By reding the article at: http://finance.yahoo.com/news/the-federal-reserve-s--4-3-trillion-ticking-time-bomb-121801977.html let me get it straight: During financial crisis in 2008 the FED borrowed money from Banks at 0.5% rate just to lend the same money back to the Banks at 0.25% rate so the banks may invest it into the stock market and save it from the crash???!!!
As for the FED, there's going to be some fireworks with this issue when the next president of the U.S. takes office. A trillion dollar time bomb is going to be more than a debate. Happy Memorial Day Weekend.
All comments are simply my uneducated thoughts and might be completely wrong (I never really understood economics like I did math) - so check them with your financial advisor before acting on them. I sure many experts could show me where I am wrong. I believe you have discovered a fundamental basis of the Keynesian "no down payment, pay as you go" plan (AKA Fabian socialism or liberal style financing) - the so called "risk free rate". Carlin said something like: it's a huge club and we're not in it! I'll bet you thought the 700 billion bailout was the plan but that was just the magician's misdirecting hand. Look in his other hand. I'll bet you thought they meant risk free for investors! Silly boy! It gets worse though. Like a shark, the fish system must keep moving forward or it dies. Interest payment has NO theoretical backing AT ALL (I may be wrong) in the "modern financial system" (likely tried many times) and I can't understand how that was missed by all the brilliant world economists since 1971. Wouldn't that cause constant built in inflation? (What do I know though?) What happens if deflation or a recession were to happen? I apparently missed that class and it wasn't on the test when I took it. Nothing in this world can grow exponentially for ever that I have seen (with the possible exception of promises from politicians). Nobody's perfect except front runners and HFT which is running really low on suckers. Why do you think the largest of largest investors have reported terrible results in the earlier quarter? When the smartest hedge funds and international bankers lose money, small traders should be out. I think the congress has guaranteed all derivative losses (hell why not - after they can guarantee to fix the 50 times earth size dark spot on the sun with a snap of their fingers or walk on water or teleport themselves to venus etc.). IMO the Fed doesn't just work for the US. Helping us all since 1913, the fight can be traced back to before the civil war ( and even probably beyond that to Babel-On). The first world war never ended IMO and the three major currencies are one bankrupt currency AKA a honest to goodness international banking shell game. We are just not aware of all the mis-directions. Most of us are just too busy playing the game and are easily attracted to free stuff and movements. Recently as the bankrupt shale oil debt piled up (junk debt AKA high yield debt) on certain large bank balance sheets, rather than a bailout, according to a zerohedge article, I think, someone stopped the February 2016 market fall partly by ordering large purchases of it to be held by pension funds. (hell why not ....) I presume yet another banking bailout was needed but was deemed politically sensitive since the economy was doing so well. So we now see the private union pension funds attacking the public ones as the public ones take over all governments as kind of debt-in-financing by running the government to boost their pension payouts but someone has to lose (hell why not ....) Two strong liberal candidates (teachers vs truckers) squaring off vs an outsider who they likely fear will let out all the secrets. The whoppers are piling up too! Have you seen what is going on in France - the beginning of liberal and socialist thoughts? A socialist leader taking on the unions directly to determine dick's size. Wow! The US has pension obligations to retiring populations but that is all guaranteed as well. (hell why not ...) Luckily the healthcare will be looked after since there could be a few shocks coming. But wait there's still more. The voters are waking up finally I think. That could be the worst of all. War is a racket someone said. But it is all rackets (https://en.wikipedia.org/wiki/Turtles_all_the_way_down) until someone wakes up. Everybody think; we need more debt to solve the debt overdose problem. What can we do? Answer this one and win a big big big prize. I leave that to the reader. Here are some early entries: Start a war with someone (maybe even 2 someones). Use global "warming" as a pretext for more debt and higher taxes. Martial law. Raise entitlements (Hell ....) Tax the rich (my personal favorite since rich on this planet means food and shelter. The dumbest voters have yet to figure out who is actually doing all this to them! The first step to healing is to recognize the pain and face it. With that said we really do need a solution fast. We built it. We can fix it too IMO. Contest closes soon so get those entries in!
Remember the mantra of 2008-09 "Inflate or die"...well, it's still the mantra, but no one dare mention it any longer.
For war you need to borrow more money for military. It will bring only profit to corporations, more debt for the Government and more dead and disabled war victims for people. Unless a war is used as a reason to increase taxes on the general population it will not solve the problem but bring more debt and more pain... France tried to do it. It did not solve the problem, many Rich people became Russian citizens to avoid tax increase - they have money to move to other country and buy another citizenship Increase taxes on corporation will not help as well - corporations will move their headquarters and production plants to Mexico, India or other contrives. Bear in mind that Saudi decided to diversify their economy and they will be inviting big corporations to move to them... Solution to the problem (complete conspiracy theory - smile - nothing except sneaky conspiracy may help): 1. Split the Banks into smaller that they are not longer "too big too fail", so, a bank's crash will not destroy the economy 2. Let the market to crash, maybe even help it. 3. During the crash destroy your biggest bank lenders and use different committees to block these banks to be bought out. 4. When your biggest bank lender is crashed (bankrupt), blame investors in everything and implement new restrictions on investing
We won't run out since we have the printing press. So, I am too dumb to understand: Why borrow? Why don't we just print enough to pay off all our debts instead of having the Feb buy up our bonds using money they created out of thin air anyway. This way we save interest payment which is eating up a larger and larger % of our Federal budget and the way things are going one of these days the interests will be bigger than the Federal budget. Well, you can see I do not understand economics.
Which makes it even better, our debt will be worth less and less. Just kidding. By the way isn't what the Fed and ECB, JCB, China... are all doing the same as printing money, yet there is no inflation, even negative interest rates? What am I missing? I was actually just kidding. I really don't understand economics so I don't really make sense. Regards,
you , me and everybody else. That is the thing, we can't get any inflation no matter how hard we try, yet everything you and I buy are getting more expensive and if I had job I wouldn't have gotten a raise for a while, or at least not one that outpaces inflation because there is no inflation.