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Fed to Buy U.S. Debt, Saying Recovery Has Slowed
The New York Times ^ | August 10, 2010 | The New York Times

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 ...


TOPICS: Breaking News; Business/Economy; News/Current Events
KEYWORDS: bernanke; deflation; easing; economy; fed; federalreserve; recovery; thefed; treasuries; treasuties
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To: expat_panama
"Learn something new every day I guess..."

I'm curious as to whether you learned how wrong your statement was in post #233 when you said "FRB creates gold based bank notes..."?

281 posted on 08/12/2010 8:44:56 AM PDT by GourmetDan (Eccl 10:2 - The heart of the wise inclines to the right, but the heart of the fool to the left.)
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To: palmer
If I were borrowing from the Fed, I would be borrowing at 0.25%

Banks cannot borrow from the Fed at 0.25%.

It’s a guaranteed money-maker as long as I ensure that “deflation” rears its ugly head

I thought you only made money because the Fed will buy all the 2 year notes? How many do you imagine they'll buy?

282 posted on 08/12/2010 8:51:51 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: palmer
Primary dealers can't refuse.

Rather trivial point

LOL! You said selling the Treasuries was easier said than done for the Fed. You were wrong. Trivial? LOL!

283 posted on 08/12/2010 8:53:37 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: expat_panama
Please tell me if we're talking about the kind of FRB where banks loan out deposits at interest and pay depositors part of the earnings.

No, that's not what I'm talking about and that's not what fractional reserve banking means. I explained the thing in post 264 above and have tried five or six times to explain it to toddster, which is sort of like talking to a tree.

284 posted on 08/12/2010 10:19:30 AM PDT by wendy1946
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To: Toddsterpatriot

They will buy enough to keep the price up at their target level. That target price will depend on the perception of the economy and can be raised as much as they feel is necessary. The nice thing for the buyers is all they have to do is manipulate perceptions to guarantee their profits (don’t have to produce anything, etc)


285 posted on 08/12/2010 10:23:54 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: palmer
The nice thing for the buyers is all they have to do is manipulate perceptions to guarantee their profits

Yeah, because when you buy a 2 year note at 99.92 with a 0.625% coupon, you've got a lot of upside potential.

286 posted on 08/12/2010 10:27:24 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
LOL! You said selling the Treasuries was easier said than done for the Fed. You were wrong. Trivial? LOL!

So what stopped them in 2008? They could have kept selling all the excess securities they bought during early 2008 when they were frantically bailing out the financial market. Well it turns out once they started their little scheme (pump credit by buying securities), the credit markets took that into account and tanked at just the threat of the Fed stopping their purchases. So the Fed can't stop and can't just start selling to all those primary dealers who can't refuse to buy. Not without massive deleveraging and another market drop like 2008. That's why it's (a lot) easier said than done.

287 posted on 08/12/2010 10:29:17 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: palmer; Pelham
So what stopped them in 2008?

Nothing stopped them. If they had wanted to sell Treasuries "to soak up liquid money when they begin to see inflation" they could have done so. Just as Pelham said.

288 posted on 08/12/2010 10:33:38 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: palmer
Selling at 99.92, having bought a month earlier at 99.78, I made 0.14%

Let's see, 0.14% a month times 12 months gives you a scorching annual return of 1.68%. I'll notify Warren Buffett, his replacement has been found.

289 posted on 08/12/2010 10:36:17 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
Yeah, because when you buy a 2 year note at 99.92 with a 0.625% coupon, you've got a lot of upside potential.

Another thing I forgot to mention is that people with foreign currencies can do this when the dollar is about to look like a "safe haven" against whatever their currency is. Then it is simply one more speculative trade on top of the speculation on the Fed's role. Suffice to say that speculative trades like that don't add to the economy and actually create more systemic risk when they all unwind.

290 posted on 08/12/2010 10:39:06 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: Toddsterpatriot

Nothing stopped them except the financial system falling off a cliff.


291 posted on 08/12/2010 10:41:10 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: palmer
Another thing I forgot to mention is that people with foreign currencies can do this when the dollar is about to look like a "safe haven" against whatever their currency is.

So it's not just the Fed propping these up? Thanks. LOL!

292 posted on 08/12/2010 10:45:54 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: palmer

They must not have seen inflation or the need to soak up liquid money.


293 posted on 08/12/2010 10:47:02 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: palmer; wendy1946; Toddsterpatriot
You two are wasting your time feeding the troll. Todd's game is quite simple: he merely appeals to authority by simply referring to the actual wording of the originating legislation. Hence you get statements such as "primary dealers are obligated to do x, y & z", while dismissing the reality of shadow operations, because, you know, it's not right there in the law. QED

Anyone could play this trick on any subject if they were so inclined. I could frequent the threads discussing Obamacare, and someone might opine regarding 'supposed' death panels. I would then step in and declare that nowhere in the legislation was there such a thing as a death panel and then issue a challenge to the person to prove such an assertion. I would also pepper my comments with, 'that's silly', 'try again', 'law is hard', etc.

What you really need to know about Todd is that he doesn't know what he's talking about. That is, he doesn't understand basic financial concepts nor how banking actually operates. But that's not his intent; trolls revel in disruption, which is why I refer to him as a clueless disruptor.

As proof of his lack of understanding, here's his comment to me which he mistakenly posted before attempting to modify with subsequent posts. Reading this is all you need to know about our Todd:

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,


294 posted on 08/12/2010 10:49:32 AM PDT by semantic
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To: semantic
S: Rather, they book both the deposit & asset out of thin air when the loan is made,

TP: That works for about 10 seconds, until the borrower cashes the check to buy the home, car etc......

You never did explain where the money comes from when the borrower takes the cash or check from the lending bank. Try again?

295 posted on 08/12/2010 10:54:05 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot; palmer; wendy1946
Tood, I told you I was going to keep playing back your comment. Palmer & Wendy, perhaps you would like to help out. Here's what I suggest: whenever we see good 'ole TP posting, we reply with this:


296 posted on 08/12/2010 10:59:55 AM PDT by semantic
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To: Toddsterpatriot

Todd, tell me again how a borrower cashes a check for his home loan? {snicker}


297 posted on 08/12/2010 11:00:48 AM PDT by semantic
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To: John W

The only problem with this is that it is a lie. The Fed does not have enough paper maturing to reinvest enough monies to help.


298 posted on 08/12/2010 11:04:14 AM PDT by Captain Peter Blood
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To: semantic
You do understand that when you take out a loan a wire or check changes hands, don't you?

So when that check is cashed or the wire sent to the other bank, where does the money come from? Take your time. Think about it. LOL!

299 posted on 08/12/2010 11:05:28 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
They must not have seen inflation or the need to soak up liquid money.

They didn't see oil spiking to $140?

300 posted on 08/12/2010 11:16:44 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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