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Adding to the stimulus
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The Economist
November 28, 2008
THE Federal Reserve’s interest-rate target is near zero. The recession is deepening. No wonder that speculation is mounting about when America’s economic policymakers will start using truly unconventional measures to stimulate the economy.
- A d v e r t i s e m e n t
The answer is that they already have. Since early September, without any formal declaration, the Fed has radically expanded its balance sheet to counter the credit crunch. Under the guise of successive new programmes, each with a less memorable acronym than the last, the Fed is substituting its balance sheet with that of the contracting private financial system in the hope of keeping the economy from being starved of credit.
The current credit crisis is not a temporary shock like the September 11th 2001 terrorist attacks, which briefly severed the financial system’s internal plumbing. Rather, a radical reassessment of what constitutes acceptable levels of capital, leverage and interest rates is underway. Those financial institutions that have not failed are intent on reducing leverage—their volume of loans for each dollar of capital. The Fed has no hope of stopping this process; it is merely trying to slow it down by providing a home for the assets that the financial sector is shedding. The alternative is plunging asset values, a complete withdrawal of credit and economic catastrophe.
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November 28th, 2008 at 12:41 pm
“The Fed will finance these programmes with newly created reserves; that is, it will print money. Its balance sheet, which has ballooned from $900 billion in August to $2.2 trillion now, could grow by an additional $800 billion, which would make it a larger lender than any commercial bank. ”
That is over 2 trillion extra dollars printed.
The US physical money supply was $700 Billion in April with M1 money supply of $1.4 Trillion. This has already been doubled!
http://www.newyorkfed.org/abou.....fed49.html
Even at the M3 money supply which includes CDs, Savings accounts and money market funds was at $7.7 trillion meaning that the money added is 25% of that number.
How this will not lead to a massive devaluation of the dollar as well as inflation is beyond me.
November 28th, 2008 at 12:52 pm
Hyperinflation is coming….you have been warned
November 28th, 2008 at 1:03 pm
December 1 Speech – Chairman Ben S. Bernanke
Federal Reserve Policies and the Financial Crisis
Meeting of the Greater Austin Chamber of Commerce, Austin, Texas
1:45 p.m. EST
e
http://www.aniboom.com/video/301279/obama-plan/
November 28th, 2008 at 1:14 pm
to all the people out there that think this war is worth fighting, i have got some bad news for you… its already over there is no way to stop what is coming, we are in phase 2, which is what i recomend everybody do. seek out like minded people in your local community that you think you can count on to help contribute to a sustainale living enviroment after social break down, we will always be stronger as a group than as individauls, to everybody that is awake this is the most imoprtant thing you can do to ensure yours and your families future, but as you are preparing for the worst remember, no one can be made to see the truth, they have to find it for themselves… good luck…
November 28th, 2008 at 1:39 pm
Question: How do you tell when the dollar is devalueing?
Answer: When you buy something made over seas and it cost more dollars.
November 28th, 2008 at 4:44 pm
fuck THIS WEBSITE PRINT MY COMMENTS