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Senior Contributor

Re: OptionEye...Jan 29th

Nobody here has said the fed creates debt!!!!!   The fed creates money to finance the government debt.  With out the fed at this point, the gov could not run a trillion dollar deficit.  There are not enough buyers.  The fed money does flow into the economy. http://ciovaccocapital.com/videos/qe/qevideopartone.html

 

Everybody this link shows that palouser is wrong when it comes to the effects of the fed.  The effects have not shown up yet but they will.  No doubt.

One thing I am not saying:  The fed's money will be enough to create real growth. Just this morning, report of negative gdp.  Can you imagine what the econmy would be like if gov spending was reduced by 1 trillion!  And the only reason why they can spend that extra trillion is because the fed creates the money to do it.  It is real simple.  If I or any of you did it we would be put in jail for counterfeiting!

 

By the way, why are risk assets up today with negative gdp?  Because the smart money knows the fed will print more money in the future because the gov deficit will be going up with less tax revenue and increased transfer payments.

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Senior Advisor

Re: OptionEye...Jan 29th

I think you need to review some facts. Congress produces debt by spending more than the revenue coming in. Which is why it is such sweet irony when they 'protest' debt creation by refusing to raise the debt limit because of their own actions. The debt limit determines the amount of treasuries put out to finance the debt. Which are bought by those willing to hold it. No??????? Tell me I'm wrong? Which is why the go ernment starts shutting down when budgets and debt limits aren't taken care of.

You are saying the Fed can just jump in and finance the operations of the USA? When did they ever so that?
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Senior Contributor

Re: OptionEye...Jan 29th

Palouser,

 

Your question to Mr Shellady, was, how does the money created by the fed get into the economy day after day.  And the last link I posted explains that. Another words your question was answered.   Now why the talk about the debt limit fiasco?  Red Herring? 

 

I am on your side I think when it comes to this debt limit fiasco.  Just a side show. 

 

One thing I would like to point out.  There have not been enough buyers of the gov debt at these interest rates.  That much is admitted. That is why the fed steps in and buys the excess. Keeping rates low.

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Esteemed Advisor

Re: OptionEye...Jan 29th

Yes, and Operation "Twist" was about as blatant market manipulation as could be imagined.

 

Nice thing about it though, manipulating long rates lower put in a classic and historic low in long-term rates, plus gave us all of a chance to lock up capital for years at a negative interest rate. It is a shame our parents were never given such a gift.

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