Fed Decides to keep Printing $85 billion/month

[rudder]

It's also worth noting that the too big too fail banks that began this mess were saved at any cost.

It's not capitalism and it's not free markets at this point.

It's impossible to empower the middle class when all we have is trickle down economic policy during massive employment and income equality problems.

And also worth noting the number of banks that were too big to fail has decreased but at the same time they have grown much larger.

 

[Texashiker]

FYI, Yellen has been named the new Fed chair. Yellen is ultra QE-friendly.

In other words, the worlds supply of ink is about to be sucked dry by the federal reserve.

 

[destey]

I had margin calls for INTC at $14 back in 2008, how come ben won't give me $23.10 (today's price)?

That's what this MBS repurchase is, isn't it? Correct me if I'm wrong but isn't the fed giving full dollar to the banks for these packaged MBS when in reality they're worth far less as many inside that MBS haven't or aren't paying their mortgage?

Can someone explain the bond purchase program? Or do I have it right: the treasury has to pay interest on bonds, accounts payable etc and the incoming revenue doesn't meet expenditures. The difference, is made up by floating bonds at bond auctions, but not all of the bonds are being bought. So the fed buys ones that aren't.

Is that right or did I goof?

 

[Texashiker]

Can someone explain the bond purchase program? Or do I have it right: the treasury has to pay interest on bonds, accounts payable etc and the incoming revenue doesn't meet expenditures. The difference, is made up by floating bonds at bond auctions, but not all of the bonds are being bought. So the fed buys ones that aren't.

Is that right or did I goof?

The fed is buying junk bonds the tax payers are going to be stuck with.

 

[destey]

The fed is buying junk bonds the tax payers are going to be stuck with.

So the fed's interest they receive goes to the treasury I'm guessing? And the treasury pays interest to the fed?

This all sounds like installing a fan on a sailboat to blow it across the ocean

 

[fskimospy]

I had margin calls for INTC at $14 back in 2008, how come ben won't give me $23.10 (today's price)?

That's what this MBS repurchase is, isn't it? Correct me if I'm wrong but isn't the fed giving full dollar to the banks for these packaged MBS when in reality they're worth far less as many inside that MBS haven't or aren't paying their mortgage?

Can someone explain the bond purchase program? Or do I have it right: the treasury has to pay interest on bonds, accounts payable etc and the incoming revenue doesn't meet expenditures. The difference, is made up by floating bonds at bond auctions, but not all of the bonds are being bought. So the fed buys ones that aren't.

Is that right or did I goof?

All the bonds would be bought regardless, just at modestly higher rates. The fed is buying bonds in an attempt to push down yields.

 

[boomerang]

So the fed's interest they receive goes to the treasury I'm guessing? And the treasury pays interest to the fed?

This all sounds like installing a fan on a sailboat to blow it across the ocean

Yup. People that don't go through life with their head's in the clouds understand that we are in deep, deep shit. The worst part is that when a faction in DC start even making rumblings of fiscal conservatism, they are met with a wall of partisanship. Politics at some point is going to have to take a back seat if we actually can pull out of this. Personally, I see no way for that to happen. Too much is aligned in a bad, bad way.

Obama’s national debt rate on track to double

IMO, the reason politician's don't want to address our underlying, very severe problems is because they know there is no answer. So, they put Band-Aids on things and play political games in hopes that they are out of office or worse, that they can pull off blaming it on the other party.

Good times.

 

[LegendKiller]

The fed is buying junk bonds the tax payers are going to be stuck with.

So you consider US Treasuries and Fanne/Freddie MBS "junk bonds"?

Do you even understand how low the losses are on agency RMBS and how well protected they are, especially post-crisis?

Nope, you have no clue.

 

[LegendKiller]

So the fed's interest they receive goes to the treasury I'm guessing? And the treasury pays interest to the fed?

This all sounds like installing a fan on a sailboat to blow it across the ocean

The fed is attempting to lower the availability of two asset classes (treasuries and agency RMBS) from the market so people either bid those lower, or move onto other asset classes which are then bid lower. Ultimately the interest rates for all assets are lowered.

This affects all sorts of things. For example, the interest rate on a prime auto loan securitization may be swaps + 50 across the entire structure, or maybe 2%. That allows the auto manufacturers to offer cheaper subvention (lower than market rates) or just low rates in general to the public, increasing the availability and affordability of vehicles.

The same goes for leasing companies which lease copiers, scanners, computers, and other business essential machines to companies. They are able to lower lease rates to small businesses.

Apply this across the entire economy.