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Why the Federal Reserve is pouring money into the financial system

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Re: Why the Federal Reserve is pouring money into the financial system

#71

Post by vpmpaul »

0x445442 wrote: post #62
dragonwriter wrote: post #48

Earlier quoted context omitted.

You left out #3, tighten lending criteria and raise interest rates on loans to increase income per dollar lent and reduce volume of lending, which also improves liquidity. But, yeah, if you are flush with cash and don't own a home but want to, #1 & #2 sound great if you consider only their first order effects on you. #1, especially, is a huge brake on the economy (as is it's close relative #3). Which probably also ha…

Given there's so much of this ( https://en.wikipedia.org/wiki/Bullshit_Jobs ) right now, I'm not convinced #1 would have a such a negative impact. If we broaden are thinking it could have an awesome impact long term.

The problems with these types of books to me is that the researcher surgically analyizes a tiny part of the whole picture and claims this is the grand solution or something like that.

This book does nothing other than highlight common knowledge but does nothing to show why or how it is that way and what can be done to begin to change it.

Its the equivilant of saying well the reason the timing belt on your car breaks is it is too weak. So I made a 150kg gear system to replace it. "Wont that be too heavy for the engine to turn it?" , "Oh yeah you will have to replace the whole engine and transmission as well." Except in this instance it is all of society and humanity that would have to be changed or replaced.

On example: the reason duct tapers exist is that they handle the exceptions from really, really ,really, really difficult problems to solve that are already partially solved and working good enough.

Re: Why the Federal Reserve is pouring money into the financial system

#72

Post by dragonwriter »

0x445442 wrote: post #62
dragonwriter wrote: post #48

Earlier quoted context omitted.

You left out #3, tighten lending criteria and raise interest rates on loans to increase income per dollar lent and reduce volume of lending, which also improves liquidity. But, yeah, if you are flush with cash and don't own a home but want to, #1 & #2 sound great if you consider only their first order effects on you. #1, especially, is a huge brake on the economy (as is it's close relative #3). Which probably also ha…

Given there's so much of this ( https://en.wikipedia.org/wiki/Bullshit_Jobs ) right now, I'm not convinced #1 would have a such a negative impact. If we broaden are thinking it could have an awesome impact long term.

> Given there's so much of this (https://en.wikipedia.org/wiki/Bullshit_Jobs) right now, I'm not convinced #1 would have a such a negative impact.

Well, it would. Now, you can certainly argue that with an ideal distributional system (or even a far-from-ideal one that is still better than the one the US has, which aren't exactly rare in the developed world), we could have significantly lower total output and still equal or better overall well-being (and far better practical conditions for the lower 60-75% of the income/wealth distribution). And, sure, you'd be right. But we don't have such a system.

> If we broaden are thinking it could have an awesome impact long term.

Returning to a system that encourages positive-feedback economic crashes isn't broadening our thinking, it's just blindly throwing away beneficial progress.

Are there other economic friend that might eliminate the need for the current mitigation for that problem and be far better overall? Probably. Find and implement them first, though.

Re: Why the Federal Reserve is pouring money into the financial system

#73

Post by Qub3d »

neogodless wrote: post #53
sbmthakur wrote: post #44

https://outline.com/BqFFzM

This link is broken for me. I tried it a few different Firefox containers and a private window. No dice!

Turn off enhanced tracking protection[0]. As outline inherently works by grabbing data off of third-party sites, the new enhanced protection may break it.

[0]:https://support.mozilla.org/en-US/kb/enhanced-tracking-prote...

Re: Why the Federal Reserve is pouring money into the financial system

#74

Post by neogodless »

Qub3d wrote: post #73
neogodless wrote: post #53

Earlier quoted context omitted.

This link is broken for me. I tried it a few different Firefox containers and a private window. No dice!

Turn off enhanced tracking protection[0]. As outline inherently works by grabbing data off of third-party sites, the new enhanced protection may break it. [0]: https://support.mozilla.org/en-US/kb/enhanced-tracking-prote...

Ah that might be it. I think I'll leave it on and skip the article, but thanks for figuring out why I had the issue!

Re: Why the Federal Reserve is pouring money into the financial system

#75

Post by the_watcher »

Cakez0r wrote: post #61
sedeki wrote: post #41

Earlier quoted context omitted.

I think it makes sense for the banks to wait for the Fed to do something. Banks are acting in the interest of their shareholders; the Fed for the population as a whole.

Following that line of reasoning, isn't a bank incentivised to accrue as much debt as possible because the fed will just bail them out if they can't pay it back?

That's the moral hazard, yes.

Re: Why the Federal Reserve is pouring money into the financial system

#76

Post by ComputerGuru »

NKCSS wrote: post #65

I still had some money in USD on my paypal... I think this is a good time to convert those back to Euro's :)

I wish it were that simple. It’s truly a global economy and between the spike in oil prices, the looming brexit/not-brexit, the US-China trade war, and everything else, I think it’s all one big cluster%]+} and it doesn’t make a difference which of the two currencies you store your money in, long term.

Re: Why the Federal Reserve is pouring money into the financial system

#79

Post by LatteLazy »

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

The majority of people already own houses and have mortgages. That means they don't want interest rates to go up. So the Fed will not allow that.

That's it, that is the reason banks were bailed out in the first place. That's the reason they're being subsidised now (plus lots of cheap money pushes up the stock market and spurs investment and looks good at election time).

This isn't about economics. It's about politics.

Re: Why the Federal Reserve is pouring money into the financial system

#80

Post by BuckRogers »

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

It's stealing money out of everyone's pockets to keep the banks going. Devalues the existing currency already in circulation. I love the obsession with keeping the system going, if the system is cyclical and flawed for human beings, maybe we shouldn't base the system that feeds, clothes and houses humanity on a craps table. The more of this sort of news that comes up the closer I listen to Richard D. Wolff.
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