Fed's arsenal against inflation & weak dollar

[BigDH01]

Originally posted by: piasabird
You dont get it do you?

Oh, I get it.

High Taxes chase away investors, including foreign investors.

Good thing our effective corporate tax rates are just about average when compared to the rest of the Western world. Not a good thing that even at 0% corporate tax rate, labor is still far more attractive in those countries with labor factor advantages.

Over-legislation also chases away investors. However, that hasnt stopped a few investors from trying to break into the China Market.

It hasn't stopped people from investing in China because China has such a huge labor advantage. Industry doesn't care if people are free to speak, practice religion, or free to associate, they only care about the bottom dollar. Regulation is rather secondary when looking at factor advantages.

If the government doesnt have confidence in the economy improving then probably no one else will either. People will not want to invest in the USA if even the president does not believe in the free market.

The government doesn't have confidence in the economy improving? Also, how does your second statement jive with your previous point?

However, that hasnt stopped a few investors from trying to break into the China Market.

People will not want to invest in the USA if even the president does not believe in the free market.

China has a lot less economic freedom than the United States, yet people seem to invest there. How do you reconcile your beliefs, or do you just like hyperbole?

Would you want to invest in a country with a communist agenda?

What does this have to do with the United States?

Why don't you think about these questions, do some quick reading into international trade theories, at least some review of the Communist Manifesto, or any other authoritative source of Communist literature, and try to create a cogent argument. You are all over the map and I'm not even sure your map depicts this planet.

 

[SigArms08]

Originally posted by: LegendKiller

Originally posted by: iFX

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

Yeah, and you are so much more "keen" than the best economic minds in history.

BTW, how many billions are you worth?

Yes, the wisdom and foresight has cleverly avoided all manner of recessions and bubbles. You must be so proud of your heroes to finally announce that the US should whittle down its record high deficits...."keen", indeed.

 

[LegendKiller]

Originally posted by: SigArms08

Originally posted by: LegendKiller

Originally posted by: iFX

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

Yeah, and you are so much more "keen" than the best economic minds in history.

BTW, how many billions are you worth?

Yes, the wisdom and foresight has cleverly avoided all manner of recessions and bubbles. You must be so proud of your heroes to finally announce that the US should whittle down its record high deficits...."keen", indeed.

The trough is the time to have deficits, the peak is the time to pay them off. Don't put words in my mouth. My "hero" is a rational person who anticipates this, accepts it, and adheres to it.

I'm sure your economic theory is based in so much reasoning that you've made millions off of this, right?

Ohh wait, you're one of those who sits on the sidelines bitching about everything, especially anything "libruhl", right?

 

[Special K]

Originally posted by: miketheidiot

Originally posted by: Special K

Originally posted by: Skoorb
They could jack interest rates and jack up the value of the dollar but the cost to that would be higher by crushing the economy. This is why every economist is repeatedly saying the fed is between a rock and a hard place. It can either keep brow beating the dollar or stifle recovery.

I read an article that said there will be intense pressure on the Fed to keep interest rates too low for too long, just like they were after the last recession. Congressmen will point to their regions' unemployment rate and demand that interest rates be kept low.

Am I correct in my understanding that a higher Fed Funds rate will theoretically lead to fewer business loans, which would in turn lead to fewer projects being started, fewer workers being hired, which keeps growth from occuring?

Obviously a rate that is too low leads to asset bubbles.

actually this time there is (strong) pressure to raise rates too early.

Link to source? I've read the opposite - that many politicians will pressure the Fed to make the same mistake they made after the last recession - keeping rates too low for too long. I'm sure there's pressure coming from both sides though.

 

[SigArms08]

Originally posted by: LegendKiller

Originally posted by: SigArms08

Originally posted by: LegendKiller

Originally posted by: iFX

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

Yeah, and you are so much more "keen" than the best economic minds in history.

BTW, how many billions are you worth?

Yes, the wisdom and foresight has cleverly avoided all manner of recessions and bubbles. You must be so proud of your heroes to finally announce that the US should whittle down its record high deficits...."keen", indeed.

The trough is the time to have deficits, the peak is the time to pay them off. Don't put words in my mouth. My "hero" is a rational person who anticipates this, accepts it, and adheres to it.

I'm sure your economic theory is based in so much reasoning that you've made millions off of this, right?

Ohh wait, you're one of those who sits on the sidelines bitching about everything, especially anything "libruhl", right?

Should I be singing high praises to your noble character, oh great one?

Its truly inspiring, the manner in which you look down on anybody who hasn't made millions?.it?s the second time in this thread that you've used it to discredit anybody who isn?t enthralled with the deficits and long-term, absurdly low interest rates. Do you take this approach with everybody you meet? Firefighters, police officers, military personnel, volunteers at the Salvation Army, the elderly, children, etc.

Well, you brought it up - if you were truly liberal, you?d be more apt to see that lone individuals aren?t necessarily worth the extravagant sums of cash that they allegedly ?earn? and horde, while so many languish in poverty with few opportunities for jobs (much less careers). Your kind exploits liberalism soley for the pursuit of monetary profit.

 

[Jhhnn]

Fluff it up all you want, LK. There's no free lunch, contrary to your assertions. In a speculative market, which is what housing became under the non-guidance of the Bush Admin and Greenspan's FRB, the area of the curve above equilibrium must be accounted for on the other side of the line, with a corresponding negative area. We both know that to be true. That line is the straight black line on your second linked image. Current efforts are geared towards altering the shape of that price correction, stretching it out over time. That's what happened in the Japanese economy and the market meltdown there.

The current market uptick isn't about anything more than beating the solvency out of the FHA by converting ARM's into 30 year FHA insured notes. Appraisals are being fudged to make that happen whenever possible. Losses are thus extended over time. The govt will ultimately bail out the FHA, just as with Fannie and Freddie. Then what? What mechanism is left to support the insupportable? An un- and under- employed workforce? Or a population locked into their current housing because they can't afford to sell? Maybe some new bubble.. in what, exactly?

Your reference to $10T in lost money is extremely disingenuous, at best. There's a difference between appraised value, equity, and actual liquidity, something you know quite well. The only people who'll actually "lose money" in the current imbroglio are those who end up with negative equity, be they bondholders or homeowners. Foreclosure is an extreme form of negative equity.

And, uhh, my linked article does refer to the Fed's purchase of RMBS, but you'd have to actually read it to see that... So, uhh, how'd they do that? Where did the money come from? They simply created it, as they do with all US money. Banks leverage that into even more money using the magic of fractional reserve banking. It's a tough proposition, however, propping up a situation created by leverage of 30:1 or 40:1 using leverage of 10:1- you have to create a lot of money. It's even tougher to prop it up when it's based on unrealistic expectations of the population's ability to pay. That hasn't really improved, at all, and likely won't, given income distribution trends and employment trends...