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Message
Federal Reserve and Quantitative Easing (QE)
Posted on 6/28/13 at 7:01 pm
Posted on 6/28/13 at 7:01 pm
I always understood QE involved the Federal Reserve actually printing money. Current QE rate is set at $ 85 billion (I believe) monthly. Apparently that's not the case. If I understand this correctly, the Fed does not actually print money, it's a digitalized transaction. Further, the folks who really benefit from this practice is Wall Street. I always assumed the 'funny money' found its way to mortgage lenders and banks, and we the consumer (home buyers, borrowers) benefit from the availability of huge pots of money. Thus the influx of capital = stimulation of the economy = drop in unemployment rate. Right?
Ben Bernanke announced last week Fed was halting QE. Following his announcment the Stock Market took a major dive. This week he comes back and announces the Fed will continue QE at the present rate, and the market rebounds. So I'm here thinking this 'funny money' the Fed is supposedly printing is, 1) running up the deficit, 2) hastening the onslaught of hyperinflation, 3) artifically creating the illusion of Wealth, and, 4) threatening the dollar as the World Reserve Currency.
But to my surpirse....it's just a form of creative economics.....like creating a digitalized transaction out of thin air. I mean somebody is left with the bill....right? Looks like to me all QE is doing is propping up Wall Street!
Does anybody have any idea where this will all lead us to?
Can somebody explain this to me? Maybe one of you guys in Finance.
Inquiring minds want to know?
Ben Bernanke announced last week Fed was halting QE. Following his announcment the Stock Market took a major dive. This week he comes back and announces the Fed will continue QE at the present rate, and the market rebounds. So I'm here thinking this 'funny money' the Fed is supposedly printing is, 1) running up the deficit, 2) hastening the onslaught of hyperinflation, 3) artifically creating the illusion of Wealth, and, 4) threatening the dollar as the World Reserve Currency.
But to my surpirse....it's just a form of creative economics.....like creating a digitalized transaction out of thin air. I mean somebody is left with the bill....right? Looks like to me all QE is doing is propping up Wall Street!
Does anybody have any idea where this will all lead us to?
Can somebody explain this to me? Maybe one of you guys in Finance.
Inquiring minds want to know?
This post was edited on 6/28/13 at 8:02 pm
5
Posted on 6/28/13 at 7:19 pm to Matrixman
we're screwed, buy silver coins, build a bunker, and buy lots of canned food and water
Posted on 6/28/13 at 7:30 pm to ThaBigFella
don't forget weapons and ammunition.Posted on 6/28/13 at 7:44 pm to ThaBigFella
quote:
we're screwed
I'm thinking maybe you're right. Maybe could buy some Gold....but i don't think the price has hit bottom yet. Miners announced that Gold is selling below what it cost them to dig it up and process it. So are we looking at a further reduction in the price of that commodity? IMO...possible!
I got a suggestion....put your money in Rabbits. Things get really bad you can always eat the principal!!
This post was edited on 6/28/13 at 8:11 pm
Posted on 6/28/13 at 8:22 pm to Matrixman
I hear VolsShaft's buttcoins are the new bitcoins
Posted on 6/28/13 at 8:26 pm to Matrixman
The Fed has a variety of options at it's disposal when it comes to QE. Currently, they are purchasing bonds in the open market in droves.
In a theoretical sense, QE is supposed to drive interest rates down, urging investors to spend money now, instead of sitting on their hands, thus stimulating the economy.
What's actually happening?
1. Banks are sitting on large stockpiles of cash. The cash that is supposed to be getting to consumers hands to spend and stimulate isn't getting there, for a variety of reasons.
2. Since open market bond buying drives down the yield on bonds, to get returns, then investors must put their money into equities to gain returns.
3. Our dollar weakens as the M2 supply increases at huge rates.
4.
Once again, Ben has said this is what he wants. He wants people to "feel richer" because the more wealthy people feel, the more money they spend.
In a theoretical sense, QE is supposed to drive interest rates down, urging investors to spend money now, instead of sitting on their hands, thus stimulating the economy.
What's actually happening?
1. Banks are sitting on large stockpiles of cash. The cash that is supposed to be getting to consumers hands to spend and stimulate isn't getting there, for a variety of reasons.
2. Since open market bond buying drives down the yield on bonds, to get returns, then investors must put their money into equities to gain returns.
3. Our dollar weakens as the M2 supply increases at huge rates.
4.
quote:
3) artifically creating the illusion of Wealth
Once again, Ben has said this is what he wants. He wants people to "feel richer" because the more wealthy people feel, the more money they spend.
Posted on 6/28/13 at 8:27 pm to Matrixman
quote:
Ben Bernanke announced last week Fed was halting QE
Uh...no, he didn't.
quote:
This week he comes back and announces the Fed will continue QE at the present rate
Uh....no, he didn't.
I'm not sure if your questions are serious or if you're just trolling.
Posted on 6/28/13 at 8:28 pm to Matrixman
quote:
.but i don't think the price has hit bottom yet. Miners announced that Gold is selling below what it cost them to dig it up and process it. So are we looking at a further reduction in the price of that commodity? IMO...possible!
Why do you think that would that result in a further price reduction, exactly?
Posted on 6/28/13 at 8:29 pm to LSURussian
quote:
Ben Bernanke announced last week Fed was halting QE
Uh...no, he didn't.
quote:
This week he comes back and announces the Fed will continue QE at the present rate
Uh....no, he didn't.
ha, thank you. I was wondering if I missed something....
Posted on 6/28/13 at 9:29 pm to Matrixman
It seems to me that he is saying that he will be doing what he is doing for the foreseeable future. However, the market seems to want to call him a liar.
ETA: corrections,cause I type like a monkey.
ETA: corrections,cause I type like a monkey.
This post was edited on 6/29/13 at 6:04 am
Posted on 6/28/13 at 10:03 pm to Janky
I just applied for Vivos Indiana $50,000 is nothing to ensure im one of the 80 people who gets a spot when SHTF
LINK
I highly suggest you book your spot, they offer financing, I paid cash. You guys are so screwed, I might be the only TD poster left.
Summary
also
Im interested in starting a business of this nature......
LINK
I highly suggest you book your spot, they offer financing, I paid cash. You guys are so screwed, I might be the only TD poster left.
Summary
quote:
Vivos is effectively a modern day Noah’s Ark, providing people with an “Life-Assurance Solution” to preserve their life and that of their loved ones. Vivos is the most viable solution for the continuance of life, providing an underground "biosphere" to survive virtually any Earth-devastating catastrophe, whether from nature, the cosmos, or an act of mankind.
also
quote:
Vivos will also become a depository of DNA and reproductive cells. With our Cryovault program we will help preserve the biodiversity of the planet from a possible life-extinction event. This will assure the greatest chance of future restoration of the planet, regardless of the coming catastrophes. Vivos may be the next "Genesis" for Earth, providing a new beginning for life as we know it.
Im interested in starting a business of this nature......
This post was edited on 6/28/13 at 10:05 pm
Posted on 6/29/13 at 8:04 am to LSURussian
quote:
Uh...no, he didn't.
Uh....yes, he did.....
From a Financial News Marticle titled:"Federal Reserve signals unease with QE, and an end in 2013.
"The article stated, "Quantitative easing, or creating money to buy financial assets, could end “well before the end of 2013” because of concerns by several policy makers over financial stability, and that the Fed’s portfolio of assets – now over $2-trillion (U.S.) – is becoming too large, according to minutes of the central bank’s December policy meeting, released in Washington after the customary three-week delay".
Please! If you can't answer to my questions, then let somebody else who can. I'm not a troll. Federal Reserve monetary policy affects us all, including me. I'm just trying to educate myself on this issue. I always believed that manipulaton of its currency, is the greatest evil a country can engage in.
I don't put things out there until I've done a reasonable effort to educate myself on the issue. Fact is the Fed has indicated an end to QE as indicted in the above. Aparently his announcement spooked the Stock Market.
This post was edited on 6/29/13 at 8:05 am
Posted on 6/29/13 at 8:37 am to Matrixman
Link the article.
I listened to Bernanke's press conference after the FMOC meeting last week and he never said anything that your
"quote" says he said. You said In your earlier post that Bernanke said the Fed was ending QE. Your quote in the most recent post doesn't quote Bernanke at all.
So, again, uh..no, he didn't say QE is ending.
I listened to Bernanke's press conference after the FMOC meeting last week and he never said anything that your
"quote" says he said. You said In your earlier post that Bernanke said the Fed was ending QE. Your quote in the most recent post doesn't quote Bernanke at all.
So, again, uh..no, he didn't say QE is ending.
This post was edited on 6/29/13 at 8:40 am
Posted on 6/29/13 at 8:56 am to LSURussian
Slightly off topic, but… what is the Fed’s plan for all the bonds they are buying? And, if they hold them until maturity will that lessen the impact once they stop buying as opposed to selling them?
Posted on 6/29/13 at 9:23 am to PlanoPrivateer
The have indicated they plan on holding till maturity the QE bonds they have accumulated.
Posted on 6/29/13 at 9:48 am to LSURussian
He did not say he was going to stop. He might have said if the indicators continue to improve at the current he will begin tapering. That is a long way away from him saying he is going to stop.
Posted on 6/29/13 at 9:51 am to Janky
but when he does stop.....you'll wish you had invested $50,000 for your spot underground with the other 79 of us.
Posted on 6/29/13 at 9:51 am to Janky
Correct.
Posted on 6/29/13 at 10:07 am to LSURussian
My question is did BB say anything different than he has said since QE started? From what I recall his message has been steadfast
Posted on 6/29/13 at 10:01 pm to ItNeverRains
Bernanke said at some point in the future the FOMC will start taking its foot off the gas but it's a ways off before the brakes will be used.
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