SERVING THE QUANTITATIVE FINANCE COMMUNITY

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ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

QuoteOriginally posted by: ppaupercoincidentally, Reagan budget director David Stockman's book was on Drudge todaythere's a story on it at http://www.peakprosperity.com/podcast/8 ... rmationbut it's saying unavailable at the moment try later"Reagan Budget Guru Declares: We've Been Lied To, Robbed and Misled..."it's back upQuoteThen, when the Fed?s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to$850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history(snip)The banks quickly worked out their solvency issues because the Fed basically took it out of the hides of Main Street savers and depositors throughout America. When the Fed panicked, it basically destroyed the free-market interest rate ? you cannot have capitalism, you cannot have healthy financial markets without an interest rate, which is the price of money, the price of capital that can freely measure and reflect risk and true economic prospects.Well, once you basically unplug the pricing mechanism of a capital market and make it entirely an administered rate by the Fed, you are going to cause all kinds of deformations as I call them, or mal-investments as some of the Austrians used to call them, that basically pollutes and corrupts the system. Look at the deposit rate right now, it is 50 basis points, maybe 40, for six months. As a result of that, probably $400-500 billion a year is being transferred as a fiscal maneuver by the Fed from savers to the banks. They are collecting the spread, they've then booked the profits, they've rebuilt their book net worth, and they paid back the TARP basically out of what was thieved from the savers of America. ppauper Posts: 70239 Joined: November 15th, 2001, 1:29 pm ### Fed Prepares for Further Quant Easing QuoteOriginally posted by: trackstarI know some of you will snarl and gnash your teeth, but it is good news for the short term, really, and in the long run we will all be dead.as Keynes squawked from his socialist perch in the UK,>>The long run is a misleading guide to current affairs. In the long run we are all dead.One of my favorite Keynes quotes is>> We will not have any more crashes in our time.>> Conversation with Felix Somary in 1927, reported in Felix Somary, The Raven of Zurich, London: C. Hurst, 1986 (1960), 146-7. ppauper Posts: 70239 Joined: November 15th, 2001, 1:29 pm ### Fed Prepares for Further Quant Easing Faber: Fed could up QE to$1 trillion a month

daveangel
Posts: 17031
Joined: October 20th, 2003, 4:05 pm

QuoteOriginally posted by: ppauperFaber: Fed could up QE to $1 trillion a monthscratching the bottom of the barrel there with Marc Faber. There is an apocryphal story about Mr Faber. Back in the day, he was short some Hang Seng futures (1997) and the market dropped a couple of hundred points from around 16,000. Not believing his luck, he quickly covered his shorts but of course then went to to watch one of the largest asset bubbles deflating from the sidelines. Last edited by daveangel on October 21st, 2013, 10:00 pm, edited 1 time in total. knowledge comes, wisdom lingers ppauper Posts: 70239 Joined: November 15th, 2001, 1:29 pm ### Fed Prepares for Further Quant Easing In Fed and Out, Many Now Think Inflation Helpsif we use 1980 methodology, inflation is close to 10%shadowstats ppauper Posts: 70239 Joined: November 15th, 2001, 1:29 pm ### Fed Prepares for Further Quant Easing ex fed official apologizes for QE ppauper Posts: 70239 Joined: November 15th, 2001, 1:29 pm ### Fed Prepares for Further Quant Easing US banks to offer negative interest rates ?QuoteExecutives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the$2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors.Banks say they may have to charge because taking in deposits is not free: they have to pay premiums of a few basis points to a US government insurance programme.no mention that they lend that money out and make $$on it Traden4Alpha Posts: 23951 Joined: September 20th, 2002, 8:30 pm ### Fed Prepares for Further Quant Easing QuoteOriginally posted by: ppauperUS banks to offer negative interest rates ?QuoteExecutives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the 2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors.Banks say they may have to charge because taking in deposits is not free: they have to pay premiums of a few basis points to a US government insurance programme.no mention that they lend that money out and make$$ on itThat assumes there are: 1) sufficient low risk borrowers; 2) those borrowers are willing to pay what the bank wants to charge. One of the reasons for dumping Glass-Steagall was that fewer corporate borrowers were going to banks for money -- more lenders could get cheaper money elsewhere.Or look at it another way -- where can low-risk borrowers (including banks) get the cheapest money? And given a prevailing market rate for money, what are the administrative costs of borrowing it from consumers that must be subtracted from that market rate? If the market rate drops, the rate banks are willing to pay consumers can go negative regardless of how much banks might earn from lending.

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

QuoteOriginally posted by: Traden4AlphaOr look at it another way -- where can low-risk borrowers (including banks) get the cheapest money?in the US at the moment the interbank market has collapsed because banks aren't prepared to lend to other banks at ridiculously low rates because of the risk, so banks are borrowing directly from the Fed, not necessarily by choice but rather because other banks will not lend to them

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Fed Prepares for Further Quant Easing

QuoteOriginally posted by: ppauperQuoteOriginally posted by: Traden4AlphaOr look at it another way -- where can low-risk borrowers (including banks) get the cheapest money?in the US at the moment the interbank market has collapsed because banks aren't prepared to lend to other banks at ridiculously low rates because of the risk, so banks are borrowing directly from the Fed, not necessarily by choice but rather because other banks will not lend to themInteresting. If the Fed is handing out free money, why borrow from other banks or consumers?

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

fed to ease the easing ?

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

QE for ever ?

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

Charles Plosser thinks there?s a ticking time bomb at the FedPhiladelphia Fed presidentthe issue is \$2.5 trillion in ?excess? reserves

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

no rate hike in sight

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Fed Prepares for Further Quant Easing

quantitative easing continues