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The Fed's actions were extreme bailouts. They've been busy bailing out almost everybody: home owners, Wall Street, Europe, the Treasury, the states. Net bailou

The Fed's actions were extreme bailouts. They've been busy bailing out almost everybody: home owners, Wall Street, Europe, the Treasury, the states. Net bailouts performed by the Fed: trillions http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un... They gave banks and others at least $7.7 trillion and there is zero proof that it was paid back. Citi had at least a $1 trillion blackhole on their balance sheet, and there is no possibility they were able to fill it. Bank of America was in the same situation, and their profits could never fill that. The Fed took over trillions in toxic waste mortgages to bail out the banks, and most of those 'assets' still sit on the Fed's balance sheet. I'm sure the money supply continuing to skyrocket means the Fed isn't bailing anybody out. Surely those trillions aren't going toward bailouts for the government, Wall St, big banks, or the housing market. http://www.shadowstats.com/charts/monetary-base-money-supply http://www.shadowstats.com/charts/monetary-base-money-supply The Fed is currently bailing out the US Government by buying 95% of all long term govt paper. The US Treasury has been bailing out California among other states, by using the Fed money. The US Government is completely insolvent without the Fed bailouts, it would have to slash 1/3 of all spending just to correct the imbalances in the system if the Fed stopped the QE programs. The Fed is bailing out home owners, investors, realtors 24/7 using trillions in QE to push rates lower to prop up the housing market. The Fed is pushing risk into equities and out of paper by driving rates down, which is providing a bailout to big institutional investors by keeping the stock market artificially high. It's a bailout bonanza. Natural mortgage rates would be the mortgage rates you'd get when you remove all Federal Reserve manipulation of short and long term rates. That is, when they stop all QE / monetization programs that are designed to specifically hold rates down, thus we have sub 4% 30 year mortgage rates. It would be something closer to a historical norm, 6% to 8% would be a lot closer to normal based on the last 50 years, than 4%, for example. But if you know anything about any of this, you already know that.

photon137 14y ago
Bernanke had to do a lecture series (as part of a PR-initiative, I assume - but he's an academician as well) explaining the Fed's actions to those who may not be that well-versed with macroeconomics or how the FOMC works. You should read this before making any "bailout" claims: http://www.federalreserve.gov/newsevents/files/bernanke-lecture-four-20120329.pdf http://www.federalreserve.gov/newsevents/files/bernanke-lect... Edit: The lecture series in full for those who might be interested: http://www.federalreserve.gov/newsevents/lectures/about.htm http://www.federalreserve.gov/newsevents/lectures/about.htm It made very insightful viewing/reading even for us who are involved in the financial markets.
- carsongross 14y ago
  Appeals to authority... check. Courtiers reply... check. Dismissive passive aggressive attitude... check. Good job, you hit 'em all. http://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm http://www.federalreserve.gov/monetarypolicy/bst_recenttrend... Good luck unwinding that, kids. And that's just what they are telling us.
  - photon137 14y ago
    The various Feds' open market operations and reverse repo operations inject/sterilize billions of dollars every day from the markets. $3 trillion may seem like a big amount on the balance sheet to unwind - but that kind of liquidity can be soaked out of the system pretty easily (if done carefully) once the economy gets going and the Fed is able to raise rates (ie secondary credit markets begin to function well enough - e.g. the traditional GSE-sponsored lending/commercial-paper lending etc). Edit: I am trying to make a valid clarification in this thread. Your sarcasm is unwarranted.
    - carsongross 14y ago
      _shrug_ Again, that's only what they are telling us about. Pulling a couple trillion out of the economy is going to absolutely taco it (that's thousands of those billions you mention) since we are effectively an infinitely leveraged fractional reserve system now, even ignoring derivatives. I'd be more sympathetic to your pat-us-on-the-head attitude if the mainline economists had been right about anything for the past decade. There's a whole slew of economists who actually got the debt crisis correct and might be worth looking into, starting with Steve Keen. The federal reserve has been hiding it's destruction of the average person's purchasing power behind academic rhetoric and obfuscation for over 100 years now, with the aid and abetment of the economic mainstream and the financial world. Don't assume that because we don't agree with you we don't understand what you are saying. We just don't believe it.
      - photon137 14y ago
        How on earth do I have a "pat-us-on-the-head" attitude? You're just infusing your comments with what I think is political (possibly Ron Paul-esque) rhetoric without understanding how monetary policy transmission and Fed lending works even when I am trying to explain the thing and providing verifiable facts. I have nothing to say about schools of macroeconomic thought because then you are very likely to turn this in to a political issue (given that you consider fractional-reserve banking as "infinitely" leveraged) and HN isn't the right forum. I have my views but I'll keep them to myself. Edit: Also, the Fed isn't "taking out" trillions out of the economy. Neither did it inject trillions into the economy. It is just swapping one sort of asset with another to ensure that liquidity, as a whole, remains constant. During the crisis, it swapped out non-performing assets (illiquid) with plain cash (liquid). When the economy fares better and appetite for credit-risk returns, the illiquid assets also become liquid with a much fairer valuation. Hence, now the Fed would swap out cash for these assets.
achompas 14y ago
Net bailouts performed by the Fed: trillions http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un.. http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un.... They gave banks and others at least $7.7 trillion and there is zero proof that it was paid back. It'd be nice if that article had actual proof, or at least some kind of FOIA-sourced documents to support the $7.7t number. There's nothing there, though, and you're just parroting a number that appears once without any substantiation. I'm sure the money supply continuing to skyrocket means the Fed isn't bailing anybody out. Surely those trillions aren't going toward bailouts for the government, Wall St, big banks, or the housing market. Holy CRAP! Look at that long-term M2 chart! It looks like money is growing at a constant logarithmic rate! That's evidence of manipulation. Or, uh, inflation. The Fed is bailing out home owners, investors, realtors 24/7 using trillions in QE to push rates lower to prop up the housing market. I know, look at all these QEs we've had! It's been at least zero since 2010! Free money for everyone, all on the Fed's tab!! [0] [Natural mortgage rates] would be something closer to a historical norm, 6% to 8% would be a lot closer to normal based on the last 50 years, than 4%, for example. But if you know anything about any of this, you already know that. Or there's just a glut of housing supply -- including foreclosures -- and banks are offering low rates to clear that supply. Also, if "you know anything about any of this" you'd know better than to use past information to analyze this kind of extraordinary economic climate. Seriously: half of your stuff is unsubstantiated, and the few factually-correct points (money supply, low housing rates) are symptoms of normal economic behavior. Please stop pushing HN's economic discourse further into the earth. [0] Also, if you "knew anything about any of this" you'd know QE3 has been whispered about since 2010. Two years later...zero additional QE.

photon137 14y ago

Bernanke had to do a lecture series (as part of a PR-initiative, I assume - but he's an academician as well) explaining the Fed's actions to those who may not be that well-versed with macroeconomics or how the FOMC works. You should read this before making any "bailout" claims: http://www.federalreserve.gov/newsevents/files/bernanke-lecture-four-20120329.pdf http://www.federalreserve.gov/newsevents/files/bernanke-lect... Edit: The lecture series in full for those who might be interested: http://www.federalreserve.gov/newsevents/lectures/about.htm http://www.federalreserve.gov/newsevents/lectures/about.htm It made very insightful viewing/reading even for us who are involved in the financial markets.

carsongross 14y ago
Appeals to authority... check. Courtiers reply... check. Dismissive passive aggressive attitude... check. Good job, you hit 'em all. http://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm http://www.federalreserve.gov/monetarypolicy/bst_recenttrend... Good luck unwinding that, kids. And that's just what they are telling us.
- photon137 14y ago
  The various Feds' open market operations and reverse repo operations inject/sterilize billions of dollars every day from the markets. $3 trillion may seem like a big amount on the balance sheet to unwind - but that kind of liquidity can be soaked out of the system pretty easily (if done carefully) once the economy gets going and the Fed is able to raise rates (ie secondary credit markets begin to function well enough - e.g. the traditional GSE-sponsored lending/commercial-paper lending etc). Edit: I am trying to make a valid clarification in this thread. Your sarcasm is unwarranted.
  - carsongross 14y ago
    _shrug_ Again, that's only what they are telling us about. Pulling a couple trillion out of the economy is going to absolutely taco it (that's thousands of those billions you mention) since we are effectively an infinitely leveraged fractional reserve system now, even ignoring derivatives. I'd be more sympathetic to your pat-us-on-the-head attitude if the mainline economists had been right about anything for the past decade. There's a whole slew of economists who actually got the debt crisis correct and might be worth looking into, starting with Steve Keen. The federal reserve has been hiding it's destruction of the average person's purchasing power behind academic rhetoric and obfuscation for over 100 years now, with the aid and abetment of the economic mainstream and the financial world. Don't assume that because we don't agree with you we don't understand what you are saying. We just don't believe it.
    - photon137 14y ago
      How on earth do I have a "pat-us-on-the-head" attitude? You're just infusing your comments with what I think is political (possibly Ron Paul-esque) rhetoric without understanding how monetary policy transmission and Fed lending works even when I am trying to explain the thing and providing verifiable facts. I have nothing to say about schools of macroeconomic thought because then you are very likely to turn this in to a political issue (given that you consider fractional-reserve banking as "infinitely" leveraged) and HN isn't the right forum. I have my views but I'll keep them to myself. Edit: Also, the Fed isn't "taking out" trillions out of the economy. Neither did it inject trillions into the economy. It is just swapping one sort of asset with another to ensure that liquidity, as a whole, remains constant. During the crisis, it swapped out non-performing assets (illiquid) with plain cash (liquid). When the economy fares better and appetite for credit-risk returns, the illiquid assets also become liquid with a much fairer valuation. Hence, now the Fed would swap out cash for these assets.

achompas 14y ago

Net bailouts performed by the Fed: trillions http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un.. http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-un.... They gave banks and others at least $7.7 trillion and there is zero proof that it was paid back. It'd be nice if that article had actual proof, or at least some kind of FOIA-sourced documents to support the $7.7t number. There's nothing there, though, and you're just parroting a number that appears once without any substantiation. I'm sure the money supply continuing to skyrocket means the Fed isn't bailing anybody out. Surely those trillions aren't going toward bailouts for the government, Wall St, big banks, or the housing market. Holy CRAP! Look at that long-term M2 chart! It looks like money is growing at a constant logarithmic rate! That's evidence of manipulation. Or, uh, inflation. The Fed is bailing out home owners, investors, realtors 24/7 using trillions in QE to push rates lower to prop up the housing market. I know, look at all these QEs we've had! It's been at least zero since 2010! Free money for everyone, all on the Fed's tab!! [0] [Natural mortgage rates] would be something closer to a historical norm, 6% to 8% would be a lot closer to normal based on the last 50 years, than 4%, for example. But if you know anything about any of this, you already know that. Or there's just a glut of housing supply -- including foreclosures -- and banks are offering low rates to clear that supply. Also, if "you know anything about any of this" you'd know better than to use past information to analyze this kind of extraordinary economic climate. Seriously: half of your stuff is unsubstantiated, and the few factually-correct points (money supply, low housing rates) are symptoms of normal economic behavior. Please stop pushing HN's economic discourse further into the earth. [0] Also, if you "knew anything about any of this" you'd know QE3 has been whispered about since 2010. Two years later...zero additional QE.