FEDERAL RESERVE: Bought $2.17 billion of Treasuries today as part of QE2. Maturity/call date range of securities was 2/2021 to 11/2027. Let´s not forget everybody´s darling : QE II.
What does it mean, exactly... and what are the consequences... when your own central bank is buying the majority of your Bond issues??
The fiction set up by the privately owned federal reserve was that if the govt overspent - we could be protected from inflation by forcing the govt to borrow the money instead of just printing the money like a banana republic... our currency would not be debased. But now we seem to be buying the bonds with fed dollars. we are borrowing the money from ourselves. It is the equivalent of just running the printing presses to allow the govt to overspend and at the same time giving the fed bankers a free commission. We were told the fed was supposed to be set up to prevent the politicians from over spending. Note -- I just read another thread about a fed salary freeze.... Perhaps they are behind the scenes telling Obama it has to stop. that fed employee salary freeze is sort of interesting.
http://www.fundmymutualfund.com/201...ium=feed&utm_campaign=Feed:+FundMyMutualFund+(Fund+my+Mutual+Fund) Federal Reserve Moves into Top Spot in Holders of U.S. Debt
And are expected to believe... which is because we can barely tear our eyes away from Dancing With The Stars and American Idol. (Maybe should better be named, "American Idle"...)
A very different point of view by Randall Wray about QE2. "The way the government spends is through keystrokes. It credits bank accounts," Wray said. "A sovereign government, the U.S., is the issuer of the currency. It's impossible for the U.S. to borrow dollars. You can't borrow IOU's from yourself." "Really it is religion. Economists figured it out in the 1960s - the way the government spends is by crediting bank accounts. But if the public understood this, they would demand more services. We need the myth [of deficits and the need to balance budgets through borrowing]. They're just really scared to death people will find out," Wray said. The complete article is worth reading. http://ipsnews.net/news.asp?idnews=53706 pdf of article
government borrows for many reasons - the main is confidence so money don't hyperinflate if government just prints and doesn't have any confidence they get Zimbabwe Basically the article is a pure garbage don't waste your time
I disagree with the people quoted in the article. Those people seem seem to confuse printing money with spending money. The articles concept about a country and its money is wrong. There is a difference between borrowed money and printed money. Lets say each note were backed by Gold. If you have 10,000 dollars the govt has a right to put back into circulation based on revenues. If it needs to spend 12,000 The govt has to get that 2000 from somewhere... If it borrows 2000 you now have x plus 2000 in circulation but the users of the money know that 2000 will be sucked out in the future. However if you just add 2000 dollar to the money in circulation the users of the money know that there is less Gold per dollar note. So they will have charge more to get the same amount of Gold as they would have before the govt printed the money. Its the same think with the Federal Reserve Notes we call dollar... although less exact because those notes are not backed by Gold.