SERVING THE QUANTITATIVE FINANCE COMMUNITY

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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:27 am

So, the old question of laissez faire or intervention, or a (dys)functional blending of the two?

There is talk that the Fed may raise rates in November.  Will it be before or after Trump becomes Emperor?

October should be fun!

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Last edited by trackstar on September 18th, 2016, 12:29 am, edited 2 times in total.
 
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outrun
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:27 am

The FED is not under US govt control, is it? 
 
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:32 am

LOL.  When ppauper becomes DT's Chairman of the Fed, who knows what will happen?!

We will see what The Creature of Jekyll Island really means to him.

**

When you look at the structure....

Chair of the Federal Reserve:

"The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms. 
...
Appointment Process
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve fourteen year terms.  The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.
Last edited by trackstar on September 18th, 2016, 12:51 am, edited 1 time in total.
 
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Collector
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:50 am

Only a money system with perfect conservation of money can last forever. The indivisibles in the void are the perfect money system (of the gods), absolutely no free lunch (but karma), conservation of money (better known as conservation of energy). Ever lasting money units = indivisible particles dancing in the void! 

But then bad money drives out good money from circulation, so what would you expect! 

Good Money: Birmingham Button Makers

"This book not only examines the crucial role of private coinage in fueling Great Britain’s Industrial Revolution, but also sheds light on contemporary private-sector alternatives to government-issued money, such as digital monies, cash cards, electronic funds transfer, and—outside of the United States—spontaneous “dollarization.”
 
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:56 am

Between Trump, Brexit, and large impending Solar Storms*, I think it is best to have useful trade skills, some livestock, and be prepared to barter!

Early on in this thread, I mentioned a personal interest in organic farms.  I stand by that for sure!  Having access to your own food supply is always a good idea, no matter who (or what) is in power. 

* This has been getting some attention in various news media lately, including this article: Space storms could crash upper Midwest’s power grid - Science September 13 2016

"...a new study shows that the upper Midwest can have its own special sort of grid-destroying storm—space weather. The study finds that this region is at greatest risk of damage from storms of charged particles from the sun, which crash into Earth and send electrical currents surging along power lines, melting transformers and triggering blackouts. According to the study, those surges could be up to 100 times more powerful in northern Minnesota and Wisconsin than in other parts of the United States..."

I guess we could say some indivisible particles are slam dancing in the void and they are heading our way from time to time...
 
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Collector
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 7:51 am

I prefer Farady (cage) money compared to space storms fried money!  

Faraday bills will also do

Image
 
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ppauper
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 9:16 am

As long as current money system is in place one need to print more money (with exception of possibility of survival in short term contraction without printing). All monetary systems have their end (but some can have long life spans), will the current system end or transform in a controlled manner, or in a uncontrolled collapse?
the previous monetary system (Breton Woods, established by the British socialist Lord Keynes and the US communist/soviet agent Harry Dexter White) collapsed in 1971, and with that, the last link with gold was severed
 
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outrun
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 9:23 am

LOL.  When ppauper becomes DT's Chairman of the Fed, who knows what will happen?!

We will see what The Creature of Jekyll Island really means to him.

**

When you look at the structure....

Chair of the Federal Reserve:

"The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms. 
...
Appointment Process
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve fourteen year terms.  The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.
Thanks.
But what's also interesting is that the FED's shareholders are commercial banks -some in turn partially foreign-, and the the FED serves its shareholders, it's completely independent of the US government. So it serves the commercial banks that's where it's decisions are aimed at.
 
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ppauper
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 9:44 am

LOL.  When ppauper becomes DT's Chairman of the Fed, who knows what will happen?!

We will see what The Creature of Jekyll Island really means to him.

**

When you look at the structure....

Chair of the Federal Reserve:

"The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms. 
...
Appointment Process
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve fourteen year terms.  The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.
I'm hoping Trump will abolish the Fed.
And yes, in the unlikely event that I got the call from Trump asking me to become Chair in order to abolish the Fed, I'd take the position, but only after I'd suggested that Ron Paul, who is intimately acquainted with the machinations of the Fed despite Bernanke and Greenspan having repeatedly failed to answer his questions during congressional hearings, would be a better choice.
The onion in the ointment would be that Yellen's term as chair runs to 2018, unless she is good enough to resign.
She is also serving a 14-year term as a member of the Federal Reserve Board that will expire on January 31, 2024.

In many ways, the Fed is acting as a 4th branch of government. Legislative, executive, judiciary, and now the Fed.
In recent decades, the Fed has repeatedly usurped the role of Congress.
14 years is a long time, and means that someone appointed by LBJ could be making monetary policy in the Reagan era and someone appointed by Reagan could be making monetary policy in the BJ Clinton era.
Can Fed personnel be removed by impeachment, like the judiciary? not sure

As for central banks being above politics, we all know the Fed will keep rates down to help Hillary be elected.
And then there's Art Carney at the Bank of England trying to influence the Brexit vote by saying that the sky would fall if Britain voted to leave.
 
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ppauper
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 9:45 am

LOL.  When ppauper becomes DT's Chairman of the Fed, who knows what will happen?!

We will see what The Creature of Jekyll Island really means to him.

**

When you look at the structure....

Chair of the Federal Reserve:

"The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms. 
...
Appointment Process
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve fourteen year terms.  The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.
Thanks.
But what's also interesting is that the FED's shareholders are commercial banks -some in turn partially foreign-, and the the FED serves its shareholders, it's completely independent of the US government. So it serves the commercial banks that's where it's decisions are aimed at.
It's often said that the Fed is a cartel mechanism for the banks
 
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Traden4Alpha
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 11:11 am

The US Government has some long-term control over the Fed: the Chairman of the Fed is picked by the President and confirmed by the Senate. But essentially it is a government-sanctioned cartel.

The asset side of US debt is much smaller than one might think. Only about 1/6th of it went to defense spending. Not only that, but US infrastructure sucks. More than 2/3rd of all the spending went to social benefits -- the country has been borrowing money for decades just to buy groceries.
 
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ppauper
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 11:50 am

The US Government has some long-term control over the Fed: the Chairman of the Fed is picked by the President and confirmed by the Senate.  But essentially it is a government-sanctioned cartel.

The asset side of US debt is much smaller than one might think.  Only about 1/6th of it went to defense spending.  Not only that, but US infrastructure sucks.  More than 2/3rd of all the spending went to social benefits -- the country has been borrowing money for decades just to buy groceries.
yes, the Fed Chair is picked by the President and confirmed by the Senate
But 2 points: the Chair has a 4 year term, so when Trump is sworn in in January 2017, he will be stuck with Yellen until when, February 2018,
And as track said,
"The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms.
The Governors have 14 year terms, beginning in Febuary of even years, so (unless any have died, resigned etc), Trump will get to pick a new Fed Chair from 7, 4 appointed by Obama and 3 by Bush II.  Not much of a choice.
 
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 12:19 pm

Happy to place a bet on some number of resignations. ;)

On Faraday cages: I went on a sponsored business tour of Switzerland some years ago; they were showing some of their infrastructure, expertise and assets.

One of the best days was a trip to see where some of the gold is kept.

I was thinking of James Bond as we descended but what a maze of cages and doors!

Yes the gold was there! Stack after stack of neatly aligned blocks lying next to each other.

But I came home empty handed! :D
 
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ppauper
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 1:28 pm

Happy to place a bet on some number of resignations. ;)
fed board
the list of resignations over the years are here

From 1913 until the 1930s, the Secretary of the Treasury and the Comptroller of the Currency, who were members ex officio, which gave the president a little more power (and, of course, had been a big selling point of the Fed legislation in Congress, but was removed as soon as possible once the legislation had passed)

There are only 5 board members listed rather than the 7 allowed
Janet L. Yellen, Chair
Stanley Fischer, Vice Chair
Daniel K. Tarullo
Jerome H. Powell
Lael Brainard

According to wiki, the 14 year limit is not set in stone:
Membership is by statute limited in term, and a member that has served for a full 14 year term is not eligible for reappointment. There are numerous occasions where an individual was appointed to serve the remainder of another member's uncompleted term, and has been reappointed to serve a full 14-year term.[4] Since "upon the expiration of their terms of office, members of the Board shall continue to serve until their successors are appointed and have qualified", it is possible for a member to serve for significantly longer than a full term of 14 years. The law provides for the removal of a member of the Board by the President "for cause".
Greenspan for instance was board member and chair from 1987 to 2006.

So are 2 unnamed former board members staying on until they are replaced? Or are there really only 5 board members?

Then we come to the Fed Open Market Committee, which sets monetary policy and has 12 members.
The 7 Fed Governors (or is that only 5 at the moment???)
The NY Fed President is a member
The remaining 4 members are drawn from the 11 remaining regional Fed presidents
wiki
Five of the Federal Reserve Bank presidents serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of banks, one bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. The New York President always has a voting membership
Notice that
All of the Reserve Bank presidents, even those who are not currently voting members of the FOMC, attend Committee meetings, participate in discussions, and contribute to the Committee's assessment of the economy and policy options. The Committee meets eight times a year, approximately once every six weeks.
there's a photo on wiki, and there seem to be an awful lot more than 12, or even 19, people there, so who are the others????
Image
"Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C."

Each of the regional Feds has 9 directors, 6 picked by member banks and 3 by the Fed Board of Governors.
The President of each regional Fed is picked by the directors of that regional Fed, with the approval of the Fed Board of Governors.
 
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Re: Fed Prepares for Further Quant Easing

September 18th, 2016, 1:42 pm

Good research and yes, confirms my suspicion that there is room for maneuvering here around the composition of the Fed and BoG and not to forget the Council of Economic Advisers.

If we look at the ages of the Supreme Court Justices, we may find a similar "opportunity".

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