Skip to comments.Fed: No taper
Posted on 09/18/2013 11:13:08 AM PDT by HojczykEdited on 09/18/2013 11:17:36 AM PDT by Admin Moderator. [history]
An economy still stumbling toward recovery was not enough to sway the Federal Reserve, which defied market expectations Wednesday and said it will not begin pulling back on its monthly asset-purchasing program. Stocks surged on the news but bond yields were flat.
(Excerpt) Read more at cnbc.com ...
More air into the balloon.
Makes a bigger noise when it pops.
amazed at this, really.
I had absolutely expected them to announce a tapering, and not even such a small one.
“This is incredibly wimpy,” David Kelly, chief market strategist at Morgan Stanley, told CNBC.
The Fed said it was unsatisfied with the pace of economic growth and felt the timing was not right to make a change in quantitative easing.
This is not going to end well.
I recall watching FMOC during the dot com bubble, and being thrilled with the decision (cant remember if it was increased rates or lower rates) and watching the dot coms shoot up 5% in a couple of minutes.
That ended well, didn’t it.
$85 BILLION created every month, out of thin air, and used to purchase stocks in order to maintain the illusion that the market is doing well -
with the intent of keeping real money, yours, in the market.
THEY know when the music is going to stop - you don’t.
DJIA to 20,000 by the 2014 election.
Gold and stocks shoot up, treasury yields tank.
Wonder how many ordinary people know what “asset purchasing” means. For that matter, how many people know what “bond buying” means?
They mean borrowing of course and these activities should always be called ‘borrowing’ when the audience is ordinary people.
It’s tough to get a crack addict to stop taking the drug, when the crash it would cause is so bad.
And, if you don’t like giving the Big, Obama-supporting New York Bankers $87 Billion a month in free cash for eternity, YOU MUSS BE A RASSISS! (or one of those crazy conservative Christian-types)
Hey, once the real rate of inflation has to be recognized the Dow should go straight to 100,000. Now 100,000 units of the Dow will still buy the same amount of gasoline or potatoes as 15,000 units do today, but at least St. Barack will get to feel good about himself. :)
It certainly turned the equities market around. Must be like meth.
A whole lot of people are going to have their asses handed to them...again. The markets have gone full retard...again.
Things are not getting better, no matter how much they manipulate the markets, and the sycophantic media praises Obama.
More and more people are dropping into poverty, every day, yet if you note that, you must be CRAZY!!, or a racist.
It’s OUR fault, folks. We sat on our asses for decades and let the Radical Socialist Dems take control of the language, and this is our just desert.
One 401 is on full retard. The other is in cash. Who the hell knows what to do.
I just buy a little more silver each week.
Not sustainable. We are Argentina.
DJIA to 20,000 by the 2014 election.
Kinda meaningless, cause the dollar’s in collapse mode now.
Congress has abdicated its responsibility to “coin money and regulate the value thereof...”
How anyone can keep money in that casino is beyond me. I was here years ago telling people that you can’t have a solid economy with a country of wedding planners and mortgage brokers. Me and those like me were lucky if we were only called gloom and doomers back then. Do people with 401k and IRA money in this market think these asset prices are reflectiong anything near reality now that we’ve gone from wedding planners and mortgage brokers to 29 hour a week fast food workers?
My companies 401k rep was just here yesterday. Boy he was pumping 401ks and the stock market.
No word of the govt taking over 401ks from him of course.
Free trade will fix it.
And there goes the prices of precious metals....zooooom!
lets see, 5 years ago, oil was around 30, today its 108. but Bernanke says there’s no inflation.
would be hilarious if it wasn’t so sad.
“Wonder how many ordinary people know what asset purchasing means.”
a couple of years ago on wrko in boston, there was an overnight radio show called the steve Lavelle broadcast.
the subject was price of gas. I called in and I said well its very much tied to qe and the dollars being pumped into the economy. the host didn’t even know there was such a thing as qe.
then when I told him it was the fed he went ballistic, so i’m assuming talk of the fed is verboten.
The Fake White Indian kneecapped Larry Summers.
Message Received and Understood.
It doesn’t work so they will keep doing it. lol
You bring up a subject that I’m not real sure of. Can the Fed (or any other agency) create money out of thin air? I think they always have to borrow the money they put into the system.
That in turn means they gotta pay it back sometimes.
So if they gotta pay it back then such ‘created’ money isn’t permanently in circulation since it the government (or Fed) would have to take back the money to pay off the creditors, plus interest.
Am I missing something here?
In the current qe process, is the Fed buying bonds that already exist in the private sector, or they borrowing from the treasury, or what?
My final question: does money get created that stays in circulation forever?
On what planet? In what solar system?
And an ownership society! Who wants a pony?
Pure monetary insanity. The inmates are running the asylum now.
My primary fiscal plan, quite honestly, is to pay off debt and buy assets. Hard assets. So far, it hasn’t yielded much in terms of $$. But I sleep well at night and I don’t worry about unemployment.
Gold up $44/oz, silver up almost 5%, oil up 2.5%.
Gasoline to follow. In California it’s back over $4/gallon.
Because banks are holding onto the cash?
They will keep this up until a Republican is elected president. It will then be allowed to pop, putting the blame on republicans and conservative fiscal policy. Just watch.
Energy and food are deliberately withheld from inflation calculations: too volatile! lol
I want a pony!.
Burning the candle at both ends = no taper.
Vote for Vermin Supreme!
5 years ago, oil was about $112, two months before that, it hit $147. Today it popped almost $3 to $108.
I was also in Pittsburgh at the time. What a difference a little more time made; after 3 1/2 years most were "Reagan Democrats"!
Or, at least until after the 2014 election.
No Taper Bernanke Caves
There. Fixed it.
They need to go back and read Chapter One of their economics textbooks.
Economic growth does not come from fiat money being pumped into the economy. It comes from the chance to make a profit.
Right now, with the coming of draconian environmental regulations and Obamcare, there’s absolutely no chance to make a profit.
That was my first thought too.
Barnake worships at the feet of Keynes.
No, I don't believe the Fed ever has to pay the money back. My understanding is that the Fed has been given the power by Congress to print money out of thin air at their own discretion with a dual mandate to "control inflation" and "maximize employment." This is how the system works.
Let's say that the US government wants a billion dollars of cash to spend and no private investors want to buy Treasury bonds. How does the US government get the cash they want if their are no private investors who want to buy? Well, the government won't want to raise taxes because that is politically unpopular. So where does the money come from?
Well, of course! The Government goes to the Federal Reserve Bank and asks for a LOAN of a billion dollars. The Fed does not actually have a billion dollars to give the government, but that's not a problem. The Fed will create the money out of thin air, by creating a bank account and electronically saying that it has a billion dollars in it. And just like that *poof*, the government has a billion dollars to spend. Because the computer says that the government now has a billion dollars in their account.
In exchange for this newly created billion dollars of cash, the US Treasury Department will usually give the Fed a billion dollars of US Treasury bonds. Since these treasury bonds are on interest. The US government will owe the Fed a billion dollars plus the interest on the treasury bonds. This is a problem though, because the US government will owe more money to the Fed than the Fed actually printed, so it will be essentially impossible to ever pay off the National Debt in full.
In short, the Fed is basically a legalized counterfeiting operation. They can create as much money as they like for free, but they loan that money out to the US government and other banks on interest.
The Fed doesn't have to pay anyone back. It's not the Fed borrowing from the Treasury. It's the Treasury borrowing from the Fed. Thus it's the government who has to pay the Fed back. Unfortunately, this means that ultimately, the taxpayers who will get the short end of the stick because they have to pay the Fed all of the money they created plus interest. Quite a racket, isn't it?
Now the US government could cut out the middleman and issue money to itself directly interest free like it used to do, but I don't think that the big banks would be very found of that idea.