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Thread: Federal Reserve Plans to Buy Government Debt

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    Re: Federal Reserve Plans to Buy Government Debt

    Yes, this is pretty big news, and I'm not sure why it's not caused more of an upset.

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    Re: Federal Reserve Plans to Buy Government Debt

    It is this policy move that has pushed stocks higher (today is a profit taking sell off), while weakening the dollar, and pushing almost all commodities and their industry reliant firms up.

    Part of the problem is the ultra strong dollar, which has made our businesses less competitive on a global scale. This is a move to reflate the deflated economy, the only true question is whether the Fed will be able to move MBS's off their balance sheet.

    Also, this puts significant pressure on China, and other highly dollar denominated investors to purchase treasury securities in an effort to hedge against the short term erosion of their reserves.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by Khayembii Communique View Post
    Yes, this is pretty big news, and I'm not sure why it's not caused more of an upset.
    I think it's because people don't understand the federal reserve. I don't understand the federal reserve. I don't understand their nature of being private but also controlling the economy, printing money, and basically telling congress how things are gonna go down. I don't really understand who owns the federal reserve. I know it's shareholders are other banks but are there actually people who profit off the federal reserve? Clearly with it's power to manipulate the markets I'm sure there are individuals profiting. Their power seems too big with too little oversight.

    But just because we don't understand the federal reserve I think it's very unwise to just ignore everything they do. If they can "rescue" us from a financial crisis then they must also be able to "cause" a crisis. Right? There are lots of conspiracies about the federal reserve and you can get basically as crazy as you want with all that; but I really believe most - like myself- have very little understand of how the federal reserve works, who pulls the strings, why congress seems to take orders rather than give them, and which individuals benefit by what the federal reserve does.

    I know Ron Paul hates the federal reserve.

    I'm not sure how to feel about the conspiracy theories but I do think they operate virtually unchecked, manipulating our economy with everything they do.

    The fact that they do this and somehow manage to do it without the majority of folks talking about their actions is quite a feat. The fact that this story isn't the lead on every radio news broadcast and big deal tv news is eerie.

    Why are we allowing banks and wall street to run our government; no questions asked?
    Last edited by talloulou; 03-19-09 at 03:19 PM.

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by Goldenboy219 View Post
    It is this policy move that has pushed stocks higher (today is a profit taking sell off), while weakening the dollar, and pushing almost all commodities and their industry reliant firms up.

    Part of the problem is the ultra strong dollar, which has made our businesses less competitive on a global scale. This is a move to reflate the deflated economy, the only true question is whether the Fed will be able to move MBS's off their balance sheet.

    Also, this puts significant pressure on China, and other highly dollar denominated investors to purchase treasury securities in an effort to hedge against the short term erosion of their reserves.
    I can't blame the Chinese for being concerned. It looks to me like we're trying to screw them.

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by Goldenboy219 View Post
    It is this policy move that has pushed stocks higher (today is a profit taking sell off), while weakening the dollar, and pushing almost all commodities and their industry reliant firms up.

    Part of the problem is the ultra strong dollar, which has made our businesses less competitive on a global scale. This is a move to reflate the deflated economy, the only true question is whether the Fed will be able to move MBS's off their balance sheet.

    Also, this puts significant pressure on China, and other highly dollar denominated investors to purchase treasury securities in an effort to hedge against the short term erosion of their reserves.
    But explain to me where the money comes from. How do they say they are going to buy our government debt, but then do so by printing money? Why do they have the authority to print money? If the federal reserve is private, and our government is indebted to them because they bought our debt, don't they have to use their own money to buy the debt? I don't get the whole, "We'll buy the debt, we'll start printing the money up now."

    Can anyone explain that? I've tried to figure it all out with googling but still haven't a clue.

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by talloulou View Post
    I think it's because people don't understand the federal reserve. I don't understand the federal reserve. I don't understand their nature of being private but also controlling the economy, printing money, and basically telling congress how things are gonna go down. I don't really understand who owns the federal reserve. I know it's shareholders are other banks but are there actually people who profit off the federal reserve? Clearly with it's power to manipulate the markets I'm sure there are individuals profiting. Their power seems too big with too little oversight.
    Yes, the Fed does provide profits for shareholders.

    But just because we don't understand the federal reserve I think it's very unwise to just ignore everything they do. If they can "rescue" us from a financial crisis then they must also be able to "cause" a crisis. Right? There are lots of conspiracies about the federal reserve and you can get basically as crazy as you want with all that; but I really believe most - like myself- have very little understand of how the federal reserve works, who pulls the strings, why congress seems to take orders rather than give them, and which individuals benefit by what the federal reserve does.
    Yes, but it is counter productive for the FRB to enact policy that would be harmful (in the long run) to their balance sheet, and thereby association, the US economy itself.

    I know Ron Paul hates the federal reserve.
    I really do not care for them either, but regardless of my partisan sentiment, they are a big player in the markets (for better or worse) and we now are dependent on them to guide the economy (for the time being). Deflation is much nastier than inflation; hyperinflation cannot exist in the US unless they begin buying $10's of trillions of assets in a short time.

    I'm not sure how to feel about the conspiracy theories but I do think they operate virtually unchecked, manipulating our economy with everything they do.
    It does allieve them of political control. Congress does not know how to guide an economy.

    The fact that they do this and somehow manage to do it without the majority of folks talking about their actions is quite a feat. The fact that this story isn't the lead on every radio news broadcast and big deal tv news show is eerie.

    Why are we allowing banks and wall street to run our government; no questions asked.
    They are not running our government, they are instead prevailing over the economy as they have since 1913. One of the major reasons 1930's depression became so horrendous is the fact that asset loss persisted due to the lack of sheer liquidity in the market. Asset loss is facilitated through deflationary spirals, and the US was heading in that direction as of 1 week ago.

    To be honest, i am actually surprised they had the balls to go all in at this stage. I have to applaud Bernanke, as he fuels up his fleet of helicopters ready to dump liquidity at any and all costs.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Federal Reserve Plans to Buy Government Debt

    Does the fed own "money" but not have it all printed up or something? Like I own money but don't go to the ATM for cash unless I need it; leaving most of my transactions electronic?

    Or can the fed literally create money out of nothing?

    Is all the money backed up by something real - I guess is my main question.

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by talloulou View Post
    But explain to me where the money comes from. How do they say they are going to buy our government debt, but then do so by printing money? Why do they have the authority to print money? If the federal reserve is private, and our government is indebted to them because they bought our debt, don't they have to use their own money to buy the debt? I don't get the whole, "We'll buy the debt, we'll start printing the money up now."
    LOL, their money is the bank note you have in your pocket, as our money is given to us by the Federal Reserve. They control the amount of dollars in the system. Theoretically, they have infinite dollars to buy assets (pump money into the economy) and can sell them (pull money out) when they see prices beginning to jump.

    Can anyone explain that? I've tried to figure it all out with googling but still haven't a clue.
    I can answer more question in about an hour and a half.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by talloulou View Post
    Does the fed own "money" but not have it all printed up or something? Like I own money but don't go to the ATM for cash unless I need it; leaving most of my transactions electronic?

    Or can the fed literally create money out of nothing?

    Is all the money backed up by something real - I guess is my main question.
    No. It's backed up soley by the laws of supply and demand.

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    Re: Federal Reserve Plans to Buy Government Debt

    Quote Originally Posted by talloulou View Post
    But explain to me where the money comes from. How do they say they are going to buy our government debt, but then do so by printing money? Why do they have the authority to print money? If the federal reserve is private, and our government is indebted to them because they bought our debt, don't they have to use their own money to buy the debt? I don't get the whole, "We'll buy the debt, we'll start printing the money up now."

    Can anyone explain that? I've tried to figure it all out with googling but still haven't a clue.
    The fed doesn't print money the Treasury does what the fed does is manage the money supply.

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