[Jotapay]

Got PMs?

[nero]

$this->bbcode_second_pass_quote('SPG', 'A')pparently one of the strategy items the fed announced today was that it was going to start buying up some of the massive numbers of T-Bills it's unleashed on the market in the last few months. They want to try to force that money into commercial credit markets.

The problem there is that it will drive T-Bill yields up and basically puts the Fed and the Treasury at crossed purposes.

[MrBean]

$this->bbcode_second_pass_quote('emersonbiggins', 'W')asn't the consensus that a cut to 0% is pretty much the final bullet in the Fed's pistol?

[evilgenius]

$this->bbcode_second_pass_quote('Jotapay', 'G')ot PMs?

[MrBean]

$this->bbcode_second_pass_quote('smallpoxgirl', 'A')pparently one of the strategy items the fed announced today was that it was going to start buying up some of the massive numbers of T-Bills it's unleashed on the market in the last few months. They want to try to force that money into commercial credit markets.

The problem there is that it will drive T-Bill yields up and basically puts the Fed and the Treasury at crossed purposes.

[nero]

The effective rate was already down below 0.5% wasn't it? So this drop isn't going to translate into much action.

At this point it's all about how much quantitative easing the Fed does. I read somewhere today they have already gone from 0.8trillion to 2.2trillion dollars, or in other words have printed 1.4 trillion dollars. I think at some point with trillion dollar deficits there will be a crisis at which point the Fed will step in and temporarily be the buyer of last resort for treasuries. After that either they start selling foreign denominated debt or they continue to pay for the stimulus with hot off the press money and inflate the greenback away. I don't think that it will happen within 12months because the relative size of the US debt is not at a crisis level but in 2010 it could happen because it doesn't take long when the nominal economy is shrinking for the debt to get out of hand.

[MrBean]

Latest news: at next easing Fed sets interest rate at square root of minus one.

[smallpoxgirl]

$this->bbcode_second_pass_quote('nero', 'H')ow does buying up treasuries drive up the yield of T-bills? Buying treasuries is basically printing money and giving it to the treasury to spend. The Treasury will say thank-you and ask if the Fed wants any more.

[evilgenius]

$this->bbcode_second_pass_quote('nero', 'T')he effective rate was already down below 0.5% wasn't it? So this drop isn't going to translate into much action.

At this point it's all about how much quantitative easing the Fed does. I read somewhere today they have already gone from 0.8trillion to 2.2trillion dollars, or in other words have printed 1.4 trillion dollars. I think at some point with trillion dollar deficits there will be a crisis at which point the Fed will step in and temporarily be the buyer of last resort for treasuries. After that either they start selling foreign denominated debt or they continue to pay for the stimulus with hot off the press money and inflate the greenback away. I don't think that it will happen within 12months because the relative size of the US debt is not at a crisis level but in 2010 it could happen because it doesn't take long when the nominal economy is shrinking for the debt to get out of hand.

[nero]

$this->bbcode_second_pass_quote('evilgenius', 'I')t will taken until well past 2010 to build an economic model where there is enough money in consumer's hands for any company to pass along price increases. To have the kind of inflation everybody is worried about you have to build the ability to pass along price increases into the system. Oh, how the mighty have fallen!

[MrBean]

$this->bbcode_second_pass_quote('evilgenius', '
')It will taken until well past 2010 to build an economic model where there is enough money in consumer's hands for any company to pass along price increases. To have the kind of inflation everybody is worried about you have to build the ability to pass along price increases into the system. Oh, how the mighty have fallen!

[patience]

Quote:
"...if your currency ceases to be accepted by exporting countries..."

This is what has me worried. I don't know how to evaluate how likely this is as a possibility. The Fed has committed to whatever it takes to reflate the US economy, which I see as maybe not possible. Maybe the black hole of collapsing debt is really too big to fill? But the ROW could begin to perceive the the US as a bad credit risk, and say, "NO MAS!" Then we do an Iceland, right?

How does one predict this/find indicators? US Dollar Index? Oil price? Does that moment mean that the US can no longer finance its' debt and defacto defaults, with an instant devaluation of, say, 3:1 like Argentina?

I have seen a lot of mention of such things, but can't find reasoned responses that tell a newb like me the whole process involved in a currency crash, if that is the proper term.

Does currency crash mean Iceland's plight, that is, no one will accept your currency?

[patience]

Some of Chris Martenson's words on the subject:
Quote:
And what of the rest of the Fed words?

FOMC statement details plans for quantitative easing

Fed to keep its balance sheet at 'high level'

Fed to flood financial system with money

FOMC to purchase large quantities of agency debt, securities

Fed considers buying longer-term Treasurys

Here all I can tell you is back up the truck and load it with anything that can be shipped and is priced in dollars - they're throwing Uncle Buck under the bus. Gold is my personal favorite because it is liquid across all currencies. " end quote.

Link

[JoeSixPack]

$this->bbcode_second_pass_quote('MrBean', 'L')atest news: at next easing Fed sets interest rate at square root of minus one.

[smallpoxgirl]

$this->bbcode_second_pass_quote('patience', 't')hey're throwing Uncle Buck under the bus.

[MrBean]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('patience', 't')hey're throwing Uncle Buck under the bus.

[PenultimateManStanding]

The whole global system seems to be out of whack. Problems everywhere. The Islamic countries are set to go the way of Somalia. China is in grave danger. European banks are on the edge. Canada, Brazil & a host of other commodity exporters are reeling from the deflationary spiral. The clock is ticking. Why fret about the Federal Reserve? 2009 is looking grimmer by the week.

[Chuckmak]

$this->bbcode_second_pass_quote('MrBean', 'L')atest news: at next easing Fed sets interest rate at square root of minus one.

[CarlosFerreira]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('patience', 't')hey're throwing Uncle Buck under the bus.

[Revi]

What does this lowering of interest rate do? 1/4 of one percent is a pretty low number. I guess if you get it that cheap you can lend it at 2% and still make money.

The Fed is desperate for people to take their dollars. All the "quantitative easing" (printing money) and there still aren't any takers.

What's going to happen now?