• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Federal Reserve Plans to Buy Government Debt

It's odd to watch a country I once thought to be invincible fall apart around me.
 
EgoffTib said:
It's odd to watch a country I once thought to be invincible fall apart around me.
Click to expand...

The illusion of invincibility was one that needed to be shattered at some point in time. It's definitely in our best interest.
 
EgoffTib said:
It's odd to watch a country I once thought to be invincible fall apart around me.
Click to expand...

I bet people said the same thing at the onset of the great depression.
 
BulletWounD said:
The illusion of invincibility was one that needed to be shattered at some point in time. It's definitely in our best interest.
Click to expand...

winston53660 said:
I bet people said the same thing at the onset of the great depression.
Click to expand...
Agreed. Being only 19, this kind of collapse is better preparing me to deal with problems in the future and taking away what little "ignorant innocence" I had left about our country.
 
EgoffTib said:
Agreed. Being only 19, this kind of collapse is better preparing me to deal with problems in the future and taking away what little "ignorant innocence" I had left about our country.
Click to expand...

We are a strong industrious people we will get through this.
 
I don't think we're falling apart (well, our roads are but that's another story), but I do believe this crisis may have a great long-term effect: A generation which got the living **** scared out of it.
 
talloulou said:
Right.

Why would we sell our government debt to the fed reserve? If we're in debt then we're in debt. So the feds buy some of the debt and do they give the money to our government? Then the government presumably uses the money to pay off debt?

How does the fed buying government debt flood the economy with money?
Click to expand...

They're robbing Peter to pay Paul.

They did this with Social Security. In 2018 Social Security will no longer be able to sustain itself, it'll be operating in the red.

9 years isn't that far off, so you might not be counting on collecting SS, but you're sure going to be paying a lot more for it.

Pretty depressing when you start to realize the amount of debt being aquired today, coupled with the amount that SS will be bringing.

Social Security's Problems Haven't Gone Away

Social Security Reform Center - Problem

The real depressing news, is that the people "leading" us down this path are the ones who are pushing for universal healthcare. A complete failure in itself.

Look at Mass. healthcare reform is failing us - The Boston Globe.

Obama's "plan" calls for a $600+ billion down payment.

We're witnessing madness.
 
talloulou said:
This is true if all the share holders, profiteers, etc are American. But maybe not so much if they're foreign, right?
Click to expand...

There are a strict set of rules to become part of the Board of Governors, as they are appointed by the President for 14 year terms, while the Chairman is appointed to 4 year terms, of which they will preceded back to the board after their term is up, and reappointment is confirmed.

I just think their power is perhaps too big and unchecked. If they can "fix" the economy they can also purposely "break" the economy if there was some incentive to do so. If there is no foreign interests or shareholders tied to the federal reserve then there's not as much reason to worry, but do we know if there are foreign interests involved?
Click to expand...

Again, they do what is in their best interest. When inflation is the main concern, the Fed has the power to induce recessions via the pull back of the monetary base through FOMC activity (Federal Open Market Committee).

Maybe not but it's dangerous to just "take orders," and allow a virtually private bank to own our government debt.
Click to expand...

They are not taking orders though. The Fed is a quasi-private institution that looks out for its best interests; as they are the central bank of the US, their best interest is a strong economy without high levels of price stability.

It seems like all the financial folks are surprised which is why it's worrisome.
Click to expand...

They are most likely pleased. The US, in the past two years, has face a wealth evaporation of $20-$30 trillion. Re-inflating the economy is crucial to avoiding an ever scarier depression.
 
talloulou said:
Right.

Why would we sell our government debt to the fed reserve? If we're in debt then we're in debt. So the feds buy some of the debt and do they give the money to our government? Then the government presumably uses the money to pay off debt? I do in fact believe this is the first time they have announced the purchase of 10-30 year securities.


How does the fed buying government debt flood the economy with money?
Click to expand...

That is not really the case. Through open market operations, the Fed will in effect, be purchasing long term treasuries. They have since their beginning purchased short term debt (specifically treasuries) as a way of pumping the system full of liquidity.

Japan eventually went this way in the beginning of the century, and the Bank of England has recently followed suit (as can be seen by the strengthening of the dollar only one month ago).


Here is how it works. Say the board of governors believes more money (m2) is needed to facilitate growth. The FOMC, through open market operations purchases with dollars, assets from banks and other lending institutions. As the purchase is complete, the Fed credits the accounts of these banks, which are on record at the Federal Reserve, with dollar denominations. This fills the banks balance sheets with "cash", although it is in digital format.

Banks can then lend out their reserves up until a certain point (10% of total loans must be held as reserves). As the fed feels prices are beginning to increase, they then will sell back their assets, previously purchased from banks, in open market operations. This action will pull the excess liquidity from the system.
 
Last edited:
There's so much alarmism here. It's honestly not the end of the world.

Goldenboy219 said:
Yes, the Fed does provide profits for shareholders.
Click to expand...

What?

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year
Click to expand...

FRB: FAQs: Federal Reserve System

Goldenboy219 said:
That is not really the case. Through open market operations, the Fed will in effect, be purchasing long term treasuries. They have since their beginning purchased short term debt (specifically treasuries) as a way of pumping the system full of liquidity.
Click to expand...

This is not the first time they've purchased long term treasuries.

The Fed said it will will purchase $300 billion of long-dated Treasuries over the next six months, its first large-scale purchases of government debt since the early 1960s
Click to expand...

Business Feed Article | Business | guardian.co.uk

World didn't end then, it's not going to end now.
 
RightinNYC said:
World didn't end then, it's not going to end now.
Click to expand...

You're absolutely correct.

We're merely travelling down the path of stupidity, racking up needless deficits.
 
print our way out of this mess...

goodbye dollar, hello zimbabwe.
 
talloulou said:
I guess it doesn't really matter since the Annuniki are returning in 2012 anyway. :mrgreen:
Click to expand...

They're already here. :) Haven't you read any David Icke? The politicians are shapeshifting man/reptilian hybrids. Crazy people have even seen Hillary shapeshift before their eyes.
 
RightinNYC said:
This is not the first time they've purchased long term treasuries.



Business Feed Article | Business | guardian.co.uk

World didn't end then, it's not going to end now.
Click to expand...

My bad for not being more specific. Operation Twist was a mortgage tool, where as the long term buying in these conditions is full board quantitative easing. Rates are @ 0%-.25% (although in theory they are negative). In the 60's the were from 1.7 -3.0 (During Kennedy).

I should have said, they have never truly eased before:mrgreen:
 
You must log in or register to reply here.
Back
Top Bottom