Fed buys $1T of Treasury, mortgage assets

http://www.iht.com/articles/2009/03/18/business/fed.php

Not really sure what to make of it. It could extremely benefit the economy but if it fails it would cause a lot of inflation.

I'm curious on your opinions seeing as you guys know better economics than I do.

GG America for making the value of my money even less.

At this rate, caps will be worth more than the dollar. Anybody wanna start up a Nuke-Cola company with me?

The big economy killer is the banks not giving out loans from the bailout money, not the fed buying treasury bonds. God damn, that's pretty obvious.

*watches banks getting bailout money*
*watches bank officials taking massive pay packets and rises*

THE GOVERNMENT IS DESTROYING THE ECONOMY

No, the big economy killer is peoples confidence. The banks have the loan system in place now (even though its rocky) however people fear from getting one.

They fear to spend that extra money on a holiday or a car, something which isnt necessary and instead save it just in case, as we dont know what is around the corner.

Nobody's demanding loans Snaf. People demand loans when they want to invest in capital assets or in expensive durable goods. The housing market is down, car dealerships are shutting down, and retail markets for things big and small are closing. That leaves out capital assets, but, unfortunately, most investors are now either investing in commodities, or buying US bonds because they are so cheap (Europe); they could be also just keeping that money.

The banks aren't giving out loans because people aren't demanding them. I've heard commercials on the local radio from Bank of America and CitiGroup basically telling me "Loan our money!" Which tells me that they are in dire straits right now.

Still no excuse for banks (and other bailed-out companies) to blow their bailout on luxuries or payouts for their CEOs, which is exactly what's happening. It's getting so bad here that our own government are supposedly going to put an end to it.

Well the US government has just introduced a 90% tax on the bonuses, basically cutting them down dramatically, but still I see your point.

I anticipate a lot of anti-government and big-business sentiment in the near future. Perhaps we'll see a replacement to our stuffy captains of industry!

The Government should keep their nose out of it. They are the reason the Economy is the way it is.

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Originally Posted by rossmum

Still no excuse for banks (and other bailed-out companies) to blow their bailout on luxuries or payouts for their CEOs, which is exactly what's happening.

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I completely I agree. Hard earned tax payer money should not be given as bonuses.

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It's getting so bad here that our own government are supposedly going to put an end to it.

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How do they propose to do this?

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Originally Posted by RobertGraham

The Government should keep their nose out of it. They are the reason the Economy is the way it is.

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You amaze me sometimes Rob, you clearly have no idea what you are talking about.

Also the government should keep there noses in it 24/7 for the next 10+ years. The issue will not instantly go away, sadly taxes will go up in 5+ years I personally think, they need to cut down on spending currently but later they will need to get more money in.

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Originally Posted by Limited

You amaze me sometimes Rob, you clearly have no idea what you are talking about.

Also the government should keep there noses in it 24/7 for the next 10+ years. The issue will not instantly go away, sadly taxes will go up in 5+ years I personally think, they need to cut down on spending currently but later they will need to get more money in.

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I agree with Rob on this one.

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Originally Posted by RobertGraham

The Government should keep their nose out of it. They are the reason the Economy is the way it is.

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uhhhh...

http://img16.imageshack.us/img16/1646/stopposting.jpg


seriously.

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Originally Posted by RobertGraham

The Government should keep their nose out of it. They are the reason the Economy is the way it is.

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Yes, because they were the ones dishing out huge loans to idiots who could never, ever hope to pay a cent back on them.

Oh, wait.

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Originally Posted by MetKiller Joe

How do they propose to do this?

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Probably some bonus-limiting legislation

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Originally Posted by rossmum

Probably some bonus-limiting legislation

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By reducing incentive to work, they will boost the economy?

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Originally Posted by MetKiller Joe

By reducing incentive to work, they will boost the economy?

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Uhhh are you kidding? The banks proposing that they need to give these 5 million dollar bonuses to people to keep them (rather than letting them go and hiring other professionals out of a job) is outright retarded. The bailout money is not for buying a new summer home and a private jet for execs.

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Originally Posted by MetKiller Joe

By reducing incentive to work, they will boost the economy?

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So these fucks taking their companies for every cent and then laying everyone off is alright, is it? That'll boost incentive to work?

Are you serious?

Metkiller, did you actually watch that video? It basically ripped the idea to shreds.

I thought rossmum meant that the Australian gov't will establish this legislation, which didn't make sense, why would you disincentivize work?

I know about the legislation for bonuses here in the US; I don't necessarily agree with it, but, as I said before, I don't really see why giving out money to banks is necessary in the first place if nobody wants to loan right now.

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Originally Posted by Limited

Metkiller, did you actually watch that video? It basically ripped the idea to shreds.

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Which idea? The point of the video is that government deficit spending doesn't fix recessions, it makes them worse.

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Originally Posted by MetKiller Joe

I thought rossmum said that the Australian gov't will establish this legislation, which didn't make sense, why would you disincentivize work?

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That's precisely what I said, considering Pacific Brands just laid off thousands and outsourced while all the profits of this went straight to their CEO...

Kevin Rudd gets $300,000 a year for running the country. These lot shouldn't get ten times that just for signing all their work out to underlings and appearing at a few conferences.

Metkiller, its about cash flow. Not who has it at any point in time.

OT, loving the tags for the thread.

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Originally Posted by RobertGraham

The Government should keep their nose out of it. They are the reason the Economy is the way it is.

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Uhm...

No.

No the reason we're where we are now... is because the Government didn't pay enough attention.

Trillions of dollars don't disappear if the Government actually kept track of it.

In fact... the United States is closest to the Laissez-Faire (hands off... let it be) style of government... and of course the United States was hit hardest by this economy collapse.

Up here in Canada with more regulation -- our housing market is fine except for like -- Vancouver, Calgary, Edmonton, and Toronto. For instance -- our house is worth more now than when we bought it 4 years ago.

Sooo maybe you should be more like Canada and not let the corps walk on you.

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Originally Posted by Limited

Metkiller, its about cash flow. Not who has it at any point in time.

OT, loving the tags for the thread.

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Limited, when the government puts money into the economy, where does it get that money? I think 700 Billion dollars being transfered has a lot to do with cash flows.

I'll say it again:

People demand loans when they want to invest in capital assets or in expensive durable goods. The housing market is down, car dealerships are shutting down, and retail markets for things big and small are closing. That leaves out capital assets, but, unfortunately, most investors are now either investing in commodities, or buying US bonds because they are so cheap (Europe); they could be also just keeping that money.

The banks aren't giving out loans because people aren't demanding them. I've heard commercials on the local radio from Bank of America and CitiGroup basically telling me "Loan our money!" Which tells me that they are in dire straits right now.

I'll add: What use does taking 700 Billion dollars worth of funds from the market do when you are giving it to the very people that started the mess? Nobody is demanding loans, which makes, in my opinion, any debate over the usefulness moot.

You are taking 700 Billion dollars which could have been spent on real capital assets or saved or invested in projects all over the world (Africa is not getting as much financial aid from nations because all of that money is going toward buying dirt cheap US bonds), and you are giving it people who will just let it sit in their vaults.

Where does it get the money?
Where does the money go?
Will be money ever reach civilians pockets?

All valid questions.

The reason I said cash flow is because up until now, the flow of cash has been stopped half circle.

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Originally Posted by Limited

Where does it get the money?
Where does the money go?
Will be money ever reach civilians pockets?

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1) Bonds, its citizens, foreign loans
2) To banks and other such organizations
3) If they loan the money yes, if not, no.

Well I didnt actually mean you do answer them, I'm saying before any action is taken the government and other responsible establishments need to consider them and take into account what the future may hold.

There is no easy answer, no easy way out. It will get harder before it gets better, we will go through a stalemate time when we will just need to ride it out and let time take its course.

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Originally Posted by MetKiller Joe

1) Bonds, its citizens, foreign loans
2) To banks and other such organizations
3) If they loan the money yes, if not, no.

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You realize that's a problem... right?

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Originally Posted by Phopojijo

You realize that's a problem... right?

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I feel like I'm repeating myself:

I'll say it again:

People demand loans when they want to invest in capital assets or in expensive durable goods. The housing market is down, car dealerships are shutting down, and retail markets for things big and small are closing. That leaves out capital assets, but, unfortunately, most investors are now either investing in commodities, or buying US bonds because they are so cheap (Europe); they could be also just keeping that money.

The banks aren't giving out loans because people aren't demanding them. I've heard commercials on the local radio from Bank of America and CitiGroup basically telling me "Loan our money!" Which tells me that they are in dire straits right now.

I'll add: What use does taking 700 Billion dollars worth of funds from the market do when you are giving it to the very people that started the mess? Nobody is demanding loans, which makes, in my opinion, any debate over the usefulness moot.

You are taking 700 Billion dollars which could have been spent on real capital assets or saved or invested in projects all over the world (Africa is not getting as much financial aid from nations because all of that money is going toward buying dirt cheap US bonds), and you are giving it people who will just let it sit in their vaults.

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Originally Posted by Limited

You amaze me sometimes Rob, you clearly have no idea what you are talking about.

Also the government should keep there noses in it 24/7 for the next 10+ years. The issue will not instantly go away, sadly taxes will go up in 5+ years I personally think, they need to cut down on spending currently but later they will need to get more money in.

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Basically the Great Depression happened because Classical Economists believed that economies fix themselves, I guess they realized they didn't after over 9000 banks went broke (not a meme, actual fact).

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Originally Posted by leorimolo

Basically the Great Depression happened because Classical Economists believed that economies fix themselves, I guess they realized they didn't after over 9000 banks went broke (not a meme, actual fact).

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Edit: I'm tired, I need to go to bed. Otherwise, there would have been a counter-point here. Just didn't have time to develop it.