Thanks for posting....
Unfortunately...the George Soros-inspired Free Trade Globalists on here....they will claim this is all a “conspiracy theory” when in fact it is a reality
These are the same types who claim “CFR does not exist”....yet anyone can read their plans in Foreign Affairs magazine
That the Bush Admin and the Obama Admin are all members of the CFR, Tri-Lats, and Bilderburgers should tell you that what Obama is doing is nothing really new....he is just a little more socialist than Bush
March 13, 2009
Chaos reigns globally. Respected academics and high ranking politicians call for bank nationalization. CNBC reports of “secret” meetings at Goldman Sachs amid fears Geithner cannot get the job done. US equity indices are down more from their highs than the corresponding period in The Great Depression. Pension funds, 401k plans, endowments, insurance companies, etc., are fully exposed, taking heretofore unimagined losses. With nearly everyone in the country exposed to equities in one way or another, the unthinkable begins to seem increasingly plausible. Insurance companies cannot pay claims; pension funds cannot meet their obligations; universities suspend session; Mr. and Mrs. Smith, told just months earlier an unprecedented $700 billion bank bailout was designed to save them and their neighbors on Main St., stand to lose everything. The Fed, having thrown just about everything in its arsenal at the crisis, appears to be losing control. In the most desperate of times, Hatzius calls for the most desperate of measures:
…Fed officials might need to expand their balance sheet by as much as $10 trillion to make policy appropriately accommodative (pg. 2)…To be sure, “quantitative easing”- an increase in base money beyond what is needed to keep the funds rate at zero- by itself may not be sufficient on its own because Treasury bills become perfect substitutes for base money once short-term interest rates have fallen to zero. But the Fed can engage in “credit easing” by purchasing assets whose yields are still positive, including longer-term Treasuries, commercial paper, mortgages, corporate bonds, and perhaps even equities.5 Five days later, the Fed shocks the world (though not, it seems, Goldman Sachs) with its most aggressive policy action yet, expanding both the size and composition of its balance sheet via increased purchases of mortgaged-back securities, agency debt, and long-dated Treasuries. Spreads immediately tighten; Bonds- both IG and HY- scream higher; equities stage one of the most explosive rallies in history; the debate shifts from bank nationalization to record bank profits and excessive pay; financial collapse, along with the terrifying social, political, and economic consequences associated with it, is averted. The war, we are confidently told, is over.
Mission accomplished.
May 2004
Ben Bernanke and Vincent Reinhart (who until 2007 was Director of the Division of Monetary Affairs for the Board of Governors of the Federal Reserve System) publish “Conducting Monetary Policy at Very Low Short-Term Interest Rates” in The American Economic Review. How, they ask, can a central bank effectively move beyond conventional policy measures when short term rates are at or approaching zero? Bernanke and Reinhart suggest three strategies:
Convince market participants rates will stay low for a period beyond current expectations Change the composition of the central bank’s balance sheet (credit easing) Increase the size of the central bank’s balance sheet to a level exceeding what is necessary to achieve zero short term rates (quantitative easing)
Strategy #2 is radically aggressive insofar as it contemplates altering the composition of a central bank’s assets- which, in non-crisis conditions, consists almost entirely of Treasuries of various maturities- to include other, perhaps even riskier assets. For instance:
As an important participant in the Treasury market, the Federal Reserve might be able to influence term premiums, and thus overall yields, by shifting the composition of its holdings, say, from shorter-to longer- dated maturities. In simple terms, if the liquidity or risk characteristics of securities differ, so that investors do not treat all securities as perfect substitutes, then changes in the relative demands by a large purchaser have the potential to alter relative security prices. The same logic might lead the central bank to consider purchasing assets other than government securities, such as corporate bonds or stocks or foreign government bonds. (The Federal Reserve is currently authorized to purchase some foreign government bonds but not most private-sector assets, such as corporate bonds or stocks.)1