Bernanke assaults the dollar

[wiphan]

Buying Mortgage backed securities is not printing $ and ultimately will be profitable for the government. Especially if they buy some of the higher rate securities they can make a quick profit on their $. Financials and the stock market are rallying due to Mark to Market fixes and the fact that things eventually hit a bottom and had to go up. This is not like most government programs this will make the Gov't $ unlike every other program/stimulus that is just government spending....

[randallscott35]

Originally Posted by wiphan

Buying Mortgage backed securities is not printing $ and ultimately will be profitable for the government. Especially if they buy some of the higher rate securities they can make a quick profit on their $. Financials and the stock market are rallying due to Mark to Market fixes and the fact that things eventually hit a bottom and had to go up. This is not like most government programs this will make the Gov't $ unlike every other program/stimulus that is just government spending....

Bzzzzzzzzzz. They are now buying treasuries. That is printing money and is incredibly inflationary. Infation does not make you wealthier. It steals wealth. The market went down today in real terms. And buying treasuries is a sure way to end in Weimar Germany like situation, aka government changing.

[wiphan]

Originally Posted by randallscott35

Bzzzzzzzzzz. They are now buying treasuries. That is printing money and is incredibly inflationary. Infation does not make you wealthier. It steals wealth. The market went down today in real terms. And buying treasuries is a sure way to end in Weimar Germany like situation, aka government changing.

They are buying $300 billion of long term treasuries. The majority of the $ they are talking about is buying Mortgage backed securities in an effort to keep mortgage rates low to allow people to refinance their current mortgages into lower rates and or help stimulate the purchase of new homes. The Fed has already purchased $250 billion approximately of MBS and they will buy another $1 trillion in MBS which will make $ for the government. I agree that inflation scares the living crap out of me, but I don't think it is as bad as people think.

[ArlJim78]

in addition to buying the Treasuries, they did say this;

"The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion"

I know the claim is that they will make money doing this, but isn't the problem that you can't determine what the correct price should be for these securities? so there is the risk is that they'll pay too much.

[hi_im_god]

i'm still struck by all the posts about inflation when the immediate threat is deflation.

if the government did this in a growing economy it would be inflationary. but the economy isn't growing. in all likelihood the world economy will shrink in 2009 for the 1st time since ww2.

i don't know of more than a small minority of economists that isn't behind this approach. they've cut the fed funds rate as low as they can. this is the next logical step.

i saw today that core inflation in february was 0.2%. that's after fed fund rates were cut as close to zero as possible 6 months ago (something that would be hugely inflationary in a growing economy).

stop worrying about water damage. we need to put the fire out.

[The Indomitable DrugS]

Originally Posted by hi_im_god

stop worrying about water damage. we need to put the fire out.

No we don't. What we badly need is pain. Real genuine pain that is felt throughout the whole global economy.

In a perfect world - only those great many who behaved irresponcibly the last several years should have to feel the pain... but that's not how it works and the whole economic system should feel it. When you inevitably bounce back from real suffering - people will behave more responcibly overall.

Keep injecting pain killers into a race horse - tap and block this - tap and block that - you might solve the temporary problems and have an unsound horse capable of running to it's best form. But, running well or not, you still have an unsound horse! - and sooner or later you'll destroy the horse.

Give depression a chance.

Bernanke is a big player at leading us into this mess - and over $1 trillion dollars was created out of thin air by him yesterday. There's no shortage of cash to lend .. there's a shortage of the will to lend it.

The Fed buying $300 billion worth of crap treasuries isn't "putting out the fire" - from a long term standpoint - it's throwing gas on a burning fire.

[gales0678]

drugs it's seems like it's too late , look at who is advising obama , who was at the grassroots effort , who is out there that is going to short the usd into oblivian and make a bundle ????