fed injects more funny money into the banking system, freidmans assumptions on the depression are being discredited daily now, this will do no good, over a trillion now spent on the fat cats, FDR gets the last laugh
Vid...@tcq.net
http://www.bloomberg.com/apps/news?pid=20601087&sid=azabvVyocFac&refer=home
Fed Adds Most Reserves Since 9/11 Attacks as Banks Hoard Cash
By Liz Capo McCormick
Sept. 15 (Bloomberg) -- The Federal Reserve added $70 billion in
reserves to the banking system, the most since the September 2001
terrorist attacks, to keep bank borrowing costs low after the
bankruptcy of Leman Brothers Holdings Inc.
Fed funds traded as high as 6 percent, or 4 percentage points above
the central bank's target rate for overnight loans between banks,
according to ICAP Plc, the world's largest inter- dealer broker. The
margin is the greatest since Bloomberg began tracking the data in
1998. The rate dropped to as low as 1.75 percent after the Fed added
the temporary reserves.
The central bank uses repurchase agreements, or repos, to buy or sell
Treasury, mortgage-backed and so-called agency debt for a set period,
to help maintain enough money in the system to keep overnight interest
rates close to the target. They don't signal a policy shift. Futures
show traders boosted odds to 68 percent that the Fed will cut rates
when policy makers meet tomorrow to offset financial market turmoil.
``If the fed funds rate closes high today, I would be really worried
as it would mean that there really is no money out there to be lent,''
said Stan Jonas, who trades interest- rate derivatives at Axiom
Management Partners LLC in New York.
The so-called effective funds rate was 2.1 percent on Sept. 12, or 10
basis points over the target rate. The Federal Reserve Bank of New
York reports daily, for the previous trading session, the effective
funds rate. It is a weighted average rate of unsecured overnight
lending transactions. A basis point is 0.01 percentage point.
Expanding Collateral Options
The Fed widened the collateral it accepts yesterday for loans to
securities firms in an effort to help Wall Street weather Lehman's
bankruptcy.
The Fed added $50 billion in temporary reserves to the banking system
when it arranged overnight repurchase agreements, or repos, at 11:50
a.m., after providing $20 billion earlier.
``It is rare that overnight operations exceed $15 billion,'' Tony
Crescenzi, chief bond market strategist for New York-based Miller
Tabak & Co., wrote in a note. ``There is a longstanding pattern in
which the funds rate falls in the afternoon, as banks scramble to
unload their excess monies onto other banks, lest they get stuck with
excesses earning nothing.''
When the Fed added the reserves at 9:40 a.m., federal funds, the
overnight lending rate between U.S. banks, traded at 4.25 percent,
above the central bank's target rate, according to ICAP. The rate was
6 percent at the time of the second open market operation. Fed funds
opened at 3.5 percent today.
A total of $5 billion in repos matures today. Wrightson, an ICAP
research unit specializing in U.S. government finance, had expected
the Fed to add about $15 billion in repos. Dealers submitted $270.1
billion in bids for the repurchase agreements.
Fed funds' weighted average was 2.1 percent on Sept. 12 after trading
between 1.75 percent and 2.9375 percent, according to the central
bank.
SOMA Lending
The Fed also accepted $25.8 billion in collateral as part of its daily
system Open Market Account, or SOMA, Securities Lending program, the
largest amount so far this year, according to Fed data tracked by
Stone & McCarthy Research. Dealer submitted $29.8 billion in bids.
The Fed offers specific Treasury securities held by SOMA for loan to
dealers against Treasury general collateral on an overnight basis.
Dealers bid in a multiple-price auction held every day at noon. The
securities lending program is separate from the Fed's Term Securities
Lending Facility, or TSLF, one of the three liquidity measures the Fed
initiated since the credit crisis ensued last year.
The TSLF offers Treasury general collateral held by SOMA for
maturities longer than overnight in a single-price auctions with
dealers who program-eligible collateral.
Overnight Repos: Type of Collateral Submitted Accepted Stop Rate U.S.
Treasuries $9.800 billion None N/A Agency $29.10 billion $17.758
billion 4 percent Mortgage-backed $70.60 billion $32.242 billion 4
percent TOTAL $109.5 billion $50.0 billion
Overnight Repos: Type of Collateral Submitted Accepted Stop Rate U.S.
Treasuries $19.85 billion None N/A Agency $37.65 billion $3.5 billion
4.5 percent Mortgage-backed $103.1 billion $16.5 billion 4.5 percent
TOTAL $160.6 billion $20.0 billion
The ``stop'' is the lowest rate accepted by the Fed. Sums may not
match totals due to rounding.
To contact the reporter on this story: Liz Capo McCormick in New York
at Emcco...@bloomberg.net
Last Updated: September 15, 2008 15:05 EDT
Vid...@tcq.net
> On Mon, 15 Sep 2008 21:41:10 -0700 (PDT), Vide...@tcq.net wrote:
>
> >http://www.bloomberg.com/apps/news?pid=20601087&sid=azabvVyocFac&refe...
>
> >Fed Adds Most Reserves Since 9/11 Attacks as Banks Hoard Cash
> >By Liz Capo McCormick
> >Sept. 15 (Bloomberg) -- The Federal Reserve added $70 billion in
> >reserves to the banking system, the most since the September 2001
> >terrorist attacks, to keep bank borrowing costs low after the
> >bankruptcy of Leman Brothers Holdings Inc.
>
> solved by throwing more coal in the furnace. Sheesh.
yep, throwing money at the people who use it poorly for short term
personal gain(greed)is called freidmans folly.
Stray Dog
On Tue, 16 Sep 2008, Vid...@tcq.net wrote:
> Date: Tue, 16 Sep 2008 11:30:34 -0700 (PDT)
> From: Vid...@tcq.net
> Newsgroups: alt.politics.economics, sci.econ, alt.society.liberalism,
> alt.politics.usa.republican
> Subject: Re: fed injects more funny money into the banking system, freidmans
Hi Video,
Seems to me more like bailing out the rich at the taxpayers expense.
Um...where's your buddy, "cash register," (otherwise known as "alexy" with
the cold hydraulic fluid running through his body of mechanisms, wheels,
gears, levers, and switches [all for moneyharvesting, no emotions, no
morals/ethics]), etc. etc.
Kinda more like a newsgroup vampire, eh? Soaking up a lot of free
entertainment, news reposts, and other data-sucking off the rest of us
who take the time to try to talk about things, eh?
All proof that greedy/selfish is helping itself to all the booty it can
squeeze out of the groveling underlings who mostly don't have the faintest
idea they are getting ripped off (by the parasites).
Hi "alexy" hope your options, swaps, futures contracts, and other viatical
deals are making you a lot of money off all the economic woe out there.
orang...@googlemail.com
of thought recognise that the down part of the business cycle is
caused by the destruction of credit.
monetarists argue that it is possible for central banks to create
money, balancing credit destruction. This was tried in the seventies
and lead to stagflation; inflation without economic growth. if the
monetarists were correct stagflation would not be possible. ben
bernanke is viewed a monetarist, which is why he has been creating
huge amounts of money in the vain hope of averting a downturn.
the austrain school views downturns as a consequence of fractional
reserve banking. when excessive debt is created the economy becomes
distorted. investment is diverted from sound, profitable areas into
the sector inflated bt the debt. the economy must experience a
recession to correct.
the trouble is, the fed has not figured this out yet. until the fed
stops creating money to 'bail-out' companies that are already
insolvent the recession will drag on. as soon as the interference ends
the market will correct quickly and the recession will be over.
forbi...@msn.com
How much of a borrower is the Federal Government? It's it a
big player in the market?
Vid...@tcq.net
he is around, and he is still apologizing, and refusing to answer
direct questions. a bad meal will keep coming back in any way possible.
Vid...@tcq.net
mellon said that in 1929, liquidate, liquidate, liquidate. how well
did it work? you are stuck in the 1800's. a flat earth economist.
orang...@googlemail.com
what would you do, use taxes to bail the banks out, or leave them to
the market?
Vid...@tcq.net
i would bail out the little guys where this started in the first
place. you know, the little guys who are working for wages stuck in
the early 1970's, who have been forced to go deep into debt, to buy
the goods and services that we used to make. then i would reverse all
of those whacked out ayn rand/fredrick hayek/milton friedman failed
policies. then i would let the fat cats in the free market fail.
you know, just what FDR did, and was quite successful:)
orang...@googlemail.com
not sure how you mean with helping out the little guy. you mean
depositors or helping people in distress? fdic guarentee depositors'
money, up to about 100k, so the little guy is ok there.
right now helping people in distress has to be done by government. i
dont like it, but until we get out of this downturn i don't see any
alternative. friedman's negative income tax is probably about the best
way to do this -
http://en.wikipedia.org/wiki/Negative_income_tax
in the long term, though, i feel this is the job of charity, not
government. with low enough taxes full employment could be achieved.
with businesses needing people, wages would rise.
Michael Coburn
> this is why the austrian model is superior to monetarism. both schools
> of thought recognise that the down part of the business cycle is caused
> by the destruction of credit.
>
> monetarists argue that it is possible for central banks to create money,
> balancing credit destruction. This was tried in the seventies and lead
> to stagflation; inflation without economic growth.
And that claim is horseshit: Stagflation was caused by the ending of the
Vietnam war and a lot of other crap. Monetary policy had less to do with
it than did the government's spending and government's refusal to return
the tax code to the 1958 model. It simply wasn't a monetary problem. It
was a fiscal problem just as it is now. While the Fed can help the
elected government cause all sorts of problems, the Fed is not the actual
__CAUSE__ of the problems.
> if the monetarists
> were correct stagflation would not be possible. ben bernanke is viewed a
> monetarist, which is why he has been creating huge amounts of money in
> the vain hope of averting a downturn.
It does no good at all to create money and give it to financial
assholes. If that money is injected at the bottom of the economy as
opposed to the top then prices will rise (inflation) and all those bad
loans will turn int o good loans as wages rise.
> the austrain school views downturns as a consequence of fractional
> reserve banking.
That us because they are nut cases.
> when excessive debt is created the economy becomes
> distorted.
true.
> investment is diverted from sound, profitable areas into the
> sector inflated bt the debt. the economy must experience a recession to
> correct.
False. All that is necessary is to devalue the money thus wiping out the
debt. And you do that by increasing the purchasing power of the common
people. The best mechanism is wage push inflation. Right now we have
asset pull inflation to the extent that inflation exists. You can never
cure that by bailing out the asset owners.
> the trouble is, the fed has not figured this out yet. until the fed
> stops creating money to 'bail-out' companies that are already insolvent
> the recession will drag on. as soon as the interference ends the market
> will correct quickly and the recession will be over.
That is untrue. By doing it that way (and that way will work), you cause
a lot of dislocation and harm that could have been avoided.
orang...@googlemail.com
> On Tue, 16 Sep 2008 18:31:06 -0700, orangatang1 wrote:
> > this is why the austrian model is superior to monetarism. both schools
> > of thought recognise that the down part of the business cycle is caused
> > by the destruction of credit.
>
> > monetarists argue that it is possible for central banks to create money,
> > balancing credit destruction. This was tried in the seventies and lead
> > to stagflation; inflation without economic growth.
>
> And that claim is horseshit: Stagflation was caused by the ending of the
> Vietnam war and a lot of other crap. Monetary policy had less to do with
> it than did the government's spending and government's refusal to return
> the tax code to the 1958 model. It simply wasn't a monetary problem. It
> was a fiscal problem just as it is now. While the Fed can help the
> elected government cause all sorts of problems, the Fed is not the actual
> __CAUSE__ of the problems.
>
that is an interesting point of view. stagflation is when increasing
prices and economic stagnation happen at the same time. price increaes
are usually caused by increasing the amount of money in circulation
(including credit). in the period 1972 -82 the fed expanded m1 by 82%.
(http://seekingalpha.com/article/92136-m1-m2-real-gdp-and-cpi-
growth-1970s-vs-now). private banks used fractional reserve lending to
multiply this larger monetary base any times, leading to the high
inflation.
governmetn intervention preventing the liquidation of mal-investments
causing the stagnation.
> > if the monetarists
> > were correct stagflation would not be possible. ben bernanke is viewed a
> > monetarist, which is why he has been creating huge amounts of money in
> > the vain hope of averting a downturn.
>
> It does no good at all to create money and give it to financial
> assholes. If that money is injected at the bottom of the economy as
> opposed to the top then prices will rise (inflation) and all those bad
> loans will turn int o good loans as wages rise.
>
> > the austrain school views downturns as a consequence of fractional
> > reserve banking.
>
> That us because they are nut cases.
>
then please explain the cause of recessions and depressions.
> > when excessive debt is created the economy becomes
> > distorted.
>
> true.
>
> > investment is diverted from sound, profitable areas into the
> > sector inflated bt the debt. the economy must experience a recession to
> > correct.
>
> False. All that is necessary is to devalue the money thus wiping out the
> debt. And you do that by increasing the purchasing power of the common
> people. The best mechanism is wage push inflation. Right now we have
> asset pull inflation to the extent that inflation exists. You can never
> cure that by bailing out the asset owners.
>
> > the trouble is, the fed has not figured this out yet. until the fed
> > stops creating money to 'bail-out' companies that are already insolvent
> > the recession will drag on. as soon as the interference ends the market
> > will correct quickly and the recession will be over.
>
> That is untrue. By doing it that way (and that way will work), you cause
> a lot of dislocation and harm that could have been avoided.
the prediction of the austrian model wass summed up by david saied
last year. -
"lowering rates by pumping fiat-currency liquidity will have the
following effects on the US economy:
1.Credit will not contract as it should have — and might even expand —
consequently delaying the necessary liquidation of malinvestments and
the cleanup of bad loans.
2.New easy money will once again flow into stocks and other assets —
this has already happened and was the main reason for the recent
record highs in the stock market — hence, contributing to further
inflation of the stock-market bubble, and creating the conditions for
a stronger eventual fall of the market (like the famous October
collapses). Moreover, it will provide additional dislocation of the
supply chain, as more liquidity and artificial credit are pumped into
the higher order, non-consumer-good, initial stages of production.
Even more malinvestments will accumulate, setting the stage for ever
more bankruptcies.
3.Prices of these higher-order assets and related goods, wages, and
raw materials will keep rising, creating more "inflationary"
pressures.
4.The US greenback will further deteriorate, losing purchasing power
for all Americans."
seems about right to me.