The Fed can’t lower interest rates any further – money is already “free” to the country’s largest banks. So instead, the governing board has decided to inject a trillion dollars worth of liquidity into the system:
Saying that the recession continues to deepen, the U.S. Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the economy by buying mortgage-backed securities and long-term Treasury issues.
“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the Fed said, adding that it would “employ all available tools to promote economic recovery and to preserve price stability.”
I’m no economist, but this smacks of desperation to me. The money has been created out of thin air, no real value lies underneath it. It’s like a two for one stock split: You may feel psychologically richer because you possess twice the shares you did yesterday, but eventually you realize that each one is worth half as much.
Free advice is worth what you pay for it, but it seems to me prudent to lock in mortgage refis and car loans now, if you can find anybody willing to lend you money. When and if the economy does turn around, the Fed will have to boost rates viciously and take dollars out of circulation to try and stave off a debilitating wave of inflation.
Update: Oh. Never mind. Turns out a plan is in place to take that money back out of circulation again. And then some.
President Obama’s climate plan could cost industry close to $2 trillion, nearly three times the White House’s initial estimate of the so-called “cap-and-trade” legislation, according to Senate staffers who were briefed by the White House.
Businesses don’t pay taxes – they collect them.
Heh. Can’t tell you how glad I am not to be carrying a credit card balance for the first time in (too many) years.
*praying paid-for car lasts as long as I expect it to*
The lender of last resort is lending money, not just to banks as is its reason for being, but also buying $300B worth of T Bills, lending therefore, to the government. This is nothing but printing money with nothing to back it up. Might that mean Treasury is finding it harder to find takers for our bonds these days?
This is scary.
So, not being the upper-level financial type that some are, would someone be kind enough to explain to me what happened to Chapter 11?
Wasn’t Chapter 11 designed for just such times as we are now experiencing ?
I hate to be a bother and all that. I wasn’t paying much attention these past few days, having to see how much of my household goods I could sell off to acquire commercial health insurance, so as to be able to afford my VA service-connected disability treatments.
Sigh. Perhaps it would be better if I were to simply pass on, so as to relieve the government of all that troublesome medical care they’ve been providing me. Certainly, I hate to be a drain on all the monies that could be better spent on Unions, Gaza terrorists and Acorn get-out-the-fraud programs.
Silly me. trusting my government to keep it’s word.
But I digress,……. what about that chapter 11 stuff then?
Chapter 11 = bad for O’Brobbing hood supporters. Bailout = good for the won’s supporters. Can’t buy votes if you don’t buy them with other people’s money. Eventually though they’ll run out of other people’s money and they’ll end up taking other people’s (rich) labor according to their ability in order to support others according to their need…or the needs of the controlling class in power at the time.
And that bit about businesses don’t pay taxes? I CANNOT get that concept through to any of my liberal friends. They’re stuck on the “soak the rich” mantra and I cannot get them to define “rich”. (Best definition I ever heard: An AT1 on my first cruise defined it as “Someone who makes $10,000 more than you do.”) Soak them.
This plan doesn’t have any direct relation to bailouts of individual companies. This is the creation of near-term liquidity (money) at the cost of future inflation. Lots of countries do it while in financial crises (like Zimbabwe for example), albeit to a greater degree.
Get out of dollars now….Buy gold, oil, or my personal favorites: canned goods and shotguns.
Anybody else remember Germany at the end of World War 1, where it took a wheelbarrow full of money to buy a loaf of bread?
Currency is nothing more than a medium of exchange. I’ll trade you a loaf of bread for these green slips of paper only if I know I can trade these green slips of paper to the miller for my wheat.
Once the green slips are not worthy of attention as a medium of exchange, people start trading bread for chickens and plumbing repair for suppers. Trade still happens, money is no longer involved.
And if money isn’t involved, there’s no way to track or tax it.
I wonder if anybody thought of that?
– Max
How about Zimbabwe right now?
Can you spell A-r-g-e-n-t-i-n-a?
Here comes rampant inflation!
So, if I’m over-extended on my credit card, all I have to do is write a big check to cover it, right? Works for a little while. Until the check bounces…
This is a very dangerous path.
We all must position any assetts we have left to hedge for inflation. You have about 18 months to do that before inflation kicks in with a vengence and dilutes any savings you have made over your life time.
I called my broker the other day and told his sec. that I was considering buying a diamond mine in S. Africa!
MaxDamage … Barter is always the last resort when people are bedeviled by an intrusive, corrupt government. Staying under the radar becomes a necessity if one is to survive. Sometimes governments figure out ways to track this eventually, but the present Congress hasn’t had to learn this yet.
They will, though. So when you work up your CV of what practical skills you have and want to circulate it among possible trading partners, don’t do it by computer. Do it by snail-mail instead. Otherwise, the b**tards will get hold of it somehow, and there goes your way out of this mess.
Marianne
Barter items? Bags of silver dimes–most flexible deal goin’. Glad I got/laid up mine during the Carter years when silver was around $4/oz. Too late for that now tho…but if they push through these proposals on ammunition a good box of shells will do just as well..