Posted on 10/17/2018 2:09:24 PM PDT by bananaman22
Ok, I’ll try again, but I am repeating myself. I am NOT talking about the MBS purchased by the Fed. I am talking about QE and Operation Twist. Two very different things.
If you can understand that, then please remember that we agree that the Fed is currently in the process of unwinding (selling) about $4 Trillion worth of bonds. They will are being sold on the open market.
Answer this question: Who is on the hook to pay interest and the face price at maturity for those bonds?
Part of QE was the Fed buying MBS.
If you can understand that, then please remember that we agree that the Fed is currently in the process of unwinding (selling) about $4 Trillion worth of bonds. They will are being sold on the open market.
Sold or allowed to mature.
Answer this question: Who is on the hook to pay interest and the face price at maturity for those bonds?
Taxpayers are on the hook for Treasury debt. Whether it was issued and bought by Fidelity, bought by Japan, bought by your IRA or bought by the Fed.
Congratulations, you have finally come to the realization that taxpayers are responsible for balance sheet instruments sold by the Fed. Now the only thing you have to come to grips with is whether or not $4 Trillion is “expensive”.
The fact that the Fed bought some of them, and turned over the interest payments to the Treasury, means that less new debt was issued than if the Fed had left those bonds in the hands of the previous, private owners.
You were disputing my assertion that QE and OT were expensive. Do you now understand?
Absolutely. Very expensive. Saved the taxpayers hundreds of billions. Expensive. Reduced the deficit by hundreds of billions. Just horrible.
You live in a state where marijuana is legal, don’t you?
$4Trillion new debt, minimal benefits to the economy from QE and OT. All of the Fed’s machinations barely kept us out of deflation and generated 2% GDP.
Now, I understand they had to try SOMETHING in the era of high taxes and regulation of the Obama administration. It’s just not something that the Fed should have done. They were the enabler in their disfunctional relationship with Obama.
But your assertions that it wasn’t expensive and somehow REDUCED the deficit (QE and OT, not the purchase of MBS) came out of your bong.
Not yet.
$4Trillion new debt, minimal benefits to the economy from QE and OT.
QE did not cause any increased debt, let alone $4 trillion in new debt. The Fed does not borrow.
All of the Fed’s machinations barely kept us out of deflation and generated 2% GDP.
Obama would have had even weaker GDP growth if the Fed hadn't stepped on the gas to counteract his awful, anti-business policies.
But your assertions that it wasn’t expensive and somehow REDUCED the deficit
You understand that interest collected by the Fed on the Treasuries they hold is largely returned to the US Treasury. Don't you?
And who exactly paid the interest on the non-MBS bonds?
Hey, tell you what. Let me borrow $4 Trillion from you. I hear you’ll make out like a bandit.
Look at the entire universe of Treasury bonds that have been issued. The taxpayer is responsible for the interest on all of them.
Now, the Fed prints money out of thin air and exchanges it for $2 trillion of the already existing bonds. The taxpayer is still responsible for that interest, but instead of paying interest to the Bank of Japan, Fidelity and your IRA, the Treasury now pays interest to the Federal Reserve.
Same amount of debt outstanding, not a single dollar of debt added because of the Fed's action.
Now, when the Fed gets this Treasury bond interest, it returns most of that to the Treasury, reducing the total cost to the taxpayer.
Can you understand yet?
Or do you still feel that somehow the Fed spent taxpayer dollars or further indebted the taxpayer by buying Treasuries?
I still think you are being purposefully obtuse. But thanks for finally getting to the point where you understand that the US taxpayer is on the hook for both interest payments and principal.
No matter WHO the taxpayer pays the INTEREST to it is a CURRENT EXPENSE borne by taxpayers. Paid by tax receipts or borrowing, it is still a cost. An expensive one at that.
Those dollars sent to the Treasury do not “reduce the total cost to taxpayers”. Your assertion is nonsensical. The cost is a current expense.
Now, once again, go borrow $4 Trillion and give it to me. You assure me that this is a good idea.
And there is another mistake.
The interest collected by the Fed is mostly returned to the Treasury. $80 billion for 2017, $91 billion for 2016, $98 billion for 2015, $97 billion for 2014, $79 billion for 2013, $88 billion for 2012, $75 billion for 2011, $79 billion for 2010, $47 billion for 2009.
That's a reduction of the debt of over $700 billion.
Those dollars sent to the Treasury do not “reduce the total cost to taxpayers”.
I'd love to hear the logic behind that claim.
Now, once again, go borrow $4 Trillion and give it to me.
Yeah, the Treasury is awful. What does that have to do with QE again?
You’ve already learned that taxpayers pay the interest and principal of non MBS bonds. If it is paid to the Treasury or not is a moot point. It is an expense TO THE TAXPAYER.
Now should I Freepmail you my address for that $4 Trillion you are going to borrow and give to me? You can send the interest payments right to the Treasury if you like.
If the Treasury pays out $400 billion in interest and gets $80 billion back, what's the final expense to the taxpayer?
If the math is too difficult, feel free to Freepmail me for assistance.
Now should I Freepmail you my address for that $4 Trillion you are going to borrow and give to me?
You still feel QE somehow added to our debt? That the Fed borrowed? Or that the Fed forced the Treasury to borrow?
Your posts are getting progressively more idiotic. Once again, you have admitted that the Taxpayer pays the interest as a current expense. What happens after that is a moot point.
You keep circling back to stupid questions.
How deep do you want that hole to get that you are digging???
Since I've never denied that taxpayers are on the hook for government expenses, your sudden discovery is funny.
What happens after that is a moot point.
Right. $700 billion in reduced debt is moot. DERP!
https://www.amazon.com/Accounting-Dummies-John-Tracy/dp/1118482220
Paid for by taxpayers and deficit spending. What a deal.
You really need that accounting book.
Wow...you are so dense.
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