Posted on 02/11/2013 11:34:17 AM PST by appeal2
“”Tightening” is when the Fed removes liquidity from the system in an effort to increase interest rates. That is *not* what the Fed is currently doing.”
Oh yeah?
The Federal Reserve Bank of New York is holding over $1.6 Trillion. So why increase by $45 Billion a month the money supply? Because BHO2 is spending a lot of money!
Step 1. The Fed Open Market Committee approves the purchase of U.S. Bonds on the open market.
Step 2. The bonds are purchased by the New York Fed Bank from whomever is offering them for sale on the open market.
Step 3. The Fed pays for the bonds with electronic credits to the seller’s bank, which in turn credits the seller’s bank account. These credits are based on nothing tangible. The Fed just creates them from thin air.
Step 4. The banks use these deposits as reserves. Most banks may loan out ten times (10x) the amount of their reserves to new borrowers, all at interest. This is called Fractional reserve banking.
In this way, a Fed purchase of, say a million dollars worth of bonds, gets turned into over 10 million dollars in bank deposits. The Fed, in effect, creates 10% of this totally new money and the banks create the other 90%.
And people wonder why the U.S. is so deeply in debt.
Gosh, Kevao - it sure reads like a Ponzi scheme to me.
And beat the crap out of them in less time. And . . . the Gringos won't be going back home like the last time.
You are crazy. Nobody is going to pick over the bones of the Republic of Texas(and any other states that wish to align with her). It is the other way around. The USA government is HOLDING back Texas.
I’ve told my kids the same thing. People, understandably, don’t think about what happens after the collapse, but the bottom line is that the country, usually, will still exist. It will be much poorer, but a lot of stuff will be reset. The country just might pull out of it and do well (like Russia, now), or it might reach a critical mass of “takers” and never pull out (like Argentina, now).
The only thing certain: We are going down...the only question is how we pull out.
Yeah.
My post to you was simply to take issue with your comment that:
The Federal Reserve, which is a privately owned bank and NOT a part of our government, is tightening up the money supply
My point was that the Fed is not "tightening" right now, but rather "easing."
And, in response, you gave a long, eloquent, and very accurate summary of what the current Fed policy is. That whole bit you wrote about the Fed purchasing bonds and adding reserves to the banking system, is the very definition of easing.
So I think the confusion here is, you are confusing "tightening" with "easing."
Gosh, Kevao - it sure reads like a Ponzi scheme to me.
A Ponzi scheme is different from what the Fed is doing. In a Ponzi scheme, the first guys in profit, the last are left holding the bag.
What the Fed is doing harms *everyone* who holds dollars and is more aptly described as currency devaluation, savings erosion, destruction of purchasing power, an assault on the value of the US$.
And, returning to Peter Schiff, I would urge you to Google his name and watch any number of his videos. You'll find he (as was his father) is just as much a critic of Fed policy as you or I. How you mixed his family in with the Rothschilds and the other pricks who conspired to create the Creature From Jekyll Island in 1913 is beyond me.
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