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Fed, worried about recovery, will buy US debt

finance.yahoo.com

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Re: Fed, worried about recovery, will buy US debt

#41

Post by startuprules »

jeromec wrote: post #38
yummyfajitas wrote: post #28

Earlier quoted context omitted.

(Incidentally, foreigners have awesome faith in the US government,... This could also reflect a lack of faith in other governments rather than faith in the US government. If assorted European debt became 10x more risky but US debt only became 5x more risky, that would cause a flight into US debt.

Exactly correct. The U.S. can have economic problems, but as long we are still at the top, we remain at the top. One of the more interesting reactions to the FOMC’s gloomy appraisal of the economic state of affairs is the surge of strength into the dollar and the corresponding tumble in the euro. The U.S. dollar index — which is heavily weighted to the euro — is up 1.8%. The euro is down against the buck to the tune…

"but as long we are still at the top, we remain at the top."

Said the captain of the titanic.

Re: Fed, worried about recovery, will buy US debt

#42

Post by MichaelSalib »

startuprules wrote: post #39
muhfuhkuh wrote: post #35

Earlier quoted context omitted.

Right, which is what was supposedly happening with all the TARP and Stimulus and Cash4clunkers and houmebuyer tax credits. Guess what? Still, after 3 years of recession and 2 years of Great Recession, we still haven't gotten that worthless dollar and inflation. In fact, we're talking deflation. AND, wages are steady to up, not down as is to be expected.

"we still haven't gotten that worthless dollar and inflation" Oh yeah? Dollar is at 85 vs the yen, from 115 three years ago. Food prices doubled (food portions also got smaller), healthcare costs doubled, gas prices doubled, and so on. Are you using the old trusty government CPI for your inflation stats?

Your data seems...wrong. Or at least not consistent with my observations. Currency fluctuates significantly and one currency comparison tells us nothing. I've seen no evidence that food portions are smaller. Food prices don't seem to have doubled. Gas prices have definitely not doubled. I've seen no indication that health care costs have doubled.

If you want to claim that the CPI numbers are full of lies (because of a conspiracy?) then you need to bring serious evidence.

Re: Fed, worried about recovery, will buy US debt

#43

Post by startuprules »

jbooth wrote: post #33
yummyfajitas wrote: post #31

Earlier quoted context omitted.

Not to mention the use of the word "sheeple". [edit: just realized I agree with jbooth on something. I don't know if that's ever happened before.]

Yeah, that really doesn't help any argument. Protip: When everyone else is crazy, re-evaluate the possibility that you're the crazy one :)

I could be crazy :) I am sitting in a coffeeshop relaxing and spending money from my income-generating business, while I watch worker drones go to work with scowls on their face, awaiting to be blamed for failing profits at their company.

Oh and if you think inflation is near 0%, you're not as smart as I thought you were ;)

Re: Fed, worried about recovery, will buy US debt

#44

Post by cynicalkane »

anamax wrote: post #37
mechanical_fish wrote: post #21

Earlier quoted context omitted.

No, I believe it has almost nothing to do with foreign investment. (Incidentally, foreigners have awesome faith in the US government, as evidenced by the fact that interest rates are as low as they have ever been, and -- frighteningly -- perhaps as low as they can be.) No, the government buying its own debt is a very famous accounting trick designed to create more money in the economy. This act is the basis of the fr…

> Incidentally, foreigners have awesome faith in the US government, as evidenced by the fact that interest rates are as low as they have ever been, and -- frighteningly -- perhaps as low as they can be. Interest rates reflect relative opportunities, not absolute value. The fact that the US is seen as a better investment than, say, China, does not tell you that the US is a good investment. > "zero lower bound". 0 is n…

0 is a lower bound for interest rates because almost nobody would make that loan. The "rational actor" theory has some flaws, but it's a safe economic assumption that actors are rational enough to not throw away money like that.

Re: Fed, worried about recovery, will buy US debt

#45

Post by cynicalkane »

startuprules wrote: post #39
muhfuhkuh wrote: post #35

Earlier quoted context omitted.

Right, which is what was supposedly happening with all the TARP and Stimulus and Cash4clunkers and houmebuyer tax credits. Guess what? Still, after 3 years of recession and 2 years of Great Recession, we still haven't gotten that worthless dollar and inflation. In fact, we're talking deflation. AND, wages are steady to up, not down as is to be expected.

"we still haven't gotten that worthless dollar and inflation" Oh yeah? Dollar is at 85 vs the yen, from 115 three years ago. Food prices doubled (food portions also got smaller), healthcare costs doubled, gas prices doubled, and so on. Are you using the old trusty government CPI for your inflation stats?

You're filling up at the wrong gas station, man. Oil is about half the price it was before the recession.

Re: Fed, worried about recovery, will buy US debt

#46

Post by nanairo »

startuprules wrote: post #6
gte910h wrote: post #5

Earlier quoted context omitted.

Howso? You mean the owners of the fed/risk? I'd honestly say any additional risk from this purchase is counterbalanced in the reduced risk in their other holdings.

Deflation is dangerous only for the entities that own large amounts of real estate/stocks. For normal people, deflation allows their buying power to increase. The government printing is akin to stealing from your labor right then and there.

True, it allows people to buy more tomorrow with the money they have today. So what happens? They don't spend the money today waiting for tomorrow. But then tomorrow they realise that if they wait a little longer they'd spend even less.

The end result is that nobody spends for anything that is not absolutely necessary. Hence most companies have an excess of supply: they fire people, and discount they current production.

Now that more people are out of a job and therefore can't spend much, and the discounts have driven inflation even deeper, even less people spend their money.

It's a vicious cycle. It's what's happened to Japan for the last decade, and it's not a pretty place to be in.

Re: Fed, worried about recovery, will buy US debt

#47

Post by startuprules »

yummyfajitas wrote: post #40
ww520 wrote: post #11

Earlier quoted context omitted.

But the real average wage adjusted for inflation has decreased for a long time. Deflation has in fact happened in labor cost. Now it's the time to bring the rest in line. It's unsustainable to have ever increasing asset price but lower labor cost. No one can afford to buy them at the end.

But the real average wage adjusted for inflation has decreased for a long time. Is this really true? If you blindly apply inflation calculators to wage statistics, you get this result. But on the other hand, people earning average wages live a much better life (in terms of goods/services consumed) than people in the past. Even the present day poor live what would have been called a "middle class" lifestyle in the 70'…

1.) You're (like most people on this board) are confusing technology gains with monetary phenomenons.

2.) We went from a mainly single-income family in the 70s to dual-income family today. Notice how most household today goes to hell if even one parent is laid off.

Re: Fed, worried about recovery, will buy US debt

#48

Post by jeromec »

startuprules wrote: post #41
jeromec wrote: post #38

Earlier quoted context omitted.

Exactly correct. The U.S. can have economic problems, but as long we are still at the top, we remain at the top. One of the more interesting reactions to the FOMC’s gloomy appraisal of the economic state of affairs is the surge of strength into the dollar and the corresponding tumble in the euro. The U.S. dollar index — which is heavily weighted to the euro — is up 1.8%. The euro is down against the buck to the tune…

"but as long we are still at the top, we remain at the top." Said the captain of the titanic.

Don't get me wrong. I'm the last person to suggest we're unsinkable. I'm only pointing out that our troubles become the troubles of everyone else, just as our success has influenced global economic success.

Re: Fed, worried about recovery, will buy US debt

#49

Post by yummyfajitas »

startuprules wrote: post #47
yummyfajitas wrote: post #40

Earlier quoted context omitted.

But the real average wage adjusted for inflation has decreased for a long time. Is this really true? If you blindly apply inflation calculators to wage statistics, you get this result. But on the other hand, people earning average wages live a much better life (in terms of goods/services consumed) than people in the past. Even the present day poor live what would have been called a "middle class" lifestyle in the 70'…

1.) You're (like most people on this board) are confusing technology gains with monetary phenomenons. 2.) We went from a mainly single-income family in the 70s to dual-income family today. Notice how most household today goes to hell if even one parent is laid off.

Inflation is a rise in price levels relative to currency. I.e., $1 today should be able to buy $1 / inflation factor in the past. However, people buy more today with wages x inflation factor than the previously bought with supposedly a higher level of wages. That shouldn't happen.

No matter how you cut it, that's a problem with the numbers.

Regarding point 2), we also work considerably less than we did in the past. Hours worked per capita have not gone up significantly.

Re: Fed, worried about recovery, will buy US debt

#50

Post by istari »

itsgoats wrote: post #17
stretchwithme wrote: post #12

Earlier quoted context omitted.

oh, no, we're paying less for things. help! the massive housing bubble and it inflationary effects HAD to collapse. those who waited out the insanity deserve lower prices. those who were foolish do not deserve to have the rest of us prop up their property values, although our government is foolishly backing every bad bet out there.

I'd like to say thank you, stretchwithme, for all of us who saved enough to buy a house, responsibly, in what just happened to be the middle of last decade and now have cause to sell (moving jobs because the economy stinks). We so deserve to seriously be screwed over because of our timing. Thank you US government. Thank you stretchwithme, your sentiments help the situation tremendously. Surprisingly, there were actua…

You seem to think because you had a down payment, had a job, bought a house you could afford, you "deserve" to be screwed over less by a falling housing market, because you were "responsible".

Just the opposite! The migrant field worker who got a 0% down interest only loan on a 500K house is far less "deserving" of the screw than you, because he has no money to be screwed out of.

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