FED Increases Bank Reserves by 1 Trillion in The Money Question: Federal Reserve, Central Banking, Gold Standard, Treasury Money, etc. Forum

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FED Increases Bank Reserves by 1 Trillion

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LloydMiller

FED Increases Bank Reserves by 1 Trillion

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Posts: 603

Mar 21 09 10:24 PM

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Source: www.youtube.com

We have basically just printed one trillion dollars over night, is that not crazy? I've heard the FED Chair Ben Bernanke talk about this before, about how they will start raising interest rates just as, or before the economy starts getting better so as to keep inflation under control. ...

Lloyd Miller, Research Director
A-albionic Research
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Edited 1 time by LloydMiller Mar 21 09 10:27 PM.

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LloydMiller

#1

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Mar 21 09 10:33 PM

Can Central Banking "work" with such transparency mandated?

In the "old days" the secrecy of Central Bank machinations was thought to be necessary for such policies to result in their intended consequences. De-emphasis in the "News" only keeps the peons in the dark. Sophisticated economic players watch these things carefully.

Beck's claims this is otherwise unprecedented is incorrect. The US debt has never been paid and never will be paid. . . it is monetized. The numbers just get bigger.

Bernanke, based on the work of Milton Friedman and Ana Schwartz, is convinced the FED lacked the will to use its power to stop the Great Depression of the 30s and won't make the same mistake. Hopefully, he's not just making a different mistake!

Oh, one thing not mentioned is that the multiplier effect in the banking system will increase the 1 Trillion of reserves to 10 Trillion or so in check book money and maybe 100 Trillion in money substitutes such as CDs, stocks, Corp. bonds, etc etc, depending upon what the multiplier is these days. Then, as the velocity of money heats up. . . the GNP will increase to. ???

Remember! All the talk about borrowing from foreigners, mortgaging our future, stealing from our children, taxpayer bail-outs, etc. is false. The FED creates moeny out of nothing and pumps into the world financial system. Then, the US government borrows it back, but never pays it off, probably not even the interest! Taxes at the point of a gun just maintain the demand for the "created out of nothing" money so there isn't a total flight to commodity money.

Lloyd Miller, Research Director
A-albionic Research
A-albionic Research Inventory Liquidation Sale

Edited 6 times by LloydMiller Mar 21 09 10:50 PM.

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LloydMiller

Bernanke and Mystery of Mark to Market

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Mar 21 09 11:26 PM

Mystery: Why is Bernanke NOT pressing HARD to eliminate "Mark to Market" which Milton Friedman identified as one of errors that intensified the Great Depression? Surely, he couldn't have missed that theory of old "Uncle Miltie"!

Lloyd Miller, Research Director
A-albionic Research
A-albionic Research Inventory Liquidation Sale

Edited 1 time by LloydMiller Mar 22 09 9:54 PM.

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return2reason

#3

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Posts: 93

Mar 23 09 12:12 PM

I watched Bernanke/60 minute interview. They said you can get 64 million on one pallet. So- a trillion would be over 15 thousand pallets!

That's a wierd positioning for Beck's hands and the letter 'G' on the Youtube-video.

The slanting in Becks tie and background image reminds me of Batman shows where the camera angle was slanted whenever in the villians-hideout

Edited 2 times by return2reason Mar 23 09 12:20 PM.

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LloydMiller

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May 13 09 7:50 AM

return2reason wrote:
I watched Bernanke/60 minute interview. They said you can get 64 million on one pallet. So- a trillion would be over 15 thousand pallets!

That's a wierd positioning for Beck's hands and the letter 'G' on the Youtube-video.

The slanting in Becks tie and background image reminds me of Batman shows where the camera angle was slanted whenever in the villians-hideout

Brian, you focus on detail amazes me!

Lloyd Miller, Research Director
A-albionic Research
A-albionic Research Inventory Liquidation Sale

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return2reason

#5

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May 14 09 7:04 PM

Debt monetization

Debt monetization occurs when a nation's central bank (for example, the Federal Reserve in the United States) "buys" government bonds. ^[1] If a government's expenses exceed its tax revenue, if nothing is done the government will draw resources (capital) out of the private market. Since there is a limited amount of capital available in the market, there will be less available to fund business growth if the government takes out a substantial portion. If the debt is monetized, the capital is thereby returned to the private market.

Excessive debt monetization can be inflationary, which in some eyes can be seen as a flat tax because the ultimate result is that the government acquires additional funds and the currency decreases in value.^{[citation needed]} However, monetization helps the government temporarily to meet its short term commitments at the beginning.^{[citation
needed]} On the other hand, some degree of debt monetization is useful for increasing the money supply, to keep up with increased production or economic growth.

Hence it is a primary tool of the Federal Reserve in managing interest rates. Excessive debt monetization has the drawback of increasing the twin deficit. That is, when government financing is increased, along with interest rates and foreign capital, the trade deficit also goes up along with the budget deficit.^{[citation needed]}

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LloydMiller

"Twin Deficit" Theory

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May 16 09 8:16 AM

return2reason wrote:
Debt monetization

Debt monetization occurs when a nation's central bank (for example, the Federal Reserve in the United States) "buys" government bonds. ^[1] If a government's expenses exceed its tax revenue, if nothing is done the government will draw resources (capital) out of the private market. Since there is a limited amount of capital available in the market, there will be less available to fund business growth if the government takes out a substantial portion. If the debt is monetized, the capital is thereby returned to the private market.

Excessive debt monetization can be inflationary, which in some eyes can be seen as a flat tax because the ultimate result is that the government acquires additional funds and the currency decreases in value.^{[citation needed]} However, monetization helps the government temporarily to meet its short term commitments at the beginning.^{[citation needed]} On the other hand, some degree of debt monetization is useful for increasing the money supply, to keep up with increased production or economic growth.

Hence it is a primary tool of the Federal Reserve in managing interest rates. Excessive debt monetization has the drawback of increasing the twin deficit. That is, when government financing is increased, along with interest rates and foreign capital, the trade deficit also goes up along with the budget deficit.^{[citation needed]}

Wikipedia has careened off the rails on this one. The "twin deficit" theory is correct ONLY if foreigners are financing the government deficit.

But we were talking about the DEBT MONITIZATION case, ie., the case in which the Federal Reserve creates the money out of nothing to finance the deficit. That the FED does this in a circutious way by first letting the Government try to borrow on the open market and then adding the new capital as interest rates rise is irrelevant. This would be relevant only if the FED allowed a long delay between the Government deficity/borrowing and the MONETIZATION.

This "error" is actually FED propaganda. They want to always stress that borrowing from foreigners MUST BE the result of running a budget deficit. This is in line with the prime FED policy of trying to enforce discipline on the Government (not all bad!). OH, MY GOD! Running a deficit will throw us into the hands of foreigners! Another purpose of the FED propaganda is prevent a precipitous drop in the dollar which would threaten world DOLLAR IMPERIALISM, encouraging foreigners to drop the dollar as a reserve currency.

In fact, if the deficit is monetized rapidly, the quantity of US dollars increases and the value of the dollar falls relative to foreign currencies! As the value of the dollar falls, the price of US exports looks lower to foreigners and, therefore, exports INCREASE, reducing the trade deficit! Simultaneously, as the dollar falls, the price of foreign goods apparent to Americans increases, reducing imports, also reducing the trade deficit.

To put this another way, the FED WANTS to borrow from foreigners to support the US deficit which LIMITS their need to MONETIZE the debt. This is a stop gap to maintain DOLLAR IMPERIALISM.

I'd say, Obama's incredibly fantastic deficits will threaten DOLLAR IMPERIALISM as massive MONETIZATION will be required. In the past, foreign governments have been induced to "monetize/inflate" in tandem or in excess of the US as a solution (for the US). . . who knows if that will work again? To some extent, this solution is "automatic" as the foreigners want to maintain their EXPORTS to the US. China my have a revolution if there is a drastic reduction in their exports. Maintaining a low Chinese currency is the center piece of their economic policy. . . but, what if world inflation is touched-off? Hyperinflation?

The horrendous whip-sawing of the economy by the FED since its founding which has repeatedly marred the lives of us all is due to the conflict between the requirements of WORLD IMPERIALISM and ECONOMIC STABILITY. To maintain the pre-eminence of the dollar, the FED must periodically spike interest rates and cause economic collapse. Murray Rothbard wrote an excellent piece describing how the GREAT DEPRESSION was touched-off when the FED tried to help Great Britain maintain Britain's POUND/Gold Reserve Imperialism. The Chairman of the New York Federal Reserve (Strong) conspired with the Bank of England's Montagu Norman to "support" the Pound.

Lloyd Miller, Research Director
A-albionic Research
A-albionic Research Inventory Liquidation Sale

Edited 3 times by LloydMiller May 16 09 8:39 AM.

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FED Increases Bank Reserves by 1 Trillion

FED Increases Bank Reserves by 1 Trillion