Inflation Alert: Fed Pumps Another $7.9 Billion Into The System

Discussion in 'Trading' started by inthemoneystock, Nov 15, 2010.

  1. After a huge fall on Friday, the markets are floating slightly higher on the day. The SPDR S&P 500 ETF (NYSE:SPY) is currently trading at $120.93, +0.38. The Federal Reserve was back at work today, pumping money into the markets via their quantitative easing method of POMO. This stands for permanent open market operations where they buy treasuries from the banks, pumping billions into the markets. The leading sector today is clearly the banks, as Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corporation (NYSE:BAC) are all sharply higher. The rest of the market seems mixed.

    As the Federal Reserve continues to pump more money into the system, more and more critics emerge. Months after we began to describe the negative effects of the massive money printing of the Federal Reserve, others are joining the ranks. The G20, which was originally supposed to be focused on China for currency manipulation became a bash the U.S. festival over the Federal Reserve and it's policies.

    While the Federal Reserve only looks at core inflation, real inflation in food and energy has soared. Ask any retiree on a fixed income after they have been to the grocery store or ask any middle class family. The Federal Reserve is hurting America by printing money. Every single American needs energy and food. These prices are soaring, taxing the average American, yet the Federal Reserve is being short sighted. The Federal Reserve thinks that by printing more money and inflating asset prices, the average American will be out spending. Sure, some will in the short term as they are fooled into thinking they have gained money in their investment accounts, but long term, catastrophe looms.

    It is just another bubble in creation that the average American will pay for when it blows up. The Federal Reserve has been instrumental in creating every bubble in the past. After the tech bubble burst in 2000, they lowered interest rates and had a free money policy to stimulate growth. This gave way to the real estate bubble and the financial crisis. Now, they are doing it all again.

    The one positive thing is that we at InTheMoneyStocks are not the only ones noting this any longer. Many have joined the forces to rally against these actions. We hope it continues and the average American is made aware of the final outcome of this print money policy.

    Gareth Soloway
    Chief Market Strategist
  2. This should be a good news.I`s pumped into financial sector therefore another chance to cap on emission profit.
  3. chartman


    It has been a long term monetary policy of the federal government during all Presidential terms to increase the money supply during a recession. This started mainly during the Great Depression era.

    The economic theory is that during a downturn in the economy, businesses do have have the funds to spend and families are hoarding money fearful of the future. This leaves the federal government as the only alternative, since most state governments are legally required to have balanced budgets, to pump money into the economy in hopes of stimulating the economy.

    <b>How would you change this policy to stimulate the economy during a recession in order to keep the economy from going into a depression?</b> Please be specific with a remedy instead of replying to let the economy go into a depression. I do not think that is a workable solution most Americans would approve.
  4. chartman


    <i>businesses do have have the funds to spend </i>

    Should have read:
    <b>businesses do NOT have the funds to spend</b>

    Sorry about that.
  5. we don't approve death but we have to accept it.
    Americans would not approve a depression but if there is no choice they will have to accept it

    although there are number of simple solutions -

    for example, give 1 million greencards to those who want to buy house with value $200 000 and pay cash.

    another one would be implementing import tariffs. it would boost inflation without money printing, improve deficit and will bring back some jobs

    encourouge car conversion to natural gas. I don't understand why they push electric when we have a lot of cheap NG
  6. Bob111


    you got my vote for all above
  7. chartman


    William Dudley, the president of the Federal Reserve Bank of New York, gave an interview published in Tuesday's New York Times and denied that the goal was to push down the dollar or that inflation was a significant risk. And Dudley argued that the Fed's move -- which it began to signal in August -- is already having an effect.

    "You've seen a significant easing of financial conditions" since August, Dudley said. "I have to believe that the expectation of a second large-scale asset purchase program was the primary driver of those changes."

    Janet Yellen, the vice chairwoman of the Fed, delivered a similar message in an interview with the Wall Street Journal, arguing that the Fed had to step in to spur the economy. <b>Without monetary stimulus, she said, "I'm having a hard time seeing where really robust growth can come from."</b>

    This has the thinking of the federal government since the Great Depression.
  8. the1


    Well...according to the government the recession has ended and the economy is growing again, which leaves me scratching my head. If the economy is growing why do we even need QE2? :confused:

  9. Ignorant.
  10. Because the velocity of money is still declining. As a matter of fact, it has collapsed. This means that QE1 was not enough for sustained growth and a return to a deflationary spiral is possible. If you have any questions about these facts, please take an economics course at a college near you.
    #10     Nov 16, 2010