Who is Fed buying $40B/mo of MBS from?

Discussion in 'Economics' started by Newmoney24, Nov 28, 2012.

  1. And are they buying the crappy real estate securities that are basically bad loans in order to clear the market of toxicity? (and loading it on to their balance sheet)
  2. Chausey


    The Fed became the bad bank idea that was floated a long time ago. They are bailing out all the usual banks we always hear about. And those guys give themselves a large salary with bonuses for the good job they are doing, while telling everybody else to live within our means.
  3. CT10Gov


    (1) mbs is actively traded in the open market, much like stocks.
    (2) the fed bought pretty high quality papers, not the toxic junk. they most likely posted gains to the treasury from the carry and redemption.

    (you are probably not looking for facts though; I understand you are here to rant?)
  4. if they didn't buy the toxic junk from the big banks like Bank of America, then who did?

    I'm pretty sure they did indeed buy the toxic stuff - as well as perhaps some non toxic stuff
  5. Welcome to TARP.
  6. ammo


    us,courtesy of our elected officials in dc,as elvis says,thank ,thank you very much,would have been cheaper to buy up all the underwater mortgages in 08-09,the ones they pinned the blame on , they probably would have if that were really the problem
  7. CT10Gov


    They didn't. They bought very high quality stuff. Banks either write off or spun off the crap.
  8. if this is the case then the major banks like Bank of America would be broke (and negative cashflow) and bankrupt

    -so either the Fed gave them a lot of money in low interest loans to keep them alive- or, they bought their toxic mortgage backed securities - or both.

    -The Fed balance sheet has ballooned too with trillions of dollars of liabilities - so they obviously did one of the above.
  9. CT10Gov


    It's the former, not the latter.

    I'm sorry but perhaps you actually want to read about TARP, QE, and the actual various programs that the Fed put through before trying to go on cynical and baseless rant.
  10. The beauty of our system is the FED just needs to print currency, then use the currency to purchase these MBS notes.

    The FED does not need to borrow. What they are doing in essence is printing money to increase the supply of money.

    Now the Velocity of money is a different story, most banks park it in reserves or it stays in the bank for carry trade.

    This is why Inflation has not struck with a vengeance, but at some point it will and we will encounter stagflation not pure inflation coupled with wage increases and employment.
    #10     Nov 30, 2012