The Fed ends stimulous amid growing fears for a rekindled recession

[alhoon]

http://www.bbc.com/news/business-30121597

The gist: While they are afraid that we enter a rekindled period of economic turbulence, the big guys in Federal reserve bank decided to end the stimulus.


My opinion: So, the Fed decides it would be nice to remove a cushion from the floor as the oil prices and stock markets fluctuation makes the floor slippery. I don't think it's a wise decision and I think the Fed made a mistake that will hurt USA's economy in the long run.
The Stimulus was instrumental in the recovery of USA's economy and kudos to Obama and the democrats for passing it.

[Admiral Piett]

http://www.bbc.com/news/business-30121597

The gist: While they are afraid that we enter a rekindled period of economic turbulence, the big guys in Federal reserve bank decided to end the stimulus.


My opinion: So, the Fed decides it would be nice to remove a cushion from the floor as the oil prices and stock markets fluctuation makes the floor slippery. I don't think it's a wise decision and I think the Fed made a mistake that will hurt USA's economy in the long run.
The Stimulus was instrumental in the recovery of USA's economy and kudos to Obama and the democrats for passing it.

As opposed to printing more money and dangerously devaluing the dollar and increasing the debt on the dollar? It shouldn't even have been done in the first place.

[Mementomoridc]

As opposed to printing more money and dangerously devaluing the dollar and increasing the debt on the dollar? It shouldn't even have been done in the first place.

Um, the Debt and unemployment have gone down since the dems took over. On top of that the dollar did not drop in value in any meaningful way during the economic crisis and has come back from any drops it had.

[Admiral Piett]

Um, the Debt and unemployment have gone down since the dems took over. On top of that the dollar did not drop in value in any meaningful way during the economic crisis and has come back from any drops it had.

Erm.. and this is the same federal reserve that Democrats and Republicans, for one of the few times in the House of Representatives over the past 8 years, have come together to pass a bill specifically for the purpose of auditing the Federal Reserve and bringing it under more public scrutiny.

http://www.washingtontimes.com/news/...udit-fed-bill/

http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/

[Thorn777]

Um, the Debt and unemployment have gone down since the dems took over. On top of that the dollar did not drop in value in any meaningful way during the economic crisis and has come back from any drops it had.

Indeed, and an essential part of that magic was a good dosis of Beggar Theigh Neigbour policy, ensuring USA is still a monetary beacon of light despite its inflationary policies. USA caused the Euro crisis, caused massive disruption within the BRICS by targeting Russia, and now also convinced China to start printing. USA pulled it of to stay the only relevant reserve-currency and attract massive amounts of capital-flight from crisis zones into their bond-markets. And with this preservation of its reserve-currency status it remained its wonderous power of exporting inflation and to stay on importing as it is used to without paying even remotly the price.

If you think "modern monetary sophistication" is the cause of the Fed pulling it off, then your naive, like basically anyone else on this board wasting their times and gaining nothing.

Like the Greek Alhoon, giving Obama "kudo's"...yuk

[Treize]

The Fed is a scam anyway.

[Denny Crane!]

People really need to get that QE and stimulus is basically theft and wealth transfers from the poor to the rich.

[Celsius]

People really need to get that QE and stimulus is basically theft and wealth transfers from the poor to the rich.

This is true. Unfortunately Americans are as collectively smart as a peanut plant.

[Sire Brenshar]

People really need to get that QE and stimulus is basically theft and wealth transfers from the poor to the rich.

Lol? Quantitative easing is a form of stimulus, so your statement makes no sense. It certainly doesn't result in simplistic ''poor to rich'' transfers of wealth necessarily, and its not at all ''theft'' unless you also consider all forms of taxation and sources of government revenue to also be ''theft''.

A stimulus package as well can include things like tax breaks, for the ''poor'' or for the ''rich'' (lets call them the lower, middle, and upper class income brackets shall we? This isn't the medieval ages.) alike, depending on economic ideology or politics. It might not affect them at all even.

This is true. Unfortunately Americans are as collectively smart as a peanut plant.

Ironic statement.

[alhoon]

As opposed to printing more money and dangerously devaluing the dollar and increasing the debt on the dollar? It shouldn't even have been done in the first place.

It saved the economy by giving it a jumpstart. Look what happened to Southern EU that had just bailouts and austerity without a stimulus package, see what happened when we finally got a stimulus package, look how much better USA did in recovery and thank the democrats for being insightful.

You need money to make money.

People really need to get that QE and stimulus is basically theft and wealth transfers from the poor to the rich.

I don't think so, if the Stimulus is done right. If you give money to small businesses, it will, in the end, end up in the pockets of the rich but that happens anyway. That's why we have inflation.
With the stimulus you have money in circulation before it ends up (again) in the pockets of the rich.

[Denny Crane!]

Lol? Quantitative easing is a form of stimulus, so your statement makes no sense.

Oh dear well it certainly would not make sense if you have not even a basic understanding of what Quantitative Easing is or what it does. Turns out economics is not paint by numbers.

It certainly doesn't result in simplistic ''poor to rich'' transfers of wealth necessarily, and its not at all ''theft'' unless you also consider all forms of taxation and sources of government revenue to also be ''theft''.

What the hell has taxation got to do with it. It devalues a currency by buying assets the CB increases the money supply, increasing the amount of currency in circulation. It also creates an increase in the cost of commodities and assets fuelling inflation in key areas, during the crisis the CBs have increased the range of asset purchases such as buying into mortgage securities as they did when the Fed bought assets from FM and FM. Not only is it dangerous in creation of a new asset bubble but it lowers the wage value, the holding values of savings in favour of borrowers private and public but also devalues the currency of the holders further by stimulating the assets it purchases and the price rises that either go against a deflationary pattern or stimulate an inflationary pattern.

So bub I think it is clear which one of us has the simplistic view. There is the view that accounts for the vast complexity of such an economic action or there is "lol stimulus is good what"

It saved the economy by giving it a jumpstart. Look what happened to Southern EU that had just bailouts and austerity without a stimulus package, see what happened when we finally got a stimulus package, look how much better USA did in recovery and thank the democrats for being insightful.

You need money to make money.



I don't think so, if the Stimulus is done right. If you give money to small businesses, it will, in the end, end up in the pockets of the rich but that happens anyway. That's why we have inflation.
With the stimulus you have money in circulation before it ends up (again) in the pockets of the rich.

Well wonderful to have a very vague argument with the term "stimulus" but lets talk QE or nothing shall we as QE is not stimulus. If we want to talk about money in circulation then lets talk about where that new money was created and where it went, whether or not it ever circulated shall we?

[alhoon]

Well wonderful to have a very vague argument with the term "stimulus" but lets talk QE or nothing shall we as QE is not stimulus. If we want to talk about money in circulation then lets talk about where that new money was created and where it went, whether or not it ever circulated shall we?

I'm talking about the stimulus though. It was more than the QE which was in fact... saving the banks.
And still, while QE gave money to the banks, the banks had more leeway to give out loans without terrible interest hence people could take loans. Businesses and banks don't exist apart of each other.

[Denny Crane!]

I'm talking about the stimulus though. It was more than the QE which was in fact... saving the banks.
And still, while QE gave money to the banks, the banks had more leeway to give out loans without terrible interest hence people could take loans. Businesses and banks don't exist apart of each other.

Hot air. There is no consensus that it acts as a stimulus at all but that it is high risk neglible return in the opinion of many economists. So call it QE since stimulus represents MANY other options like government spending, tax cuts, infrastructure projects to name but a few. Do you have a problem with being specific in your language?

Ah right anyway so we now admit that it was a transfer of money, at the cost of value to the currency hitting ordinary people, to the banks. So absolutely we are in agreement that it was a wealth transfer from poor rich with the supposed effect (which did not happen at all in the UK) of increasing loans. And as noted before not only does this liquidity asset swap something which devalues the currency it also helps support higher prices in assets by increasing the security in the liquidity swap. We dont actually know if it works, many investors think the return from QE has been neglible in its effects on lending but it is not a hard science because we have no comparable data to say what would have happened without it.

And of course it isnt like the creation of money through fractional reserve and banks profiting through that money led to our giant crisis...no not at all.



So wed better keep this merry go round going and if it kicks ordinary people in the teeth again and again and then pisses on their chips, well such is the way things are done.

[alhoon]

Letting Lieman Brothers fall though, triggered the crisis and it was one of the worst financial decisions of the past 15 years.

[Denny Crane!]

Letting Lieman Brothers fall though, triggered the crisis and it was one of the worst financial decisions of the past 15 years.

And can you tell me the difference between a bailout/rescue and Quantitative Easing, do we think they are comparable or do we think they are different?

[Treize]

I read inflation was stable before the Fed was founded. Ever since, it increased 2000% or something.

[alhoon]

I think they are comparable. Am I wrong? You seem to know a lot about this stuff and have access to nice sources although admittedly I don't believe all of it (I.e. I can't believe that graph or don't understand it. The "cash" green area doesn't even show compared to Banks which can't be true)

[Sire Brenshar]

I think they a re comparable. Am I wrong? You seem to know a lot about this stuff and have access to nice sources although admittedly I don't believe all of it (I.e. I can't believe that graph or don't understand it. The "cash" green area doesn't even show compared to Banks which can't be true)

Don't worry Denny's mistaken on a few things, hes just passing off his assumptions as facts.

Ill type a response as aoon as I have time this weekend most likely.

[Denny Crane!]

I think they are comparable. Am I wrong? You seem to know a lot about this stuff and have access to nice sources although admittedly I don't believe all of it (I.e. I can't believe that graph or don't understand it. The "cash" green area doesn't even show compared to Banks which can't be true)

Well a bailout or a rescue was say injecting money into Vauxhall or buying mortgage backed assets from banks to improve liquidity in those banks, that money from the Troubled Asset Relief Program (TARP) and the Emergency Economic Stability act came onto the national debt and the government acquired a stake which the likes of AIG have since bought back. This is different from the creation of money you see, the liquidity swap that doesnt "print" money as such but it does create it.

The better option overall would be to have banks fail but the too big to fail was a reality and total global economic collapse was a risk.

Don't worry Denny's mistaken on a few things, hes just passing off his assumptions as facts.

Ill type a response as aoon as I have time this weekend most likely.

Big talk no facts much like your other post.

[Jedi1]

The "cash" green area doesn't even show compared to Banks which can't be true)

Why not? The vast majority of our money is created by bank loans in an electronic transaction. When we buy a car or a house we, or a business makes its weekly or monthly wages pay out it is all done so electronically. When factories, ships, plane, industrial plant and equipment is bought it is all done with an electronic transaction or via a cheque. Stock and derivatives and the various casinos masquerading as legitimate businesses that trade them with trillions of dollars of value in them all operate with electronic transactions. Nobody carries around suitcases full of cash. We only use cash to make relatively small transactions and we only take cash out of the bank as we need it most of the time. Shore their might be allot of cash turnover, but cash changes hands fast so few keep large quantities of it one them, except banks, but banks will only ever have small fraction of their deposits on hand at one time and it to likely has a fast rate of turnover as withdrawals and deposits are made.