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Started By
Message
When does the Fed run out of bullets?
Posted on 9/2/10 at 7:11 am
Posted on 9/2/10 at 7:11 am
1.) The current Fed Funds rate is 0.25% - not much room left there
2.) Fed is buying t-bills to finance federal government spending spree - I guess the Fed can theoretically print money ad infinitum but it's a catch 22: the more you print, the greater the bullets become attenuated to the point of being duds.
3.) Buying up additional "toxic" assets, e.g., real estate.
What else is in the Fed's quiver?
2.) Fed is buying t-bills to finance federal government spending spree - I guess the Fed can theoretically print money ad infinitum but it's a catch 22: the more you print, the greater the bullets become attenuated to the point of being duds.
3.) Buying up additional "toxic" assets, e.g., real estate.
What else is in the Fed's quiver?
4
Posted on 9/2/10 at 7:20 am to GumboPot
When Obama runs out of trees.
Posted on 9/2/10 at 7:23 am to GumboPot
quote:Hopefully they'll save one.
When does the Fed run out of bullets?
Posted on 9/2/10 at 7:30 am to NC_Tigah
But seriously...
The irony, assuming the Republicans take control if the House in November, is that they will force the federal government to curb spending, thus increasing the Fed's effectiveness.
Posted on 9/2/10 at 8:13 am to NC_Tigah
quote:
Hopefully they'll save one.
This post was edited on 9/2/10 at 8:14 am
Posted on 9/2/10 at 8:18 am to GumboPot
quote:
When does the Fed run out of bullets?
2/29/11 3:35 PM, Eastern Standard Time
Posted on 9/2/10 at 8:39 am to LSURussian
quote:
2/29/11 3:35 PM, Eastern Standard Time
No such date...2011 is not a leap year (but I know you're fricking around).
Come on Russian, what policies do does the Fed have left besides the ones listed in the OP? Are the policies listed in the OP valid?
Posted on 9/2/10 at 8:49 am to GumboPot
quote:
No such date...2011 is not a leap year (but I know you're fricking around).
I am soooooo busted.....
Posted on 9/2/10 at 9:09 am to GumboPot
quote:
what policies do does the Fed have left besides the ones listed in the OP?
1) Lower fractional reserve ratios.
2) Implement negative interest rates on bank reserves.
3) Relax loan classifications for banks in coordination with the OCC. (They will never admit to doing this but would do it off the record.)
Posted on 9/2/10 at 9:25 am to LSURussian
quote:
1) Lower fractional reserve ratios.
The only problem with this is you need sufficient borrowers or it does no good.
quote:
2) Implement negative interest rates on bank reserves.
What's the chances of this happening? Would this be unprecedented?
quote:
3) Relax loan classifications for banks in coordination with the OCC. (They will never admit to doing this but would do it off the record.)
If this happened it wouldn't take long for the news to leak to the street. The hedge funds would likely be the first to know what banks are misrepresenting loan quality and they would short the shite out of these intuitions. This would be a very risky move and all parties would have to be very tight lipped.
Posted on 9/2/10 at 9:56 am to GumboPot
quote:True, unless banks are still worried about their liquidity, which I doubt.
1) Lower fractional reserve ratios.
The only problem with this is you need sufficient borrowers or it does no good.
quote:Yes. I think so for the U.S. but not for other countries.
2) Implement negative interest rates on bank reserves.
What's the chances of this happening? Would this be unprecedented?
quote:You don't know the Fed very well. They won't tell the banks they are softening up, they just will. It won't be any type of official policy.
If this happened it wouldn't take long for the news to leak to the street.
quote:You misunderstood me. I'm not saying the Fed and OCC will allow banks to make loans to the average O-T poster without having to classify the loan. I'm saying what might be classified as sub-standard will be allowed to get by with a 'watch list' rating. Bankers are scared shitless now for their next exam. Examiners have over reacted (as they usually do when they get criticized by congress) when examining banks now. So, banks are not making loans unless they are almost pristine from the start.
banks are misrepresenting loan quality
quote:Nope. See above. It has happened over the past 4 or 5 recessions and I don't recall the hedge funds or anyone else gaining an advantage from it, do you?
This would be a very risky move
Posted on 9/2/10 at 10:25 am to LSURussian
quote:
You misunderstood me. I'm not saying the Fed and OCC will allow banks to make loans to the average O-T poster without having to classify the loan. I'm saying what might be classified as sub-standard will be allowed to get by with a 'watch list' rating. Bankers are scared shitless now for their next exam. Examiners have over reacted (as they usually do when they get criticized by congress) when examining banks now. So, banks are not making loans unless they are almost pristine from the start.
Okay, thanks for the explanation.
As far as banks not making loans unless they are almost pristine, I know exactly what you mean. I took out a home mortgage ~5 months ago with Wells and the underwriters practically wanted my left nut. It whet as far as disclosing any pending lawsuits which was a major pain in the arse b/c I had an outstanding lawsuit with a contractor. The underwriter wanted a letter form my attorney stating my liabilities in case of a counter suit. Anyway, I digress.
Posted on 9/2/10 at 10:44 am to GumboPot
quote:If you didn't pledge both gonads, the bank examiner will probably criticize the bank's loan policy if the bank keeps the loan in its own portfolio....
the underwriters practically wanted my left nut.
Posted on 9/2/10 at 1:56 pm to LSURussian
The Fed runs out of bullets when the American public loses confidence in the currency. History suggests that no one knows when that will happen and that it happens very very quickly, leading to a demand push toward hard assets which results in capital flight and hyperinflation.
Posted on 9/2/10 at 1:57 pm to auditu
Rivers? Is that YOU???
Posted on 9/2/10 at 2:44 pm to auditu
quote:
leading to a demand push toward hard assets which results in capital flight and hyperinflation.
What demand push are you talking about? Commodities are generally cheap and in high supply. I read an analyst report couple of days ago stating that oil should be priced at $10 to $20 bucks a barrel due to the current high supply. And what about all the production from China and India? It's going to be extremely difficult to inflate prices with the current rate of production meeting or exceeding demand. However, on the other hand with the Fed printing money we can see the dollar weaken and prices rise slightly. I just hope the Feds printing press doesn't exceed production.
I'll give you this, there may be pockets of the economy that prices are inflating due to the lack of production and/or bureaucratic regulation. For example the health care industry and the used car industry.
Posted on 9/2/10 at 3:47 pm to GumboPot
Who are YOU, Bankman?!
Other people's research will burn a whole in your pocket. I think you misunderstand hyperinflation. It is not about a 'fast rate of inflation': It is about a loss in confidence in the currency and how the central bank is managing it. It was nothing to do with anything you just spoke about.
quote:
What demand push are you talking about? Commodities are generally cheap and in high supply. I read an analyst report couple of days ago stating that oil should be priced at $10 to $20 bucks a barrel due to the current high supply. And what about all the production from China and India? It's going to be extremely difficult to inflate prices with the current rate of production meeting or exceeding demand. However, on the other hand with the Fed printing money we can see the dollar weaken and prices rise slightly. I just hope the Feds printing press doesn't exceed production.
I'll give you this, there may be pockets of the economy that prices are inflating due to the lack of production and/or bureaucratic regulation. For example the health care industry and the used car industry.
Other people's research will burn a whole in your pocket. I think you misunderstand hyperinflation. It is not about a 'fast rate of inflation': It is about a loss in confidence in the currency and how the central bank is managing it. It was nothing to do with anything you just spoke about.
Posted on 9/2/10 at 11:10 pm to auditu
awwww see it looked like you were going to be given the benefit of the doubt, but then you went and fricked it up...
i predict there is one econ major, one ron paul supporter, and one lifelong banker in this thread
i predict there is one econ major, one ron paul supporter, and one lifelong banker in this thread
Posted on 9/2/10 at 11:29 pm to auditu
quote:I'm the guy who has been posting on here using the same screen name for over 5 years, not like you who keeps changing screen names because you've probably embarrassed yourself so frequently under your previous screen name.
Who are YOU, Bankman?!
Posted on 9/3/10 at 1:11 am to LSURussian
quote:
I'm the guy who has been posting on here using the same screen name for over 5 years, not like you who keeps changing screen names because you've probably embarrassed yourself so frequently under your previous screen name.
Yowsers you're a sensitive banker. Sorry I've had a life. 33k posts? Clearly a hot shot. Sorry for stepping on your turf.
I've now declared you the alpha male. Now get back and contribute value to this board, 'banker'. I'm excited to see what you've got because I haven't read a single post that would insinuate developed knowledge in the investments world. And if you have it, then I would enjoy a more mature, productive dialogue.
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