Posted on 08/10/2010 11:49:47 AM PDT by John W
Acknowledging that the recovery has slowed, the Federal Reserve announced Tuesday that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities, The New York Times’s Sewell Chan reports from Washington.
By buying government debt, the Fed is taking an unmistakable step to maintain the large amount of money that it pumped into the economy, starting in 2007, to prop up the financial and housing markets.
(Excerpt) Read more at dealbook.blogs.nytimes.com ...
Why would I deny an obvious fact? So break it down, where does it all go?
I give up. Why would you?
"So break it down, where does it all go?"
That information is readily available. You will learn much more if you do that work yourself.
Let me know when you figure out that loans increase the money supply, even under the gold standard.
S: Rather, they book both the deposit & asset out of thin air when the loan is made,
Nice try at backtracking Todd - you explicitly said "borrower cashes the check". Why are you trying to wiggle out of this by changing the context of your comment? Realize you f'd up?
Look, you've played the prince of fools on far too many threads. I always suspected you were a clueless disruptor, but now I have my proof. Perhaps I should re-post your comment above on the various threads you frequent?
That's right folks, good ole Todd actually used this example above: a borrower attempts to withdraw $500K after a home loan is approved in order to deposit the cash with an escrow officer. Yeah right, great example Toddster. {snicker}
See #215. Anyone capable of posting this comment is completely discredited. He’s just a disruptor; crap, he could be a bored 20 y.o. just yanking everyone’s chain.
Let me know when you figure out that the Fed creates 'money' out of thin-air with an accounting entry.
Cash or check, don't matter. Try starting a bank with no deposits and see how far you get when your first loan check bounces, joker.
Walk me through it. A bank with no deposits "book both the deposit & asset out of thin air when the loan is made". The borrower takes out a $500K mortgage. He hands the check over to the seller and the seller deposits the check in a bank across town.
The seller's bank tries to get the money from the buyer's bank. What happens next?
Of course the Fed creates money out of thin air. Now pull your head out long enough to explain where the Fed’s earnings go.
08/11/2010 12:27:23 PM PDT · 215 of 219 Toddsterpatriot to semantic
S: Rather, they book both the deposit & asset out of thin air when the loan is made,
See Toddster, I'm even courteous enough to ping you when I re-post your absurd comment. Bravo, big fella.
You’re not getting out of it. You said it, now man up or STFU.
Good, admitting to the truth is the first step toward recovery.
"Now pull your head out long enough to explain where the Fed’s earnings go."
That information is readily available. You will learn much more if you do that work yourself.
Sometimes, people are useful to me even when they think they aren’t.
That's what I should've said, thanks.
Something else is that while FRB creates money out of nothing it doesn't create wealth --that's something different. FRB creates gold based bank notes but GourmetDan's still right when he points out that FRB doesn't create the gold bars used as reserve assets.
The fact that the notes are convertible to bars on demand is where we get turned around.
waiting around until the deflationary collapse kicks in
We had that all the time with gold based dollars and we haven't had it since. While I can't say what tomorrow will bring, I can say that nobody's convinced me to bet my money on doom'n'gloom happening tomorrow.
Try taking some fiat to the Fed and 'converting' it into a gold bar.
You'll get turned around all right... and thrown right out the door.
This is getting silly, we all know federal reserve notes are exchanged for gold bars every day.
That's because it's happening right now - the Z1 report tells the tale. An FRB system simply cannot withstand deflation of any kind. Like a shark which must continually swim forward, the aggregate credit-money supply system must continually expand or the entire house of cards comes crashing down.
If it wasn't for the combined Fed & Treasury activities, we'd be living Mad Max right now. Still, all they've done is kick the can. Nothing has been solved, so unless 'organic' lending activity somehow miraculously picks up from increased final demand, we still have our date with destiny.
Also, I think it's unwise to correlate our lack of deflation since the US went off the gold standard and embraced full fiat. Something about winning WWII, industrial dominance, abundant domestic oil reserves, a cohesive mono-culture, high incomes rather than debt financing consumer spending, and the $USD acting as the global reserve currency might have had something to do with it.
Demographic change, off-shoring, domestic resource depletion (what, we're up to 2/3 of our oil now coming in from foreign sources, 1/2 of which are hostile to the US?), and staggering unpayable debt loads are all conspiring to bring this little party to an end.
Oh good... Will the banks just send us a statement indicating our debt is paid off?
Should we wait to hear from our banks or just call them to confirm?
Should we discard our bills or just return to sender?
Isn't Federal Express part of the Federal Reserve?
Touche'- very clever. Yes, what is the gold exchange rate today for FRN's? $1,200 per ounce?
FOFOA has speculated that the true FRB value of gold is above $50,000. That's why the gold bugs argue that gold will skyrocket if the $USD ponzi crashes. All those excess 100:1 claims compressing down to one universal wealth standard.
I understand their POV, which is why I think the US will attempt a controlled deflation (aka demolition) in order to preserve the remnants of reserve currency status. Better to have everyone in rags rather than risk a complete implosion.
Indeed. You said, "FRB creates gold based bank notes..."
FRB doesn't create 'gold based bank notes'. Fiat isn't backed by anything, much less gold.
"...we all know federal reserve notes are exchanged for gold bars every day.
The fact that you can exchange fiat for bars doesn't mean that it is gold-based any more than the fact that you can exchange fiat for six-packs means that it is beer-based.
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