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Message
re: Fed balance sheet - a question
Posted on 8/17/10 at 4:28 pm to RaysGoodLiquor
Posted on 8/17/10 at 4:28 pm to RaysGoodLiquor
quote:Wrong about what? The Fed doesn't print "newly issued dollars." That is a function of the Treasury Department. Maybe you also need to research the meaning of money supply so that you can ask questions using the appropriate terminology.
Open market operations--purchases and sales of U.S. Treasury and federal agency securities--are the Federal Reserve's principal tool for implementing monetary policy.
LINK
Looks like you were wrong.
This post was edited on 8/17/10 at 4:34 pm
1
Posted on 8/17/10 at 4:36 pm to LSURussian
quote:
Wrong about what? The Fed doesn't print "newly issued dollars."
I never said the fed printed anything.
quote:
" That is a function of the Treasury Department.
Oh really? The treasury prints currency? Wow, I didn't know that. Obviously only someone as brilliant as yourself could possibly comprehend it. What a genius you are!
quote:
Maybe you also need to research the meaning of money supply so that you can ask questions using the appropriate terminology.
Maybe you should read things before you reply to them, because I never said the fed printed anything.
Posted on 8/17/10 at 4:37 pm to RaysGoodLiquor
Ok. Good luck.....
Posted on 8/17/10 at 4:39 pm to LSURussian
Thanks for wasting my time.
Posted on 8/17/10 at 4:41 pm to RaysGoodLiquor
You're welcome.
ETA: Seriously, go back and read your questions, starting with your original post:
"What happens if the fed balance sheet goes negative?"
After several questions about what you meant, you amended your question to: "I'm asking what would happen if the fed took a net loss."
After Poodlebrain (a CPA, btw) asked you to explain further what you were asking, you revised your question once again: "what happens if, say, the value of the mortgage assets they've purchased declines a lot and they wind up with a negative net worth?"
When I pointed out to you last those two questions were not the same thing, you again changed your question: "Please explain what happens if the assets the fed has (treasuries, mortgages,etc) are no longer sufficient to back the liabilities it has issued (dollars)."
This latest question makes absolutely no sense relative to the Fed's operations. The Fed does not pay its liabilities with its assets nor are its assets used to "back" the dollar. You don't understand the concept of a central bank, its monetary operations or how money supply is expanded or shrunk, or apparently even basic accounting principals or financial statement construction.
And you say I WASTED YOUR TIME?!?
ETA: Seriously, go back and read your questions, starting with your original post:
"What happens if the fed balance sheet goes negative?"
After several questions about what you meant, you amended your question to: "I'm asking what would happen if the fed took a net loss."
After Poodlebrain (a CPA, btw) asked you to explain further what you were asking, you revised your question once again: "what happens if, say, the value of the mortgage assets they've purchased declines a lot and they wind up with a negative net worth?"
When I pointed out to you last those two questions were not the same thing, you again changed your question: "Please explain what happens if the assets the fed has (treasuries, mortgages,etc) are no longer sufficient to back the liabilities it has issued (dollars)."
This latest question makes absolutely no sense relative to the Fed's operations. The Fed does not pay its liabilities with its assets nor are its assets used to "back" the dollar. You don't understand the concept of a central bank, its monetary operations or how money supply is expanded or shrunk, or apparently even basic accounting principals or financial statement construction.
And you say I WASTED YOUR TIME?!?
This post was edited on 8/17/10 at 4:58 pm
Posted on 8/17/10 at 5:06 pm to LSURussian
quote:
And you say I WASTED YOUR TIME?!?
Yes. All you've done is make sure everyone knows how smart you must be without providing anything of actual value to the conversation. That sort of behavior is consistent with snobs and bullshite artists alike, which are you?
quote:
The Fed does not pay its liabilities with its assets ....
Federal reserve notes and deposits are liabilities of the fed. Treasuries are assets of the fed. When it sells those securities back onto the market, it is paying a liability with an asset.
I'm beginning to think you're probably more of a bullshite artist than a snob. I should have figured it out when you falsely accused me of saying that the fed "printed" the money just so you could show the world how smart you are for knowing that the treasury prints currency.
This post was edited on 8/17/10 at 5:13 pm
Posted on 8/17/10 at 5:32 pm to RaysGoodLiquor
quote:Everyone else on here already knows how smart I am.
All you've done is make sure everyone knows how smart you must be
quote:Ummmmmm.....I'll have to go with 'snob' on that one.
That sort of behavior is consistent with snobs and bullshite artists alike, which are you?
You've obviously got your feelings hurt.
Posted on 8/17/10 at 5:38 pm to LSURussian
quote:
Ummmmmm.....I'll have to go with 'snob' on that one.
You can be both.
Posted on 8/17/10 at 5:45 pm to RaysGoodLiquor
quote:No, it isn't. The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill. Again, you're lost in the concept of a central bank's operations.
When it sells those securities back onto the market, it is paying a liability with an asset.
quote:No, I'm a snob. Just ask anyone here....
I'm beginning to think you're probably more of a bullshite artist than a snob.
quote:You were using the concept of money in this manner:
I should have figured it out when you falsely accused me of saying that the fed "printed" the money
quote:
If the fed doesn't issue dollars ( page 2, near the bottom of the page)
The Fed does not "issue" dollars.
It expands the money supply. It "creates" money.
The Treasury Department "issues" dollars by printing them. I don't think you understand that your your terminology is improper.
quote:Like that's a secret?????
just so you could show the world how smart you are for knowing that the treasury prints currency.
I'm going to have to go with kfizz's comment: awjeez......
Posted on 8/17/10 at 5:59 pm to LSURussian
quote:
No, it isn't. The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill.
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
quote:
The Fed does not "issue" dollars.
It expands the money supply. It "creates" money.
The Treasury Department "issues" dollars by printing them. I don't think you understand that your your terminology is improper.
The treasury department doesn't issue any dollars, they print currency. It doesn't turn into actual money till the fed puts it into circulation. Try reading a dollar bill, it says "Federal Reserve Note". I think you've got your terminology wrong.
BTW, you might want to inform U.S. Code that its using the wrong terminology:
quote:
Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application.
LINK
This post was edited on 8/17/10 at 6:05 pm
Posted on 8/17/10 at 6:06 pm to RaysGoodLiquor
Here's some more improper terminology being used by the law which creates the fed:
LINK
And more:
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
quote:
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized.
LINK
And more:
quote:
In order to furnish suitable notes for circulation as Federal reserve notes, the Secretary of the Treasury shall cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000 as may be required to supply the Federal Reserve banks. Such notes shall be in form and tenor as directed by the Secretary of the Treasury under the provisions of this chapter and shall bear the distinctive numbers of the several Federal reserve banks through which they are issued.
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
This post was edited on 8/17/10 at 6:09 pm
Posted on 8/17/10 at 6:29 pm to RaysGoodLiquor
The word "issue" as you used it in earlier posts in this thread is totally different from the way the word is used in the link you provided.
Used your way, if the Fed buys a t-bill during its open market operations, it "issues" more Federal Reserve Notes. And that just does not happen.
The Treasury Department prints the currency. Treasury uses the Fed to distribute the currency through its branches and member banks. Until that distribution (issue) occurs, those currency notes are just paper. Only after those pieces of paper are put into circulation by the Fed do they become legal tender.
But Federal Reserve Notes in circulation are a very small part of the money supply. Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
Good luck to you in your quest to expand your financial knowledge.
Used your way, if the Fed buys a t-bill during its open market operations, it "issues" more Federal Reserve Notes. And that just does not happen.
The Treasury Department prints the currency. Treasury uses the Fed to distribute the currency through its branches and member banks. Until that distribution (issue) occurs, those currency notes are just paper. Only after those pieces of paper are put into circulation by the Fed do they become legal tender.
But Federal Reserve Notes in circulation are a very small part of the money supply. Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
Good luck to you in your quest to expand your financial knowledge.
Posted on 8/17/10 at 6:33 pm to LSURussian
quote:
The word "issue" as you used it in earlier posts in this thread is totally different from the way the word is used in the link you provided.
OKaay!!!!
Care to show me where in the law it states that the Treasury "issues dollars" as you claim?
quote:
Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
You don't have to genius, I understand it quite well, its just not that complicated. And its good for you, too, because you're probably not even capable of explaining it, at least not without letting on that you are superior to everyone.
quote:
Good luck to you in your quest to expand your financial knowledge.
Good luck to you in your quest to impress everyone!
This post was edited on 8/17/10 at 6:37 pm
Posted on 8/17/10 at 6:55 pm to RaysGoodLiquor
quote:
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
Who's balance sheet? Be specific
Posted on 8/17/10 at 6:58 pm to TROLA
quote:
Who's balance sheet? Be specific
The balance sheet of the federal reserve bank which bought the asset.
Posted on 8/17/10 at 7:03 pm to RaysGoodLiquor
The fed remits its net profits after paying dividends to the U.S. Government - does that mean if they had net losses the U.S. Government would pay for it?
Posted on 8/17/10 at 8:01 pm to RaysGoodLiquor
Ray, no disrespect intended but a bunch of us actually have professional experience in this field. Based on your questions you don't. There's nothing wrong with that, I don't understand a lot of other professions myself but I don't pretend that I do and am willing to sit back and learn in those cases rather than lecture those who actually do know something.
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
quote:
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
Posted on 8/17/10 at 8:06 pm to foshizzle
quote:
Ray, no disrespect intended but a bunch of us actually have professional experience in this field. Based on your questions you don't. There's nothing wrong with that, I don't understand a lot of other professions myself but I don't pretend that I do and am willing to sit back and learn in those cases rather than lecture those who actually do know something.
That's great. what's your point?
quote:
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
I'm referring to the balance sheets of the federal reserve banks, not the balance sheet of the U.S. Government.
Posted on 8/17/10 at 8:08 pm to LSURussian
quote:
The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill.
I thought the fed's operating expenses were paid for by the interest it received from its assets.
Posted on 8/17/10 at 8:29 pm to RaysGoodLiquor
quote:
I'm referring to the balance sheets of the federal reserve banks, not the balance sheet of the U.S. Government.
OK, that's a fair statement. But in that case I think I've answered that question - the money supply changes. The Federal Reserve doesn't have to have any "hard" assets backing anything, nor does it need to given its mission.
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