Wow.
OK, not wow.
We knew it was coming.
And then it came.
FOMC: Fed to Purchase Up to $300 Billion of Longer-Term Treasury Securities Over Next Six Months (Story Developing)
[update - Fed Statement]
To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.
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61 comments:
Ok, so what is Europe doing to fix their problems?
Are they doing anything other then waiting to get our tax money?
Ooooobaaaamy!
Gimme Cheese.
Awesome. Long live credit and our phony economy.
What a joke.
Market is already rallying because of the "good" news.
Once again, no earnings.
See you at 5200.
Uh Hi Japan! Hello China! Remember we are in this together!
Hehehe!
Woo Hoo.
i'm loading up on CROCS
Hello all of yopu who are now poor. Dirt poor. Now that we just devalued any assets we have to nothing, we are in a vunerable stage that many want us to be in to attack us. China now has lost all the value of the T bills, and I think we may just get our asses kicked. We are so fucked beyond beleif.
Angry Leprechaun,
Waah wahhha waaaaa *sob*
snifel snifel
whathca got in that pot at the end of the Rainbow?
Did anyone notice the AIG CEO tell the panel today that he never talks to Geithner? He only talks to Bernanke? He lets Bernanke pass on the messages to Geithner?
Why is the Federal Reserve Bank determining how much of our tax dollars the Treasury is going to give to AIG?
Does this mean that the US Gov has abdicated all of its power to the Federal Reserve?
Doesn't this mean that Bernanke is now the King of the World?
Just thinking...
Goddammit! I was goint to wait until the DX crossed 86 and then load up in anticipation of this move. That SOB Bernanke cost me 8%!
Oh well, it's a long way from 86 to the 40s where this will all end (badly).
Is this the big shoe dropping in the ZIRP? Gold seems to think so. Dollar index bubble might be hitting the skids. I've been wondering when this would happen.
Keefer,
Glad you voted for Change
baaa haaa waaa haaa!
Ben Bernanke drops $1.15T from his magic helicopter, dollar savers worldwide pick them up quickly and stuff another wad of $100 bills under their magic mattresses. As far as prices, lending or spending are concerned, nothing happens.
I need someone to talk me down off the ledge b/c I am really enraged. How fucking dare they just save these effin losers on Wall Street. I HATE Corporate America. AIG gets the bailout, Goldman Sucks get their money adn the losers in who traded/sold the derivatives get their "retention" bonuses. Then Bernanke decides to just help the banking system out and take away their toxic assets so they can just resume business as usual. WHERE IS THE F#*CKING MORAL HAZARD, PEOPLE??!
PLEASE TELL ME, SOMEONE, THAT THIS ISN'T GOING TO RESTORE OUR ECONOMY AND MARKET TO THE PHONY, PONZI SCHEME SYSTEM THAT IT WAS. PLEASE SOMEONE TELL ME THIS DOESN'T REALLY DO ANYTHING AND THAT THOSE RESPONSIBLE WILL PAY AND I CAN BUY A DECENT HOUSE AT A DECENT PRICE. PLEASE.
I'm serious, I am livid right now. I feel like I am being f'ed in the ass by these corrupt, collusive crooks in our govt and on wall street.
And to make matters worse, Jim Cramer, was about to cry with joy at what Bernanke decided to do. It makes me sick to see Cramer so f'ing happy.
So if I'm understanding this correctly, they buy $300b of Treasuries which is basically printing money and inflationary. That would put upward pressure on Mortgage rates so they buy $750b of Mort. Backed Securities to keep those rates low, right?
Can someone PLEASE point me towards a source that will provide a good education on how inflation impacts an economy/society...
whathca got in that pot at the end of the Rainbow?
Not enough in gold to deal with this shit.
All this juice for a sputtering economy and all we get is a tiny bump in the dow.
I think the carburetor is flooded!
Andrew from Russia gets it.
BG;
JUMP!
Can someone PLEASE point me towards a source that will provide a good education on how inflation impacts an economy/society..."
Our situation is akin to the Chernobyl reactor right before it blew.
They let the power fall too low(ratio of productivity to debt) and had to remove virtually all the control rods to increase it.
Shortly after the reactivity(inflation) graph went vertical as the reactor exploded.
BG.....you know the answer. The elite bankster class runs this country for the benefit of....the elite bankster class.
This is the biggest screwing EVER.
At this point a violent revolution seems like the only thing left in the face of such arrogant criminality on the part of our "leaders".
Relax........
Its not like we have to pay for it.
Uncles Hu and Wen will provide a backstop.
They have the assurances of the administration that US treasurys are a very safe investment.
HAHAHAHAHAHAHAHAHA
Can someone PLEASE point me towards a source that will provide a good education on how inflation impacts an economy/society...
Well, see, many many moons ago, there was this struggling artist named Adolph....
so it would appear that the people at Itulip and Peter Schiff were correct. Can you say the word .....inflation...
I knew you could.
so shall we now pronounce the deflationista argument dead and void?
Mish Shedlock owes Peter Schiff an apology. ha ha
Maybe we can put the President on the newly
created billion dollar bill that we will use to buy a loaf like Zimbabwe
Step 1, collect underwear
Step 2, .....
Step 3, make money
SeattleMoose,
I am shocked.
This kind of talk from a GITMO defender?
Just shocking, I tell ya..
Can’t we resolve this with Dialogue?
Has the UN approved?
The TARP money looters must have signaled to Bernanke that they were done buying up the gold.
Inflation (circa 2005), deflation, inflation (it's coming).
"So if I'm understanding this correctly, they buy $300b of Treasuries which is basically printing money and inflationary. That would put upward pressure on Mortgage rates so they buy $750b of Mort. Backed Securities to keep those rates low, right?"
You're sort of right but there are a few intermediary steps I would add. Wikipedia might do a better job but here is my amateur version.
The government doesn't bring in enough tax revenue to pay for all these stimulus packages and bailouts. To pay for the difference the government issues and sells treasury securities (promises by the government to pay you back).
Treasuries just have a face value on them but you can't get that face value back until sometime in the future (marked on the treasury security) so the price you pay is less than the face value of the treasury. The difference between the face value and the price you pay is the 'yield' or rate on them (annualized).
Doubling the amount (supply) of treasuries this year to pay for this huge deficit, based on supply and demand, would lower the price and, conversely, increase the yield or rate on them.
Prices and yields (rates) on treasuries move inversely to each other. The lower the price, the higher the yield (rate).
To keep rates from rising, Bernanke and the Fed have announced that they will buy treasuries, thereby increasing demand to keep pace with the increasing supply.
The reason that Bernanke buying treasuries is inflationary is because he buys them with money he has just created. Normally, the sale of treasuries is kind of neutral to the money supply because it takes money out of private hands but then it's used by government to fund their activities.
But when Bernanke buys treasuries no money is taken out of private hands but money is given to government. So you've increased the money supply, increased the amount of money in circulation.
Increasing the money supply would actually be fine if the new money was being given to otherwise unproductive people in exchange for valuable goods and services that these people have just produced.
But if this new money is given to people to produce non-productive assets like dog parks, skate parks or to just pay for existing government employees and projects then you get more money and less stuff and you get inflation.
Yeah, maybe you better just check wikipedia, man.
Are you still sleeping? Don't you realise that for decades now the corporations and governments have been raping you and enslaving you? THey saw that the people were not reacting because they had become sheep so they decided to push it as far as it goes....
If you don't react now your children will be slaves. Not figuratevly, literally
Paul E. Math,
I learned something today.
Thank you.
Anon at 8:57,
You've scared me, and I don't scare easily.
What do you propose? My friend, who has travelled the world, says maybe the south of France, or the Swiss alps in Interlaken.
I want to stay and fight.
What do we do?
.
Wow now I can go out and buy a new car. Happy motoring America.
Paul E. Math,
I think you did a great job of explaining an otherwise very complex and crazy idea. I mean, it's so bizarre that the Fed would by treasuries. They are buying Gov debt and creating debt, right? and are they doing this also because the Chinese aren't buying anymore? is that what is also going on here?
Printing 1/13th of GDP out of thin air?
Damn.
I thought we would ease in to the catastrophe.
Uncle Ben just said "Fuck it."
How about this - we need Live TV, so get SNL to show George Carlin on Consumption...http://www.youtube.com/watch?v=fsDuL4jTkz0, then a brief explanation of how badly we're being f'ed, (maybe Lorne Michaels could introduce Peter Schiff to do this or some other rational human). Then cut to some sort of video montage these groups taking action, calling on people to march on Washington, stop paying taxes, make themselves heard however they need to. This approach is kind of cheesy but the sheeple are still on their couches at least we'll have their attention.
Inflation is like:
situation before:
you earn per month for example 100$
You can buy for it for example 100 beers(beer cost 1$).
FED make some bailouts, stimulus etc. They need cash so they print money this create inflation 10%
situation after
You still earn 100$ but you can buy for it only 90 beers(beer cost 1.1$)
you are 10 beers short and it is effect of inflation.
You see sometimes goverment don't want to collect new tax because it will make plp angry(and you want to win next election)
so they print money from air (not collect money from tax or borrow) and spend it on stimulus, bailouts (they are super because try rescue economics ! and don't lose all chances to re-election) but in fact you make plp poorer.
It's like hidden tax. Effect of inflation is that people are poorer and owner of printing press(fed/gov) got cash.
It's veeeery simple look at inflation.
However it is much more complicated.
other situation.
You have 200k$ mortage credit with in normal you are able pay in 10 years.
FED make inflation because of printing money.
Now all prices go up. Your earnings must go up too because if not you die of hunger.
But rate of credit is set before inflation. You pay all your mortage credit in one month.
Because for example 200k$ now is like 10 beers.
SO IF THIS IS THE WINDOW JUST BEFORE INFLATION WHERE MORTGAGE RATES ARE BEING PUSHED DOWN, SHOULDN'T WE ALL BUY HOMES AND WHEN INFLATION KICKS IN OUR MORTGAGE PMT WILL BECOME INSIGNIFICANT AND WE GET A FREE HOME?
Anon said...
Can someone PLEASE point me towards a source that will provide a good education on how inflation impacts an economy/society...
----------------------------------
Any of the boomers can tell you about the 1970's. You never knew how much money to take with you to the grocery store. Every week the price of every item in the store would go up anywhere from 25 to 50 cents. Hmmm, so do I take $80 with me to buy groceries or will I need $100 this week? This went on for a few years.
Interest rates went to 23% before the insanity stopped (Volker stopped it, too bad Obama won't listen to him) and then to top it off we had the recession of the early 80's that put everyone out of work.
I have never forgotten how hard it was. Apparently many Boomers have memory loss.
Anon said...
so shall we now pronounce the deflationista argument dead and void?
Mish Shedlock owes Peter Schiff an apology. ha ha
Mish never said that there would NEVER be inflation. He has NEVER said that. He said the whole contraption needs to unwind first, and THEN depending on what the govt does to make things worse, then yes at a future time, it is possible there will be inflation. Just not on the immediate horizon.
We have our retirement with Sitka and we are really fortunate to have picked the deflationista camp. It has rolled just like Mish said it would.
He will let us all know when inflation is on the horizon. Bet on it.
wasn't this all caused by real estate? how could real estate go up in value from inflation when it was the cause of the crisis in the first place? there's something else going on here we're all missing...
Senate Banking committee Chairman Christopher Dodd told CNN Wednesday that he was responsible for language added to the federal stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored.
Please jam this fools phone lines and shut down his email server. He is a traitor. he needs to be tried for treason!
$1 trillion is a drop in the bucket considering all the debt destruction. If he sends everybody a $100K stimulus check that might get things hopping again.
The action by the FED is inflationary, but not nearly enough to offset the current deflationary forces brought about by debt destruction.
CHANGE YOU CAN BELIEVE IN! BWAHAHAHAHAHA. YOU'RE A BUNCH OF RETARDED CULTISTS.
AND JUST LOOK AT THE TIMING: A MONTH BEFORE YOUR TAXES ARE DUE.
So let me get this straight. The Zionists running the Fed want high inflation + mortgage rates low, while unemployment is sky high.
Ok, got it! That liberal arts degree in Asian studies really came handy.
Now run to get your loans to support the luxurious lifestyle of the zillion Madoffs on Wall Street and in Washington, slaves. Hurry slaves, be in debt up your eyeballs because the crooks need more caviar and diamonds. YES WE CAN!
Are you saying that the $4,000 Macbook laptops that aren't selling at all, according to latest sales figures, are now going to cost $8,000 because of inflation? Oh my, I better buy more AAPL stock then, because it makes a lot of sense...oh yeah, now the overpriced mac stuff will really fly off the shelves...bwahahaha
Economic theory and money supply are best understood by linking the principles of....oops gotta go American Idol is on.
.
CAN WE ALL AGREE THAT SCHIFF AND ROGERS WERE RIGHT? A LITTLE SOON, BUT CORRECT NONETHELESS.
.
he can drop all he wants for 1.2 trillion is still small compared to the tens of trillions of wealth that has been destroyed.
December 2008
they make it seem like they are loosening up credit for the small guy.
Nope, the fed is loosening up credit for congress to spend more, which is not what we need.
in the end it is still the tax payer that pays for it all. now it will be via inflation from the fed creating money out of thin air. your cash savings just dropped in value today.
Now all prices go up. Your earnings must go up too because if not you die of hunger
---
There in lies the rub. Ppl are getting laid off. And no one is getting a raise!
"...I need someone to talk me down off the ledge..."
Bonuses Distasteful.
As the video says, the Federal Reserve is neither Federal nor does it have any reserves. It is a private bank run by some very powerful rich people.
The average guy is screwed and always will be. One could ask - when do I, the responsible person who does everything right - get my reward? The answer would be - never.
Will you guys leave Ben alone? He's trying to hide the very large and expensive sausage.
I liked the back of your head better, Mitesh.
Blogger redondo_beach_dude said...
Anon at 8:57,
You've scared me, and I don't scare easily.
What do you propose? My friend, who has travelled the world, says maybe the south of France, or the Swiss alps in Interlaken.
I want to stay and fight.
What do we do?<<<
stay and fight. there is no place to run. get our your liberty sticks and clean them. get your ammo supplies in order. stack it high and stack it deep. prepare and wait. the time is coming soon.
Why is the market and the corrupt main stream media cheering Bernanke's shell game?
Bernanke issues debt then prints money to buy the same debt back. And they cheer about it?
Bernanke said on Sunday that the market would see recovery by end of 2009. On Wednesday he sends a huge sign of desperation by applying the shell game at the cost of trillions more. And they cheer about it?
All I see is desperation, last minute attempts to fix something beyond repair, trillions and trillions of debt. What's the best case scenario of this: Zimbabwe's style hyperinflation? Skyrocketing taxes to pay for all that heist? Depression?
And people are cheering about it like we're all safe now?
Hey Mitesh, you're so Bollywood trendy. Why don't you do those stupid dances for us to watch now. You know, the Bollywood dance that looks like ancient Egyptians on meth dancing over a killer ant's farm.
SO IF THIS IS THE WINDOW JUST BEFORE INFLATION WHERE MORTGAGE RATES ARE BEING PUSHED DOWN, SHOULDN'T WE ALL BUY HOMES AND WHEN INFLATION KICKS IN OUR MORTGAGE PMT WILL BECOME INSIGNIFICANT AND WE GET A FREE HOME?
You do realize that hyperinflation will make your property taxes, utilities, and insurance skyrocket, right? Do you prefer to have an adjustment once a year or every month?
Anonymous Anonymous said...
Hey Mitesh, you're so Bollywood trendy. Why don't you do those stupid dances for us to watch now. You know, the Bollywood dance that looks like ancient Egyptians on meth dancing over a killer ant's farm.
March 19, 2009 6:31 PM<<<
mitesh kind of looks like sly stone in that pic...ha ha ha
SO IF THIS IS THE WINDOW JUST BEFORE INFLATION WHERE MORTGAGE RATES ARE BEING PUSHED DOWN, SHOULDN'T WE ALL BUY HOMES AND WHEN INFLATION KICKS IN OUR MORTGAGE PMT WILL BECOME INSIGNIFICANT AND WE GET A FREE HOME?
You do realize that hyperinflation will make your property taxes, utilities, and insurance skyrocket, right? Do you prefer to have an adjustment once a year or every month?
March 19, 2009 6:39 PM
YES BUT RENT WOULD SKYROCKET TO COVER THE OWNERS COST OF THE SAME THINGS YOU MENTION AND YOU HAVE TO LIVE SOMEWHERE, MIGHT AS WELL GET A FREE HOUSE IN THE PROCESS...ALSO, THE VALUE OF THE HOUSE WOULD SKYROCKET AS WELL IN A HYPERINFLATIONARY ENVIRONMENT...
Helicopter Ben Bernanke is swamping us with Massive Quantitative Easing....The Undertow is likely to destroy us all!
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