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Posted on 12/10/2008 6:01:30 PM PST by rabscuttle385
The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.
Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.
Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.
(Excerpt) Read more at online.wsj.com ...
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Roller coasters are fun right?
This doesn’t look like it’s going to be a good couple years.
No it's not - very generally speaking.
That said, it's not all that bad for those who bought gold.
It's also not so bad for those who don't mind another nail in the coffin of our fiat money system.
Unelected and unchecked, the Fed is out of control. They are doing everything they can to prop up a bad system that cannot be supported. Why the fear of having the bad debt and bad assets flushed out into the open? Why not just take the TARP money and create new banks that private investors can buy into? Okay, so houses have come down in value and can likely fall another 15-20%, some big companies can fail, some people will suffer financial ruin. Some will not. If we can get a reset on everything then the market can get back to work.
A very good question. I wouldn't have liked that much either, as it isn't the government's job to CREATE a bank, but it would have sure as hell been better than propping up failed banks. I fear nothing is going to get any better from here.
Our elected "leaders" are both clueless and foolish, and the people that have elected them are even worse. We are SO screwed.
Hell no.
Letting the current system fail is what is needed. The new banking system would begin with the government taking the $700 billion and creating regional banks that investors could buy into. The banks would be capitalized with clean balance sheets. That would be mighty attractive to investors who want a place to put their money to work as an investor and a depositor. The government takes the IPO money and exits the business completely within a short amount of time.
If you are a viable customer then you get a loan. The banks would have traditional reserve requirements so no games.
The Fed needs to consider an asset sale. For example, it owns nearly 2/3 of the land west of the Mississipi river. Some parcels would fetch a pretty penny.
How nuch can we get for California?
They have already thrown in the kitchen sink. So what comes after the kitchen sink? Bathroom toiletries or roofing materials?
Assuming the Fed succeeds in preventing runaway deflation, there will be no middle ground. We will have runaway inflation. I simply can’t seem them even attempting to halt the liquidity before they are absolutely complete assured that deflation is NOT possible. By then, liquidity will be a torrent and we will snap to very high inflation.
There is no other course. Either the Fed will fail to reflate and all the liquidity will slosh around worthlessly, or worse still, be simply hoarded unmovingly as it is today — or the Fed will succeed all too well, leading to massive inflation I’m not saying “hyperinflation”, but something worse than we saw in the oil shock of the 70s.
This is going to be brutal. “May you live in interesting times”, indeed.
Massive inflation is the only way they have out. Not just for the current crisis and debt load, but for the 50 or so TRILLION (actually more) coming due for the baby boomers in the next decade or so.
One major problem with the coming inflation will be when our currency holders see it coming and begin to prefer dumping dollars to getting screwed.
“May you live in interesting times”, indeed.
Interesting that you put it that way. The Chinese - who coined the phrase - may be one of the largest dollar dumpers.
The problem is that a reset with the same bad actors in place and the same bad practices will just lead us right back to this point. It is going to take real pain for everyone to change. The problem with this though is the perpetual adolescents are in charge and to them pain is waiting 5 minutes for a latte.
There is a reset option. Let the bad banks fail, take the TARP money and create new ones then spin them off to the private sector. The credit worthy get their loans and capital, investors have banks with clean balance sheets that they can invest in and the confidence is restored.
There are two other ways out: sale of assets such as federal land, and to produce our way out. The Left cannot bear either of these options, so it will try denial via inflation.
Fed: What happened to making FDIC depositors’ money whole, with FDIC ins - and stopping there?
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