So much hate an ill-will on this board. Ben and the rest of the FOMC are doing their job: printing money at the problem. The Fed can work with treasury later to suck the liquidity out of the system to control inflation, after all the Dems are in office so expect the taxes to go up soon. Obama opens his mouth and market's tank. Geitner looks like he's about to get run-over by a family mini-van headed up north for the weekend. At least Ben still has a pair. Shit-no it's not popular to dilute the value of our money but it buys time and greases the wheels a bit more. They don't publish M3 anymore and there is a REASON FOR THAT. They were thinking ahead and knew this was coming. No one on this board knows more then the top brass at the Fed; as incompetent as we wish they all were they have more then enough tools to deal with this. Don't get me wrong, it will be painful at times, but that's the ebb-and-flow of things. Deal with it, quit your bitching, and pay off your credit cards. Regards, The Mgmt.
How exactly do you take liquidity out of the system. It seems given our proclivity for bubbles and massive implosions we haven't figured out that one yet, without wrecking the economy, but hey 30th time the charm right
Taxes are one way. All the govt. has to do is raise a taxes on power and fuel a few pennies/unit and they can start siphoning billions of USD out of the system into the treasury, to pay back the fed via all the debt they are issuing. The fed can raise rates - the net effect being a reduction in the money supply and velocity, though the individual dollars are worth[value] more.
Sorry, but I have never heard of tax policy as a mechanism for reducing inflation. That would be very ineffecient. It would have the opposite effect in many instances, raising cost of capital, cost or raw materials, and leading to higher unemployment. Thats tax inflation and it was a major problem in the 70's where taxes actually outpaced inflation. If you want to fight inflation volcker proved the only way to do it was to actually raise rates to stop the cycle and it was a painful process, joined with tax cuts that actually got us out of the staflation of the 70's Thats where we are heading. Companies are not going to higher anytime soon, unemployment will be high with the cost of living shooting up.
I respectfully disagree. I know many companies that are hiring in the technology industry, it's been slower in the past several months but I still get calls/emails from recruiters wanting to place me on contracts. Raising rates will curb inflation but you don't want to raise rates when you're contracting the money supply, which is what I think they will eventually do. Even today with that 90% bonus tax nonsense in the congress - the goal is just to to get the dollars out of the economy and back onto the Fed's balance sheet(via treasury bonds) where it's effectively destroyed. I see what Ben and Co. are looking to do and it makes sense. Definitely a different approach than the 30s or 70s. I'm honestly curious to see how it works. Treasury hasn't convinced me they have a clue - they haven't even hired upper management yet. Paulson at least knew what he was doing, as unfavorable as his moves were, there aren't any breadlines yet. I'm honestly grateful that Ben is still in there to steer the ship right now. He's not my first choice, but Ben is on my shortlist of people that at least understand what's going on.
What Bernanke is doing is indebting current and future taxpayers to provide artificial price support for the shittiest assets (i.e. forcing taxpayers to buy the 'unbuyable'), when the amount of money he is essentially borrowing (taking) by printing money is massive, on a hope and a prayer that this will stabilize the financial sector and help to stimulate consumer and business spending. I hate it when government forces responsible citizens and taxpayers to finance their incredibly inefficient, lofty grand schemes.
I also hate it when govt. penalizes responsible citizens. I don't mind what Ben is doing with the printers right now with the caveat that they are planning to remove the dollars from the system in the short-term.(5-10 yrs.) They're being pro-active right now, more-so then they were 3 years ago....
Being pro-active isn't necessarily a good thing at all if the underlying thesis driving the plan is flawed. I'm just a humble person not having the academic or intellectual pedigree of one Ben S. Bernanke, yet I find his apparent expectation that injecting trillions of taxpayer dollars into the 'can't sell them at any price in the private market asset market will help heal the economy' thesis deeply problematic given that I don't see how this can be effective without growing private sector jobs (let alone apparently not being able to stem the job bleeding taking place).
Jobs jobs jobs, thatâs all that matters. All this lever pulling and tinkering will solve nothing. These guys have to present the illusion they are doing something. The only thing that has proved to work in situations like this is TIME.
Welcome! J-O-B-S You are 1000% correct. This is the problem; not housing, interest rates, auto sales or any other symptom. Unemployment, high and growing is the disease.