How to categorize Dr. Paul's political views

[xj0hnx]

Same thing with our debt. If it were taught early on how the government pays for things and the implications of debt, we'd have less of a problem. However, kids aren't taught the value of money, nor the benefits *AND* dangers of leverage, thus they go into the world ignorant. This isn't wholly education's fault as it is society's fault (parents) for not being smart themselves and imparting the wisdom. Ron Paul's ideas can't fix that any more than public education can. It's change that PEOPLE must make within THEMSELVES. Sure, cutting everything cold turkey might "fix" the problem, but it would also turn us into an economic wasteland dominated by anarchy.

Kids didn't ruin the economy, the people that did knew full well what they were doing. To try pretending they are just ignorant because they were never taught better is as you said, foolish.

 

[LegendKiller]

Kids didn't ruin the economy, the people that did knew full well what they were doing. To try pretending they are just ignorant because they were never taught better is as you said, foolish.

They never were taught better and they all thought of it as a get-rich-quick scheme. My parents would never have thought of doing what was done and they never encouraged me to do the same. Instead, they taught me about debt, its uses and its abuses. Granted I had to learn on my own in some cases, but their lessons prevented the worst.

I do think one place where we can do better is education of college students about their loans and the ability to repay them. Instead of a few hour lecture, it should be a dedicated course that *all* students must take that runs through personal finances. They pay for it but they also learn a lot about it. Creating personal balance sheets, P&L, cashflow, initial financial planning, and the implications of student loans, would help massively.

Had I done that I certainly would have seen my level of debt exiting school and the potential income for a psychology major if I didn't choose to go to grad school (which I was planning on doing when I went into psych, but switched to MBA, first in IT then finance).

Collective insanity can be mitigated through education. However, it cannot be prevented as humans are flawed and prone to group-think and collective insanity no matter how intelligent or educated. This is why thinking that a totally "free market", or the elimination of the Fed, would prevent boom/bust cycles.

I do agree that the "burn" of a bust prevents the boom in the future. However, unlike touching a stove when hot which doesn't provide temptations, the heat of a bubble provides temptations that, despite the burn of the bust, seem worthwhile no matter how intelligent or educated. The risk/reward mentality isn't set, nor will it ever be.

No political system or ideology will prevent psychological insanity. It is impossible and something that Paul, nor his followers, seem to get.

I eagerly anticipate your adroit, thorough, and intelligent reply to this post. Please disappoint me as every other Ron Paul Bot does, because it merely shows the rest of the world you really are a paper tiger.

Instead, I'm sure I'll get some witty one or two sentence reply that clearly shows you lack any knowledge, ability, or intelligence to debate this one the level it truly deserves. Instead, you regurgitate the cud of another cow's chew, spitting it out and chewing it again to make yourself seem intelligent to the internet masses.

But then again, perhaps you're more than a dittohead, we'll see.

 

[xj0hnx]

No political system or ideology will prevent psychological insanity. It is impossible and something that Paul, nor his followers, seem to get.

We get it, problem is that what we have been doing hasn't worked out so good, well it has for some people. Just because we can keep doing what we are doing for a long time, doesn't mean it's smart, or a good thing. I can keep borrowing money, and let debt pile up for a real long time too, how do you think that would work out in the long run? Our politicians have kicked the can down the road for long enough.

 

[Lemon law]

To predict the US merry go round will come to a screeching halt some day is not too hard. But to say the Dr. Paul and his son of Godzilla son have the reasons or rationale accurately pegged correctly is a far harder stretch. IMHO, they never even mention the issues that I think will cause that coming deluge.

But right now, if I asked for one word to sum up the Ron and Rand Paul views effects on the larger nation, that word would be either inconsequential and or irrelevant.

I think of them as witch doctors standing at the Ocean coast line, willing that the tides not come in, and I might have an iota of respect for them if they even understood why the tides come in. And we only had one nutty witch doctor, and now we have two of them. Proving once again that 2x0=0.

 

[Anarchist420]

A paleocon is a states-rights, anti-abortion, pro-borders conservative who is hostile to the welfare-warfare state. They contrast to the neocons who are pro-war, sympathetic to the welfare state, generally anti-borders, and not quite as hostile to abortion. Neocons would fit directly in between FDR and Dr. Paul.

 

[LegendKiller]

We get it, problem is that what we have been doing hasn't worked out so good, well it has for some people. Just because we can keep doing what we are doing for a long time, doesn't mean it's smart, or a good thing. I can keep borrowing money, and let debt pile up for a real long time too, how do you think that would work out in the long run? Our politicians have kicked the can down the road for long enough.

So you think getting rid of the Fed and eliminating all regulation while going to the gold standard and becoming isolationist is "new" and "exciting"?

Shooting yourself in the dick and both knees because you have a headache isn't "new" and "exciting", its fucking stupid. Diagnose why you are getting a headache, perhaps it is something as simple as getting a new pillow.

This is the problem with libertopians, instead of thinking about what could fix the problem, they go off on a tangent and get extreme because it is a different course. It's a ridiculous way of dealing with your problems.

But hey, thanks for debating the real points. It's nice to know you're really smart, intelligent, have great solutions to great problems, and you're your own man.

Seriously, if all you can muster is a fucking couple retarded platitudes and shotgun solutions because you're too fucking stupid to come up with good ideas, then don't bother posting in any thread. What's funny is that I've replied thoughtfully to everything you've posted, yet you can't even do the same.

It's indicative of how shallow your intelligence and knowledge is. You're a veneer of mahogany with MDF shitboard underneath sold as "nice" furniture to morons at Rooms To Go who think they're getting a good deal. You sell yourself as intelligent, yet really have no depth or intelligence. You make pretty statements, but all they are is cud from another cow. This is the true problem of our system, intellectual midgets, like Ron Paul, get the soap box and people like me get the ad-hominems. It's painfully obvious that you've got nothing to really debate, it's why you started off attacking me rather than the points. I, on the other hand, allowed you to prove you've got nothing to offer, then launched into the reposte.

Just like every other RPB.

 

[bamacre]

If you actually knew anything about the current financial crisis and its causes, you'd realize that low rates had absolutely nothing to do with the crisis.

LOL. Anyone who says this is either ignorant, or deceitful. And LK isn't ignorant.

 

[xj0hnx]

So you think getting rid of the Fed and eliminating all regulation while going to the gold standard and becoming isolationist is "new" and "exciting"?

Shooting yourself in the dick and both knees because you have a headache isn't "new" and "exciting", its fucking stupid. Diagnose why you are getting a headache, perhaps it is something as simple as getting a new pillow.

Where did I say that is the answer? Oh I didn't, you are making shit up.

This is the problem with libertopians, instead of thinking about what could fix the problem, they go off on a tangent and get extreme because it is a different course. It's a ridiculous way of dealing with your problems.

And your problem is thinking more of the same is going to magically fix anything, I believe that's a definition of insanity?

But hey, thanks for debating the real points. It's nice to know you're really smart, intelligent, have great solutions to great problems, and you're your own man.

You haven't "debated" anything.

Seriously, if all you can muster is a fucking couple retarded platitudes and shotgun solutions because you're too fucking stupid to come up with good ideas, then don't bother posting in any thread. What's funny is that I've replied thoughtfully to everything you've posted, yet you can't even do the same.

A moron that thinks our problems are because people aren't educated is the cause of our problems calling someone else "fucking stupid"? That's rich.

It's indicative of how shallow your intelligence and knowledge is. You're a veneer of mahogany with MDF shitboard underneath sold as "nice" furniture to morons at Rooms To Go who think they're getting a good deal. You sell yourself as intelligent, yet really have no depth or intelligence. You make pretty statements, but all they are is cud from another cow. This is the true problem of our system, intellectual midgets, like Ron Paul, get the soap box and people like me get the ad-hominems. It's painfully obvious that you've got nothing to really debate, it's why you started off attacking me rather than the points. I, on the other hand, allowed you to prove you've got nothing to offer, then launched into the reposte.

Just like every other RPB.

The only indicitiveness here is that you have resorted to insults before even posting a single fact, and calling your opinions debate, you are a joke, and one that isn't very funny.

 

[xj0hnx]

LOL. Anyone who says this is either ignorant, or deceitful. And LK isn't ignorant.

Hey clownshoes, it's a fact, the LegendKiller said so.

 

[LegendKiller]

LOL. Anyone who says this is either ignorant, or deceitful. And LK isn't ignorant.

OK, let's try this again.


In 2003-5, rates were low but they began increasing in 2005. Ironically, in 2005, mortgage volume kept increasing DESPITE increasing rates? Why? Because rates were decoupled from one's ability to take out a mortgage. Why was it decoupled?


If you are a borrower your ability to take out a mortgage is dependent on your ability to repay it. Repayment willingness and ability is measured by credit score, income, and utility of the good you purchased.

In pre-2005, the credit boom was constrained to people who had good credit scores, verifiable income, and value in the good purchased.

Post-2005 that all was erased slowly, first through ARM, then to Option ARM, and to Liar Loans (low/no-doc). All of these eliminated the coupling of one's ABILITY to pay from one's ability to get a loan, regardless of interest rates.

Interest rates could have been 1,000,000,000% and it wouldn't have mattered because the 1-2 - year teaser ARM rate and 5-year Option ARM rate delayed the pain. Furthermore, the short-term nature of FICO scores and the no/low-DOC loans eliminated one's metric of long-term repayment.

Finally, the short-term nature of utility was the linchpin of everything. The utility of a house was to make money, provided money was made and the appreciation outstripped the short-term interest rate (you made more than you had to pay at minimum) then your utility was investment.

Thus, this considered all in one provided a full delinking of interest rates from the borrowing, destroying your rate foolishness.


----------------------------------


Now, on the lender side, your ability to extend loans was not dependent on interest rates, but of leverage. The buy/sell broker model for loans in wholesale lending was completely dependent on the ultimate purchaser getting enough leverage off of the entire mortgage. Traditionally the buyer/holder would either hold a loan until maturity or securitize it to to sell to maturity. However, every pool of mortgage securitized had lower-rated tranches that eventually accumulated until the required capital consumed a lender's balance sheet financing through equity and debt.

The interest rate of the lower tranches didn't matter, capital and financing did. Thus, what to do with the lower tranches?

Sell them!

How? Nobody will buy them, there's no offset for them, and nobody likes equity/mezzanine tranches enough, in volume enough, to make a difference. If there's 1,000,000,000,000 of subprime mortgages, and the lower tranches are 5%, that's 50bn of shit to get rid of. We don't have the balance sheet financing to deal with it and regulators will tell us that we have too many bad assets, so we have to come up with a way to get rid of it!

...hmmmm.....what to do?

Ohh, let's securitize those into CDOs, selling them as AAA securities. We'll claim modern portfolio theory and say that a diversified pool of investments will have non-correlated risk, regardless of whether the portfolio is correlated, if it is "diversified" then it is uncorrelated, right?

Right. So let's make CDOs to get rid of the lower tranches.


But wait, even if you can securitize 95% of subprime RMBS, and you can CDO 95% of the 5% of RMBS remaining, that still leaves 5% of 5%, or 50bps of RMBS. Eventually that 25bps adds up. If you have 1,000,000,000,000 of subprime mortgages, you have 2,500,000,000 of uber-shit to get rid of. Regulators will not like having too much uber-shit, so we must find a way to get rid of it.

Ohh, cool, we'll CDO the CDOs, CDO^2 is even cooler, thus we can now securitize the 5% of the 5% and only be left with 5% uber-uber-shit.

Now we're cool. We only have 125MM of total mortgage exposure from 1 TRILLION in exposure, we can easily deal with that.


You see, just like a borrower's ability to repay a loan wasn't dependent on interest rates, the lender's ability was only dependent on its ability to get rid of the loan as much as possible.


Thus ends the lesson and destroys your argument, now go fuck yourself and your loony ideas.

 

[LegendKiller]

Where did I say that is the answer? Oh I didn't, you are making shit up.

In fact, it was the only thing of substance you posted and even it was worthless.

And your problem is thinking more of the same is going to magically fix anything, I believe that's a definition of insanity?

When did I advocate doing nothing? I just advocated not doing something stupid.

You haven't "debated" anything.

No shit, because you don't know enough to debate.

A moron that thinks our problems are because people aren't educated is the cause of our problems calling someone else "fucking stupid"? That's rich.

And you're the moron who thinks the only way to solve the situation is to destroy the whole basis of a modern economy.

The only indicitiveness here is that you have resorted to insults before even posting a single fact, and calling your opinions debate, you are a joke, and one that isn't very funny.

I am a joke? You haven't posted one thing of substance. Look at your shit above. You have no basis mr-MDF. All you can do is attack me. Nice try though, you just made yourself look even more moronic than you had before. I didn't think it was possible, but you did.

Just admit it, you have no real thoughts of your own. If you did you could have countered my posts easily. Instead, you engaged in the age-old internet debate tactic, dodge and ad-hominem.

Great job!

 

[xj0hnx]

Just admit it, you have no real thoughts of your own. If you did you could have countered my posts easily. Instead, you engaged in the age-old internet debate tactic, dodge and ad-hominem.

Great job!

Right back at you sport.

So you don't think low interest rates had anything to do with the crisis? lulz

 

[LegendKiller]

Right back at you sport.

So you don't think low interest rates had anything to do with the crisis? lulz

I just explained it to you but you can't comprehend it, which is why you can't actually come up with an argument FOR your position. You just swallow the common pundit trash. There's one thing that caused the crisis, leverage. Leverage on the personal level and leverage on the bank level. Rates could have been 10% and leverage would have been the only thing that mattered.

What's hilarious is that you fools keep blaming rates, instead of focusing on the real problem, and the real problem remains. If you would be focusing on the real problem it could be countered and solved.

It's a magic trick to you people. You watch only one hand while the other is robbing you blind. Your hatred of the Fed and ignorance blind you to the real problem.


Fucking fools.


Can't you simply come up with a counter to my post? If you so strongly think rates mattered, post why. Then I will counter.


Ohh wait, this is the internet, nobody is supposed to back up their arguments. You're only supposed to post one sentence replies ending in "lol". Shit like that only signifies capitulation.


Glad you already capitulated in this debate.

 

[xj0hnx]

What's hilarious is that you fools keep blaming rates, instead of focusing on the real problem, and the real problem remains. If you would be focusing on the real problem it could be countered and solved.

Sure ARM resets had nothing to do with it, those low interest rates that allowed banks to justify loaning to people that could otherwise not afford it, and then got fucked because they could no longer afford it after reset, nope, nothing at all. Now, I don't absolve consumers that choose to go that route, they reap what they sow, but to say that interest rates had no part in it is as Bamache said " ignorant, or deceitful". Rates may have "started to climb", but they were nowhere near where they were fifteen years ago.

 

[bamacre]

Sure ARM resets had nothing to do with it, those low interest rates that allowed banks to justify loaning to people that could otherwise not afford it, and then got fucked because they could no longer afford it after reset, nope, nothing at all. Now, I don't absolve consumers that choose to go that route, they reap what they sow, but to say that interest rates had no part in it is as Bamache said " ignorant, or deceitful". Rates may have "started to climb", but they were nowhere near where they were fifteen years ago.

It's already been covered in the second half of this thread.

No one is ignoring the other causes of this crisis, it's just that LK is ignoring the primary cause. Of course, who expects a VP of a financial institution to point any fingers at their beloved Fed? Not I. Unfortunately, they aren't the only ones the Fed has a grip on.

 

[LegendKiller]

Sure ARM resets had nothing to do with it, those low interest rates that allowed banks to justify loaning to people that could otherwise not afford it, and then got fucked because they could no longer afford it after reset, nope, nothing at all. Now, I don't absolve consumers that choose to go that route, they reap what they sow, but to say that interest rates had no part in it is as Bamache said " ignorant, or deceitful". Rates may have "started to climb", but they were nowhere near where they were fifteen years ago.

So you're saying that the pre-ARM rate was sold to the purchaser as an affordability product? Wasn't that circumventing the rates, and the determination of payment, in the calculation of whether a borrower could pay?

If, in fact, they could not pay at the unlocked, non-teaser rate, wasn't the teaser rate just "kicking the can down the road?

Isn't that interesting, that rates become so disconnected from the ability to pay, that they are irrelevant inside the ARM lock period?

Take it further and question whether rates were irrelevant moreso through the Option-ARM period.

Take it even further and determine whether rates mattered at all as long as appreciation of an interest-only mortgage exceeded the interest-only or teaser rate.


Once you take into account the borrowers couldn't ultimately repay the loan outside the ARM-lock period, then you actually just proved my argument. Rates, with these affordability products, did not matter because the lock period eliminated the ability to pay from the rates.


Thanks for proving my point.

But there is one key element that you're missing. Do you actually know what it is? Please guess, because I am 100% sure you don't actually know.

 

[xj0hnx]

But there is one key element that you're missing. Do you actually know what it is? Please guess, because I am 100% sure you don't actually know.

That you're shilling for the banks? Naw, I got that one.

Please explain how someone that can barely afford to pay for a house that has 5% interest is going to afford it at 7%+, because ...interest rates don't matter.

 

[LegendKiller]

That you're shilling for the banks? Naw, I got that one.

Please explain how someone that can barely afford to pay for a house that has 5% interest is going to afford it at 7%+, because ...interest rates don't matter.

Why did they have a 5% interest rate? Wouldn't the interest rate remain at 5%? The key is that the 5% rate wasn't set by the market, it was set by the lender at an arbitrary teaser rate. IT WAS NOT TIED TO MARKET RATES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Keep in mind, the ARM interest rate isn't set to an index for the locked years. An Option-ARM "pick-a-pay" isn't set set at all during the pick-a-pay years. Moreover, a liar-loan ARM or Option-ARM isn't set to anything at all that a borrower can actually pay. It is only dependent on the borrower's willingness to not default, predicated upon the appreciation of the house and the maximum neg-am the borrower can sustain.

I gave you 3 clues in this post as to the key differential between blaming the Fed and blaming the market, above and beyond teaser rates. Are you smart enough to figure it out?

 

[xj0hnx]

Why did they have a 5% interest rate? Wouldn't the interest rate remain at 5%? The key is that the 5% rate wasn't set by the market, it was set by the lender at an arbitrary teaser rate. IT WAS NOT TIED TO MARKET RATES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Keep in mind, the ARM interest rate isn't set to an index for the locked years. An Option-ARM "pick-a-pay" isn't set set at all during the pick-a-pay years. Moreover, a liar-loan ARM or Option-ARM isn't set to anything at all that a borrower can actually pay. It is only dependent on the borrower's willingness to not default, predicated upon the appreciation of the house and the maximum neg-am the borrower can sustain.

I gave you 3 clues in this post as to the key differential between blaming the Fed and blaming the market, above and beyond teaser rates. Are you smart enough to figure it out?

So this is your round about way of trying to explain that even though interest rates were too low, and lenders could get people into houses they couldn't realistically afford they still don't have anything to do with it? Sorry, not buying it. Sounds like the same kind of logic that thinks you can borrow your way out of debt.

 

[LegendKiller]

So this is your round about way of trying to explain that even though interest rates were too low, and lenders could get people into houses they couldn't realistically afford they still don't have anything to do with it? Sorry, not buying it. Sounds like the same kind of logic that thinks you can borrow your way out of debt.

I never said it wasn't partly the banks' fault, I merely said it wasn't the Fed's fault with regards to interest rates. That's because interest rates had no bearing on what a borrower could afford, mainly because all of the subprime loans made detached one's ability to repay at ANY interest rate FROM the interest rate.

You can partly borrow your way out of debt if the new debt is cheaper and you don't incur further debt.

But to stay on point, the other point I was trying to make is that the Fed cannot control long-term rates directly, the market sets interest rates for loans, not the Fed. THE MARKET!! It can merely attempt to draw reserves into the Fed by making reserve holding more expensive, increasing the reserve rate, or selling balance-sheet debt into the market, drawing cash out, increasing rates indirectly. However, as has been seen in the past, the Fed's ability to affect long-term rates through open-market activities has been drastically mitigated by securitization's affects on the leverage of banks, especially when compounded by near 100% leverage broker-buyer-securitizer through RMBS, CDO, CDO^2...etc. You see, a lender's ability to make a loan, and fund a loan, depends on its own funding. That funding was traditionally a mix of equity, bank debt, and deposits. 100% leverage securitization made off-bs debt 100% of the capital structure, eliminating the equity (most expensive), bank debt (tied to bank's rating, second most expensive), and deposits (rates quasi-controlled by the Fed, least expensive). By eliminating ALL bank-centric funding and tying it only to structured finance, the risk to the institution evaporated, destroying the risk/return nature and eliminating the most expensive part of the capital structure, squeezing risk spreads.

This affect can be seen by the ever narrowing risk-spread of 10-year treasury bonds, where mortgages were traditionally priced, and the actual mortgage rates. Risk spreads, the spread between a AAA 10-year and a AAA RMBS narrowed, resulting in a narrowing of mortgage spreads. When looking at Fed Funds to mortgage rates, you see this narrowing even more, in spite of Fed Funds rate increasing.

You see, the problem wasn't rates, it was risk, and the perception of risk within the borrower *AND* lender side. It was why AAA CDOs of BBB RMBS were priced at LIBOR+100, despite having only a 5-10% loss in the mortgage defaults top wipe them out within 2 years.

Had the risk been correctly priced in, the rate should have been L+20, or more. It didn't really matter what the index rate was, LIBOR could have been 10%, the risk spread is what made the trade ridiculous.

You have much to learn. Ron Paul won't teach you this because he doesn't understand it himself. He blames the boogeyman (Fed), not human nature, stupidity, and poor regulation of these markets.

It's why I instantly ignore anybody who blames rates. They just don't get it.

BTW, I was preaching this back in 2004/5 on the GotApex message boards, among other places (including Fat Wallet Finance), and here.

If only I had capital to play with then...

You are getting closer young padiwan. I'll make a smart, educated, and intelligent person out of you yet. Eventually you'll hit the...

OHHH. MY. GOD. moment.

I hit it back in 2004 when a real estate broker tried to sell me a condo in Orlando. My FICO was 600, because my student loans from grad school were fucked up (not consolidated, had many accounts, once cleared up my FICO went to 710). I was making 48k with 50k in student loans. Yet, for some dumb reason, they wanted me to buy a 280k condo which had been only 200k 6months before. 100% financing, no-down through a silent second with low-doc on an 5/1 ARM.

I didn't take the deal. 6 months later, down the road, they turned a HoJo which was a drug haven, into 300K condos. The condo I would have bought was now 350K.

I watched a good friend get sucked into 900K in mortgages on 2 houses in FL on a 40K teacher salary.

Yeah, I learned quickly how dumb things had gotten.

My second OMG moment was when, 2 years later, I worked for a major CC lender. I despised myself quickly as I learned their stupidity. One day, early on, I asked what would happen to the 60bn portfolio if defaults went up. The answer was lamely "we will raise rates to compensate". I asked them whether it would drive up defaults, the 2nd lame answer was "sure, but we'll just raise rates again".

They didn't get it either. I left on exactly my 365th day, when my contract to be on the hook for relocation was up.

 

[Special K]

At the risk of being flamed, isn't the Fed Funds rate an indirect measure of how much money is currently in the banking system? When rates were low for a long time following the .com bust, didn't that mean that banks had lots of money to lend out?

If there weren't any productive investments to be made with this money, then is it really a surprise that they found some way to misallocate it by loaning it out in the form of mortgages to buyers who otherwise wouldn't have qualified for them? If rates had been raised sooner, wouldn't the end result have been less money in the system, less money to make new loans with, fewer bad mortgages being made, etc.

I realize that the ratings agencies also played a part, but didn't that ultimately just give the banks even more money to lend out? The banks sold the mortgages, which gave them even more money to originate new mortgages with.

I'm just hazarding a guess here based on what I've read.

 

[LegendKiller]

At the risk of being flamed, isn't the Fed Funds rate an indirect measure of how much money is currently in the banking system? When rates were low for a long time following the .com bust, didn't that mean that banks had lots of money to lend out?

If there weren't any productive investments to be made with this money, then is it really a surprise that they found some way to misallocate it by loaning it out in the form of mortgages to buyers who otherwise wouldn't have qualified for them? If rates had been raised sooner, wouldn't the end result have been less money in the system, less money to make new loans with, fewer bad mortgages being made, etc.

I realize that the ratings agencies also played a part, but didn't that ultimately just give the banks even more money to lend out? The banks sold the mortgages, which gave them even more money to originate new mortgages with.

I'm just hazarding a guess here based on what I've read.

Ohh how I love how the Ron Paul Rats flee at the slightest challenge to their ridiculous notions. They have no real substance so they can't counter a single argument I post, which is why bamacre and xjohnx fled this thread.


Special K, you wouldn't get flamed as your post isn't a flame against myself (unlike xjohnx's first post), nor is it a supposition, an accusation, or anything of the sort. It is what most people crave, a debatable and answerable question and point. You posted more than a few sentences of "gotcha", you posted a real point, which I thank you for.

Yes, the Fed Funds rate is a proxy of how much "cash" is in the banking system. Injecting more cash in, by the Fed buying assets, or decreasing the reserve rate, results in a lower Fed Funds rate. However, the FFR is only a proxy for what the Fed can control, many times there's just simply too large of a liquidity rush into certain markets for the Fed to counteract. As you can see, FFR did increase during the bubble period but nothing happened.

Keep in mind, it wasn't the banks lending for the whole period, it was investors buying securities. Those investors were far more broad than the banks, especially since so many structured securities were AAA rated, allowing insurance companies and other QIBs to suck them up, all of whom are outside the Fed's control.

Also take into account how many of the QIBs were foreign institutions.

Overall, the FFR wasn't a true reflection of what was going on in the market, which is why I point to risk spreads for various products, and the squeezing of the spreads, as a more accurate reflection of the overall lending market.

 

[xj0hnx]

They have no real substance so they can't counter a single argument I post, which is why bamacre and xjohnx fled this thread.

No, it because you're a lovely human, douchebag, shill for the bank that starts out insulting people, and are a complete waste of time to talk with. On top[ of saying stupid shit like interest rates don't matter. Fucking moron.

 

[StageLeft]

He has a lot of good ideas but perhaps is not imaginative; i.e. if it's not in the constitution it basically gets a no on any vote.

 

[LegendKiller]

No, it because you're a lovely human, douchebag, shill for the bank that starts out insulting people, and are a complete waste of time to talk with. On top[ of saying stupid shit like interest rates don't matter. Fucking moron.

Yeah, call me a "lovely human", that's a great way to counter my points. How about you try to do that, for once, there sparky?

How did I start out insulting? You're the one who began, go back up and look, I just ended it by thoroughly trashing your points. You haven't countered one single point I've made, you just dodge and hustle, like every other Ron Paul Bot when faced with reality.

You've got nothing, you are nothing, and you will never be anything. Well, actually, you are something, you're an ignorant homophobe who can only resort to debased attacks like you did above. It's no surprise Ron Paul will never be anything more than a 5% candidate with fools like you supporting him, hopefully it stays that way.

Thanks for proving my point and lowering your status. You're a self-fulfilling prophecy of trash.