They didn't see oil spiking to $140? 
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 ...
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..."?
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?
Rather trivial point
LOL! You said selling the Treasuries was easier said than done for the Fed. You were wrong. Trivial? LOL!
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.
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)
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.
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.
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.
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.
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.
Nothing stopped them except the financial system falling off a cliff.
So it's not just the Fed propping these up? Thanks. LOL!
They must not have seen inflation or the need to soak up liquid money.
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,
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?
Todd, tell me again how a borrower cashes a check for his home loan? {snicker}
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.
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!
They didn't see oil spiking to $140?
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