Out of Thin Air

Econ 101 Blog ^ | 3-19-09 | Newshound

[NEWSHOUND]

Like a magician who diverts our attention to his right hand while the trick is being performed with his left, the government continues to blow smoke about the AIG bonuses while the Federal Reserve produces money out of thin air.

Yesterday the Fed moved to buy 300 billion dollars worth of longer-term Treasury securities in order to 'drive interest rates for home loans even lower'. This is the first time in 50 years that the Federal Reserve has purchased Treasury securities (although back then it was for different reasons). But since the credit markets still remain essentially frozen, driving down the interest rates for home loans seems a bit superfluous. After all, if you can't get a loan, who cares what the interest rate is?

[NEWSHOUND]

If you think the Federal Reserve's move to buy long-term treasuries yesterday was was just a quick fix designed to help bump up the stock market and unfreeze credit markets, think again.

[sten]

just how much money is actually out there? every bill could be considered a share in the US.... and pushing out 1 trillion more shares will dilute the shareholders.

so the question is... how much did i just get diluted?

[Yo-Yo]

so the question is... how much did i just get diluted?

$300 Billion ain't the half of it...

US Federal Reserve plans $1.15 trillion injection

In a development which mirrors recent actions by the Bank of England, America's central bank will buy $300bn of US government securities in an attempt to pump more funds into the economy by monetising its own debt.

The Federal Open Markets Committee (FOMC), chaired by Ben Bernanke, also said that it plans to buy up to $750bn of additional agency mortgage-backed securities, on top of $500bn already committed, and double the agency debt it plans to buy this year from $100bn to $200bn.

[NEWSHOUND]

Not sure how many total ‘shares’ are out there, but the Fed just utilized their Doomsday option. Their only recourse is to continue to dilute the market as they drive away other prospective buyers. Somehow I don’t relish $50 a gallon gas and $20 a loaf bread, but that’s just me. Hyperinflation here we come. Maybe we should invest in wheelbarrows. We’ll need them to haul around all the money it will take to do the grocery shopping.

[NEWSHOUND]

Just wanted to update you on the money supply found a GREAT CHART here. Basically, since the economic trouble hit at the end of 2008 the money supply has gone from just over 800 billion dollars to 1.7 trillion (with a T) dollars. We've more than doubled the supply. Ouch.

[bmwcyle]

Glenn Beck: Last Line of Defense

[Just another Joe]

After all, if you can't get a loan, who cares what the interest rate is?

Bingo.