Friday, June 12, 2009

Fed to Keep Lid on Bond Buys



Reserves are functionally one-day Treasury securities, but the Fed doesn't seem to understand this and thinks that reserve balances drive inflation.

Nor does the Fed seem to understand that if it wants to target interest rates lower, it has the power, but that requires keeping reserve balances at a level that sustains the low rate. It is giving up on its rate target because of fear among certain FOMC members that this creates inflation?? Unreal!!

Japan has had zero or near-zero interest rates for 12 years and there is no inflation.

Does the Fed actually believe their inflation targeting efforts of the past two years was a success? Is it trying to do that again? My God, it's a big part of what created the housing collapse! By raising rates from 1% to 5.25% the Fed made it impossible for many people to stay in their homes. And did the Fed think that by doing that it was going to lead to more oil discoveries?

This destructive belief system is spiraling dangerously out of control.

2 comments:

googleheim said...

Right on, Mike.

1. Price of Oil is not rising because of recovery - it is rising because OPEC cut production, and Refineries cut production.
FALSE INFLATION - CAUSED BY OWNER/OEPRATORS!

2. TODAY I HEARD ON BOURADJIAN'S BIZRADIO SHOW ( THE ARMENIAN GOP BOY SCOUT ) HOW HE TOUTS THAT HIS PARENTS CAME TO AMERICA THE LEGAL WAY AND THE CORRECT WAY - AS IF ALL THE REST ARE A BUNCH OF CRIMINALS - WHAT A CREEP HE IS.

HIS GUEST EXPLAINS AS A SOLUTION FOR IMMIGRATION THAT WE NEED TO TAX THE IMMIGRANTS WHO GET BY SCOTT FREE WITHOUT BEING TAXED.
THE POINT IS THAT THIS WOULD PROVIDE DOCUMENTATION AND FAIRNESS TO THE CAPITAL FORMATION OF STEALING AWAY BRIGHT MINDS FROM INDIA AND OTHER PLACES.

HOWEVER, THE ARMENIAN GOP BOY SCOUT DOES NOT EVEN ENTERTAIN THAT THE SAME PROCESS OF TAXATION ON THE BARONS AND PONZIS WHO STARTED THE OIL / HOUSING / CDO / DERIVATIVES MESS COULD HAVE PROVIDED DOCUMENTATION AND OVERSIGHT AS WELL.

HE WANTS TO TAX 16 MILLION WORKERS WHO MAKE $75000 PER YEAR OR VERY MUCH LESS JUST TO GET THEM.

WHAT A CREEP.

Mike Norman said...

Yes, Bouroudjian, what a joke!