Posted on 07/27/2009 6:32:08 PM PDT by expat_panama
ummm... the congressional oversight committee
Article 1 section 10 prohibits states from making any Thing but gold and silver Coin a Tender in Payment of Debts.
The Federal government is not limited in the same way by the Constitution and the states are not "making any thing".
Does the US govt have the gold and silver to back up the paper bucks in circulation?
No.
Especially now, when we all know the fed is printing money out of thin air.
The Fed has always created money out of thin air. That's what central banks do. The only recent change is in magnitude.
Really? They said that?
If that's your only source, you should quit now. LOL!
It was nice back when competent, far-sighted folks conceived and ran the Fed. But now that is led by morons like Greenspan or myopic eggheads like Bernanke, we've been heading to hell, one boom and bust at a time.
What would you have done differently than Bernanke? Be specific.
That's not what sinister means (the root is from the latin word for unlucky or ominous, and has nothing to do with "the devil").
There are clearly better ways to deal with the pain of deleveraging than creating more leverage. The main problem is that the borrowed money is going to malinvestment (e.g. real estate, speculation) and not business (which can't get loans at ANY interest rate). The pain will have to be dealt with through tax policy not monetary policy. For starters, eliminating long term capital gains taxes would gree up a lot of money. Corporate taxes would need to be decreased too to free up money.
What exactly do you fear regarding a complete audit of the fed?
Be specific.
Which interest rates at what point?
I fear this Democrat Congress getting control of monetary policy.
Start with the TIPS, no QE on the TIPS so that the market can give an accurate inflation prediction signal. Then using that signal (I think yields on TIPS would rise dramatically but then level off) I would taper back and then stop QE on the 10 years. I would really like to stop it cold, but that would crash the 10 years (speculators are betting that the Fed will buy theirs). But as TIPS yields peak and then start back down, that would allow the Fed leeway to let the longer rates (i.e. 10 years) float up to a market level.
What would you have done differently than Bernanke? Be specific.
At each point since Bernanke became chairman, what would you do instead of what he did? You know, to fix things, instead of make them worse.
I was under the impression you were asking what I would do now that we have started QE. QE either ends in much higher interest rates or massive inflation trying to keep them low. So my strategy was how to gradually get out of it now that we are in it. But since you are asking what I would do in the past, that's a much easier answer: no QE.
LOL! I thought you were blaming him for what he did as Fed chairman?
Don't repeat the threat through 2008 causing rates to crash and exacerbate the bubble.
The bubble burst before then.
I was under the impression you were asking what I would do now that we have started QE.
No. I was asking you to do things differently, since you became Fed chairman, instead of Bernanke.
But since you are asking what I would do in the past, that's a much easier answer: no QE.
And what would that have done to prevent the situation we found ourselves in?
The bubble that popped in 2007/8 was a debt bubble created since around 87. BB inherited it, but also played a role in creating it as a Fed board member. As I said above the correct response to deleveraging is to allow it, but put in place policies to quickly shift money from speculation or sidelines into the productive economy. That unfortunately could not be done by BB, but requires the politicians to eliminate long term capital gains tax (at least temporarily) to bring money from old investements into new ones.
Another thing I suggested here last fall was printing money, not for QE, but just to counteract the credit deflation. What could have been done was a large but short inflation shock. What is bad about inflation is when it is anticipated and never ending. But past inflation is not nearly as bad. You wake up one morning and the dollar is worth less (not worthless), but the Fed also promises that it was a one-time event so there is no anticipatory inflation spiral.
I can't have prevent last year's market crash and this year's economic fallout from the crash unless I go back to 1987 and stop the boom/bust cycles (some would argue going back to the 1970's or 1930's or earlier).
He can't force anybody to buy Treasuries.
because what those 30 buyers (along with most 10 year buyers) expect to do is sell their bonds long before then (like in a month or two) to a greater fool, namely the Fed.
Now he's to blame for that? LOL!
Please, 10 year yields are up about 1.5% since December. That's a bubble?
Another thing I suggested here last fall was printing money, not for QE, but just to counteract the credit deflation.
And you'd put the money where?
It's a bubble popping. The Fed is trying to gradually let the air out while still targetting mortgage rates. The predictable result is that the government owns more and more mortgages (leads to socialism, gives Barney more power, etc). The 10 years are still being bought by speculators who hope to sell to other speculators who hope that the Fed will buy more later. Otherwise 10 years would be much higher to reflect the fact that we have a terrible fiscal policy (sinilar to Japan in the 90's), taxes are being raised on job creators, government owns too much of the economy and wants more, etc.
And you'd put the money where?
I'd greatly lower the FDIC fees that are killing small banks (I get 0.25% on a savings account but my bank pays 0.50% in fees). That also makes up for the inflation hit on savers. I'd put money into Fannie and Freddie and then IPO them to make them private again. In short, anything but politician's bridges to nowhere or handouts to people to buy TV's, but instead money needed to stabilize and privatize the credit markets.
Is he popping it too quickly or too slowly or just right? And IIRC, he said he'd buy 10 years to keep the yield down, but the yields are rising. How can that be?
The predictable result is that the government owns more and more mortgages (leads to socialism, gives Barney more power, etc).
The government or the Fed?
The 10 years are still being bought by speculators who hope to sell to other speculators who hope that the Fed will buy more later.
But the Fed was buying as yields were rising.
I'd greatly lower the FDIC fees that are killing small banks
You'd have the Fed print money and give it to banks to pay the FDIC?
That also makes up for the inflation hit on savers.
Ahhh, print money, to counteract inflation. Good idea!
I'd put money into Fannie and Freddie and then IPO them to make them private again.
Interesting idea, but money from the Fed?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.