Posted on 12/02/2002 4:36:32 PM PST by rohry
What is this and how do they do it? Is it like a second mortgage on the house?
Anyway, the entire weekend went by way too damn fast.
I remember when Fed was zealously fighting "potential" inflation by raising the interest rate many times (in 2000). Fed did it long after the stocks started to collapse. Now Fed is doing the reverse.
I wonder if such pattern of intervention does not increase the size of pendulum swings? Maybe Jude Wanniski is right, suggesting that the gold at a fixed price should be a reference? (In other words money should be issued to keep price of gold fixed?)
The bond market isn’t the only problem the Fed has to face it may also have to start monetizing all of the governments debt. The official debt limit of $6.45 trillion is about one month away from being breached. Passed late spring, the debt limit has been raised by $450 billion. Tjhere is only about $60 billion of that left. This means that when Congress returns after the holiday recess, they will have to raise the debt limit by another trillion dollars just to be safe.More taxes.
But now wages and prices could be falling. If inflation is bad, is deflation so great?
As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. ......If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."
Bernanke goes on to point out that the Fed could also supply interest free loans to banks, monetize foreign assets, buy government agency bonds, private corporate assets or any number of things that could induce inflation.
It can be, no doubt about it.
There is a real push on to keep the market up at least until the end of the year. I believe that it has been well planned, coordinated and executed. The goal seems to be to avoid yet another negative year for the averages. Reality doesn't matter. The media has become nothing more than the propaganda arm of Wall Street and government. The spin, excitement and hype is almost too obvious.
TXN is trading over $20 in AH on news that its revenues won't DECLINE AS MUCH AS previously estimated. With media spin and hype, that is accepted as a positive.
Texas Instruments Raises Outlook
The headline is blatantly deceptive and misleading. I find this continuing scamming of the public disturbing.
Richard W.
In other words, sell these assets and put money in circulation here, or buy back bonds here, both public and private and put money in circulation.
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