Someone explain to me-T-Bills set all time low record today

[nonlnear]

I understand what you're saying, but I don't believe the President or Congress has control over the supply of money.

Fern

Congress has always had the power to create money. (Article I Section VIII) They just don't use it.

 

[Fern]

The Fed controls the money supply now, and Congress has no oversight AFAIK.

Fern

 

[nonlnear]

The Fed controls the money supply now, and Congress has no oversight AFAIK.

Fern

Congress has no oversight of the Fed, but Congress could still mint any coinage they want to. They could order a trillion dollar coin to be struck if they were so inclined.

 

[piasabird]

Just look at the stock market every time that the president makes a speech it drops. This shows the lack of confidence in the white house administration. The leadership of this country is not showing any confidence, hope or stability for the financial markets to flourish.

Just look at how the president, when asked a question, says we need to tax the rich every time. In a time of distress democrats just go for the same thing every time . . . Raise taxes. If the Bush tax cuts had just been made permanent, then the markets would take that as a move toward stability. After all, at any time congress can vote new taxes in. Just depends if they want to keep their jobs.

This country is begging for some leadership, and president gives them liberal ultra left wing propaganda and double speak. People want to see confident leadership with hope and change, and all we see is more of the same Party Politics. The president cant even lead his children out of a wet paper bag!

 

[momeNt]

I'm surprised you'd ask, given that it was explained over here, a thread you're posting in-

http://forums.anandtech.com/showthread.php?t=2183533&page=12

The S&P downgrade was a symbolic act- meaningless against the backdrop of the economy & the market. We're entering a liquidity trap, and a debt/deflation spiral.

The known ways to escape that are over time, lots of time with lots of economic pain, or with income redistribution to create jobs, as was done in the 1930's.

Things will get worse before they get better, simply because the interests of wealth are being protected above all other considerations. I doubt that will change, unless things get really, really terrible, at which point public denial will collapse.

We are still living with the problems created with the intervention that was done in the 1930s, it set all the precedents that the fed and government use today to try and sway markets. The government and the fed are all out of tricks for this one though. I think the only way out is a severe correction and the fed and us gov't needs to stop trying to prop up a market that desperately needs a correction.

The only Great Depression "historian" that really believes that the great depression lasted as long because it went without any intervention is one Ben Bernanke, and he is only goal now is to prove that the fed is useful and is the answer. Any of the true economic historians know that the blame should be put squarely on the federal reserve and government policies aimed at arresting the correction as opposed to simply allowing the market to work.

 

[Ausm]

Noone in their right mind believes S&P. An entity who has a legal right to print unlimited amounts of money cannot default on its loans unless it decides to do so for the LULZ. So the only real risk is high inflation, which is something the markets don't see happening given where our economy is right now.

This...The S & P is a joke they were a instrumental player the 2008 financial collapse. They were giving triple A+ ratings to WORTHLESS mortgage backed securities and all the suckers who believed them lost their ass.

This was backed by when the stock market went down 2000 points what were people buying...US Treasuries!

 

[Darwin333]

Congress has no oversight of the Fed, but Congress could still mint any coinage they want to. They could order a trillion dollar coin to be struck if they were so inclined.

Congress chooses to have no oversight of the Fed. Big difference.

 

[Craig234]

I'm downgrading my rating of S&P.

 

[Darwin333]

Noone in their right mind believes S&P.

Very true. They have been consistently late to the party and a ton of stuff they slapped the AAA rating on did not deserve the AAA rating. If that is what you are arguing about US debt (other then very short term, such as what the market is purchasing) then we have no disagreement.

An entity who has a legal right to print unlimited amounts of money cannot default on its loans unless it decides to do so for the LULZ.

Printing unlimited amounts of money is exactly the same as just defaulting on the debt. The creditor gets basically the same thing, nothing of value.

Out of curiosity, do you believe that every sovereign nation that can legally print money should have a AAA rating simply because they cannot possibly default? Didn't think so.

So the only real risk is high inflation, which is something the markets don't see happening given where our economy is right now.

The market also doesn't believe in our long term bonds...... but you are right, they sure as hell don't mind loaning us money for a year or two right now (that would be considered parking your money in a safe haven because no one expects us to blow up in 2 years, just so you know). One would need a pretty bigass bed to stuff a few billion under the mattress until all of this blows over.

 

[Darwin333]

I'm downgrading my rating of S&P.

The MBS bullshit wasn't enough but NOW your ready to say fuck those assholes? lol

 

[theeedude]

I'm downgrading my rating of S&P.

Me too, from Sub-Standard to Sub-Poor

 

[nonlnear]

Congress chooses to have no oversight of the Fed. Big difference.

Exactly.

While I didn't state that angle explicitly, that's a part of the point I was trying to make. They have always had the power, they just decided to stop exercising it and hand over the administration of monetary policy to a private cartel.

 

[nobodyknows]

In my personal view the S&P destroyed hundreds of billions of dollars in market value because of their profound dislike of our political system. In the end the downgrade contributed to the market crashing which caused everyone to run to the safe haven (US Treasuries). One of the stupidest sequences of events I've ever seen.

All of this coming from the abomination of a ratings agency which valued sub-prime mortgage packages as AAA.

LOL!!

 

[Jhhnn]

In my personal view the S&P destroyed hundreds of billions of dollars in market value because of their profound dislike of our political system. In the end the downgrade contributed to the market crashing which caused everyone to run to the safe haven (US Treasuries). One of the stupidest sequences of events I've ever seen.

All of this coming from the abomination of a ratings agency which valued sub-prime mortgage packages as AAA.

I don't think that's what happened at all. I think the Market suddenly realized, in one of those Wiley Coyote moments, that Republican imposed austerity will be *bad for business*. That their willingness to play chicken over debt maintenance is *bad for business*. That the situation in Europe & their austerity response to it is *bad for business*. One of those no-brainer sort of conclusions that arrive as an epiphany, a "WTF was I thinking!?" conclusion.

If the debt downgrade were meaningful at all, then yield on treasuries would have climbed, but it didn't- it went the other way.

Uncertainty- what Repubs blamed for a lousy economy & non creation of jobs, until they created more themselves pandering to their Tea Party base... which is obviously, uhh, different, yeh, different somehow... I mean, it's not like they're creating more out of thin air, is it?

But It's All Obama's Fault! Must be!

 

[Craig234]

The MBS bullshit wasn't enough but NOW your ready to say fuck those assholes? lol

No, I've been after them for that the whole time.

This was just a timely crack, considering it was their first downgrade that's relevant.

 

[CLite]

I don't think that's what happened at all. I think the Market suddenly realized, in one of those Wiley Coyote moments, that Republican imposed austerity will be *bad for business*. That their willingness to play chicken over debt maintenance is *bad for business*. That the situation in Europe & their austerity response to it is *bad for business*. One of those no-brainer sort of conclusions that arrive as an epiphany, a "WTF was I thinking!?" conclusion.

If the debt downgrade were meaningful at all, then yield on treasuries would have climbed, but it didn't- it went the other way.

Uncertainty- what Repubs blamed for a lousy economy & non creation of jobs, until they created more themselves pandering to their Tea Party base... which is obviously, uhh, different, yeh, different somehow... I mean, it's not like they're creating more out of thin air, is it?

But It's All Obama's Fault! Must be!

Do you really think the market is smart enough to read into all that? I think the market is a dumb mob mentality and got a bit spooked by what the downgrade could mean long-term for global markets.

Let's say you are a financial manager and you are predicting (and/or watching) markets go down because of uncertainty regarding US debt. You look at all your available safe havens and you decide to put it into US Treasuries because they are still the most secure. You don't really care that it's the downgrade on US Treasuries that are causing the market panic, all you care about is finding a safe haven based on your independent research.

If the markets were going to respond to Republican stonewalling as you state then they would have done it much sooner, it seems to me they were clearly responding to the long-term uncertainties associated with the downgrade.

 

[ProfJohn]

Analogy...

The world governments live in a little town along the river.
A big flood is coming its way.

The US lives on the highest hill in town.

In the end it might be washed away in the flood too, but it is still the safest place in town to be...

 

[ProfJohn]

Just look at the stock market every time that the president makes a speech it drops. This shows the lack of confidence in the white house administration. The leadership of this country is not showing any confidence, hope or stability for the financial markets to flourish.

Awesome quote by Krauthammer from Wed.
" But the irony is that even if he were undetached and concerned and involved, the markets have shown that he is the anti-E.F. Hutton. When he speaks, no one listens. The markets take no notice whatsoever of what he does."

 

[Nemesis 1]

Op I will make it easy for ya . Many 401K holders after the second quarter went into the safty of bonds . surprize surprize

 

[werepossum]

Op I will make it easy for ya . Many 401K holders after the second quarter went into the safty of bonds . surprize surprize

Agreed. I think many people think that the US will not outright default on its bonds, even if we can't always pay them back when due. The stock market on the other hand could easily drop a quarter or more in value. So even though the return is slight and the underlying mechanics don't look too good, Treasuries still seem the safer place to park money.

 

[werepossum]

Analogy...

The world governments live in a little town along the river.
A big flood is coming its way.

The US lives on the highest hill in town.

In the end it might be washed away in the flood too, but it is still the safest place in town to be...

I like that analogy.