Posted on 09/14/2012 3:51:58 AM PDT by SoFloFreeper
One of the most powerful moments of Ben Bernanke's press conference yesterday, after the Fed announced Unlimited QE, was when he refuted some myths about Fed action before he started the Q&A.
In particular, he took on the idea that the Fed was screwing savers because rates are so low, and you can't get any return holding money in the bank.
Here's what he said:
On the second concern, my colleagues and I are very much aware that holders of interest- bearing assets, such as certificates of deposit, are receiving very low returns. But low interest rates also support the value of many other assets that Americans own, such as homes and businesses large and small. Indeed, in general, healthy investment returns cannot be sustained in a weak economy, and of course it is difficult to save for retirement or other goals without the income from a job. Thus, while low interest rates do impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates help promote.
So in other words: The main thing is that you can't save if you don't have a job, and that's what the Fed is trying to address. Furthermore, there are lots of kinds of assets that do benefit from low rates.
When the economy returns to health, savers will be able to get paid, just like everyone else. But until then, there's no special right to earn income on having money in a bank.
(Excerpt) Read more at businessinsider.com ...
The lenders are not going to take any hit unless they hold the mortgages. No, they will discount them back to the government....just like before the 2008 disaster.
The people who will killed beyond belief are the dopes who buy any of this worthless paper which will be repackaged into FHA bonds. Of course when they cannot sell them to the public including mostly businesses like insurance companies, who will buy them...ahem, here comes Ben the Bandit who will gladly put them on the fed balance sheet. Meanwhile, the cycle continues, spins faster until the end is reached in one super nova of devaluation and inflation.
Remember to load up on the three most valuable metals: Gold, silver and lead.
———They are trying to bring America to its knees——
No, the actions are to devalue the debt. Compounded over time, the inflation (debasement) rate will reduce the debt in future dollars. A constant rate of 7% inflation compounded will halve the debt in about 10 years.
-——Personal savings are being STOLEN BY THE STATE! ——
Savings defined as cash will decline in value.
Savings invested in hard assets will increase in value as prices are inflated. Investing in a diversified Mutual Fund of the best of American corporations will preserve the value, ditto gold/silver, land, realestate
For years now, savers have been forced to contribute to the bailout of all the financially destructive policies implemented by politicians, the Fed and some Wall Street types. And there is no end in sight.
I should be more clear. When I use the term “lenders” I don’t just mean the banks themselves ... I mean anyone who buys the mortgage-backed securities that are comprised of those loans.
If interest rates went up to a reasonable level, it would add many tens of billions to our already trillion dollar plus federal budget deficits. That's the main thing Bernanke is fighting.
They talk a great deal about "pool". Do you take possession, or use this "pool"? My initial reading on this "pool" mechanism is that it negates the whole rationale for buying metals...
It will not work.
The nominal value of the paper equities that would explode if interest rates go up VASTLY exceed the Federal debt.
Read my short essay...
Ben is covering for the 2 Big 2 Fails!
Going to be? LOL!
Best hedge is dog food futures because that’s all Florida seniors are going to be eating.
November 6, 2012: a day of reckoning
Punishing savers for not 'investing' in the economy is standard. Dont forget to give Obama credit for the stock market as those libs on MSNBC are doing
Alternatively if the two parties were to really let all those tax cuts expire and all those spending cuts to go into effect, at the same time, the result would be a huge slowdown in the economy and market dive, at least in the near term. Long term (in years) it could actually be good to have the deficit reduction, but few really care about that.
Pity the party in the WH if that happens, although it would be Obama’s second term so he would NOT be at risk asa Romney POTUS would, Romney would just make a deal if he thinks he will get blamed.
If interest rates rose to a reasonable level, then all the new federal debt and all the refinanced old federal debt would become much more expensive. The interest on the debt would become so expensive that the government could longer sell new debt (except to the fed), the government’s credit rating would become such that they could not continue to function and support all those who receive payments from the government.
The scenario you’ve heard about and accepted is theoretical, but if the government stops meeting its obligations in this dependency society, we’d have a sort of anarchy will the tens of millions of people with no means of support.
I’ve heard other financial high flyers make different predictions about what might happen in your derivatives scenario, and several who admit they don’t know what would happen.
Over at Zerohedge, one of the writers had this summation of his essay: “The Fed continues to follow the same wrong policies as it has since the beginning of this depression. We now have one of the longest depressions in history that has been caused by the Fed and the fiscal policies of the Bush and Obama Administrations. They are devaluing the dollar, destroying capital, thwarting growth, and cheating savers out of their hard earned money. It is a cruel blow to the 23.1 million un/under-employed in the U.S. who need economic growth to create jobs.”
I could not make a better statement about how out of touch these jerks in DC are especially the part of how they are cheating savers out of their hard earned money...frankly, they are stealing it.
Well, if there was an interest rate hike, enough to trigger even a small fraction of the 340 Trillion in notational value of interest rate swaps, that would decimate 9 out of 10 of the large brokerage firms in the country, and probably five out of five of the biggest banks.
They wrote contracts and they don’t have what it would take to deliver.
Just like the silver short position.
They ain’t got it.
Nuff said.
If the Fed, knowing this, can’t raise interest rates, they have no way of attracting foreign investors.
So they are stuck. QE3, QE4, QE5, QE to in-fin-it-eee..
You gotta symbol?
” - - - He is punishing saving...trying to force people to spend or put money in equities. “
In other words, The Fed is trying to replace Private Capital Investment, otherwise known as Capitalism.
BTW, isn’t Bernanke a University Professor who has never worked a day in his life earning a living in Private Capital Businesses? Well, except for being paid for mowing his parent’s lawn.
BTW, BTW, a suggested new Bernanke policy slogan: “Spending will continue until we are out of debt!”
(Hmmmmmmm, - - - - if that is good enough for The Federal Reserve, then it is good enough for every hard-working American Family too)!
-——to trigger even a small fraction of the 340 Trillion in notational value of interest rate swaps, -—
That sentence is beyond my capacity. What is notational value of interest rate swaps?
We learn by asking
Except that by definition, retirees - the savers - will be dead and will not benefit from these ULTIMATE benefits.
To be fair, this decline has been going on.through Republican and Democrats. It's just accelerated during the Obama regime.
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