they have enough or to much supply. Velocity of money is important in inflation as well.
That is my understanding.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
 |
|
|
TenBears
1000+ Penny Miser Member
USA
1021 Posts |
Posted - 06/14/2008 : 08:32:41
|
| There are three levels to the money printing maching. "Ron Paul", "Not Responsible" and "We Can't Count That High". The machine has been stuck on We Can't Count That High for too long. |
"Rich," the Old Man said dreamily, "is not baying after what you can't have. Rich is having the time to do what you want to do. Rich is a little whiskey to drink and some food to eat and a roof over your head and a fish pole and a boat and a gun and a dollar for a box of shells. Rich is not owing any money to anybody, and not spending what you haven't got." Robert Ruark
there are too wild Indians...
there are too wild Indians...
there are too wild Indians...-----still taunted
|
|
|
|
misteroman
Administrator
USA
2565 Posts |
Posted - 06/14/2008 : 10:50:15
|
| lately I just thought they hit "print" and then are done with it. |
Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
|
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/14/2008 : 11:16:15
|
Well I like Ron Paul a lot, but you can't not print right now. Unless you want to unleash a huge amount of pain. It is the type of pain that would make you dream of $4 gas and high single digits inflation.
If the Fed hadn't dropped rates (printed money), then a few large banks would have gone under or would going under. You are thinking who cares, since you didn't have any stock ownership. Well it isn't that simple. If Bear Stearns goes under, then they would have taken under JPM too likely. Well if Bear Stearns and JPM go then who do they take with them? You can't have a huge financial melt down. If the big boys go, then the regionals are toast to likely.
Bear Stearns was like a sports book writing derivatives. They tried to kept the book balance and make their cut. Well some banks lay off risk of their book with other banks to help keep it near balanced or low risk. If Bear Stearns goes under then you have a lot of major players with one sided trades/bets. They would have to spend capital to balance them again. Plus major traders would know the likely directions of those trades and front run them to make a killing off their huge losses.
Banks don't have the balance sheet right now for huge losses in their derivative books and loan books. With rates dropping, then should be able to get better net interest margins to help offset losses along with raising capital from stock issuances.
If you had mass bank failures, then you become very cash poor nation. How much cash do you have in paper money. Your bank accounts would be in FDIC processing, and that might take awhile assuming Congress bails out FDIC. No way they have the funds cover all those deposits. Consider the shortage of cash, then you would have deflation big time.
Think 1930s but worse.
We are paying for our excesses. We have already started the ball, so we need to guide it to the end on the least painful course. |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
|
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/14/2008 : 11:43:09
|
If I had totally control, then this is what I would do.
1. Government spending would be cut very deep. Taxes would be cut too, but I would run a budget surplus. The surplus would go towards the national debt. (there is a theory that tax receipts will always be around 20% of GDP no matter the tax rates, but i am not sure i buy it completely)
2. That tax code would be lower rates and no (few) deductions from income for people. Corporation would be a little different. No government help buying stuff. If you want it then you pay the full cost. Markets will set the prices. Dividends would be taxed at normal income rates, but be a deduction dollar for dollar for the corporations. This might remove the goal of leveraging companies through the roof, which is bad for everyone in the long run.
3. The Federal Reserve would be given the goal of 1-2% inflation and would do so by printing money to buy treasuries. They also would use their income to buy treasuries (removing that debt from the system as well). When they had run out of treasuries, then we would start buying assets (like gold, silver, and whatever) to keep the money supply growing with the goal rate of inflation.
4. Federal Reserve Assets would be marked to go a given fair value once a year with the off set used to forgive U.S. Treasury debt. (example might be moving Gold from $1000 an oz to $1050 an oz with $50 an oz of treasury debt forgiven) The accounting entries would be debit gold investment. Credit equity. Debit equity credit investment in Treasuries.
5. Also disallow congress from running deficits in time other than declared wars will strict repayment plans after the war is over. (Fed assets could be revalued to give the government free money in this line of events too)
6. At some point in the future the money would be backed by true assets, but not a redeemable standard.
It would be hard for a lot of people on the hand out programs, so this will never happen. It would help control inflation to healthy levels and push economic growth. I have a feeling that population growth would slow (no financial reason to have more kids) and non-producers would likely die off. It sounds harsh, but it is the way of the world. If a dog can't find food, then it dies. If a human can't produce enough to survive, then they die off. The world doesn't owe you a living. |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
|
|
|
Ardent Listener
Administrator
USA
4841 Posts |
Posted - 06/14/2008 : 16:49:05
|
I don't think that a modern moral society needs to allow its non-producers to go off and die, but on the other hand I feel that many of todays current non-producers could become more productive if they were required. I have seen people get onto the goverment gravey train when they really didn't need to be. In the long run their lives were ruined because of it.
My wife is a school teacher and she sees parents push for their very young children to be considered 'disabled' so they can get social security disability benefits. This is a national disaster that must be stopped. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
|
|
|
swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/14/2008 : 19:47:26
|
I disagree. Morals are for people. Government should be amoral. (Hell, it is with not to be dissussed, but not with money.) Its job is to protect us from foreign governments and maintain order inside this borders. It isn't to make sure everyone survives. I paid a crap load of taxes last year, and most of it went to make sure people that couldn't/wouldn't work didn't die from being lazy. I am not their father, brother, or keeper. I have no responsible to make sure they don't die. Yet, this liberal government thinks they should take my production and share it even if I would like to choose not to do so. It is stealing. I don't view the government as much better than a bank robber (which I think the penalty stealing for should be death by the way). At 25, I will never receive the services that I have already paid for, but I don't think they are through making me pay.
I am proud to be an American, but I think our government is a bunch of stealing, idiots.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
|
|
|
Cerulean
Penny Hoarding Member
USA
993 Posts |
Posted - 06/24/2008 : 15:29:22
|
It is not the job of government to make life fair.
On the other hand, I believe a society can be judged by how it treats its worst off citizens. |
Sorting Map
2010 First Finds Contest
Are you a Buffalo Hunter?
Wanna take seignorage away from the Fed? Spend *any* coins!
We cannot afford this government.
Cerulean's Standing Offer: $3/lb shipped for foreign coins |
|
|
|
starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 06/24/2008 : 17:33:28
|
"...how does the Fed "know" how much fiat money to put out?"
After setting interest rates, they "react" to regional branch orders. Regional branch orders are determined by loan creations and liquidity.
|
|
|
|
Ponce
Penny Hoarding Member
Cuba
630 Posts |
Posted - 06/25/2008 : 19:26:15
|
The answer is a simple one.......they ask Bush how much more money he needs for his wars, and then your children up to your great grandchildrens will pay back.....maybe.
|
"If you don't hold it, you don't own it"...Ponce |
|
|
| |
Topic |
|
How does the Fed "know" how much FRNs to print?
Forum Locked
Posted - 06/14/2008 : 01:34:22
