The New Hoover Dam: 2013 Fed Purchases Equal Expected Federal Deficit

Confounded Interest ^ | 12/16/2012 | Anthony B. Sanders

[whitedog57]

Last week, Federal Reserve Chairman Ben Bernanke announced that The Fed would be purchasing $85 billion per month starting in January 2013. That amounts to $1.02 trillion in Fed bond purchases.

Coincidentally, that amount is nearly equal to the Federal governments expected budget deficit of over $1 trillion.

Chairman Bernanke also announced targets of 6.5% unemployment and 2.5% inflation. Unemployment currently sits at 7.7%.

And inflation remains muted. Fed’s Five-year Forward Breakeven Inflation Rate stands at 2.8050%.

And the USD inflation forward rate remains in negative territory.

But will purchasing debt to be put on The Fed’s balance sheet that equals the expected Federal government budget deficit a good idea? Let’s see when The Fed tries to unwind a $4 trillion portfolio.

And isn’t The Fed enabling Congress and The Administration to continue spending rather than putting its fiscal house in order (as Bernanke has repeatedly stated)? Or is the Fed’s Balance Sheet the New Hoover Dam?

[whitedog57]

After Bernanke tells Congress/Adm to solve the fiscal crisis, The Fed decides to buy enough Federal debt and MBS that happens to equal the expected Federal deficit.

[hinckley buzzard]

Please. We're talking about Monopoly money here, none of the usual metrics mean squat.

[nascarnation]

You have to give Barak, Bernank, and Turbo Timmy credit.

Poor old W had to sell the debt to the Chinese.

Now we just buy it ourselves.

Truly a fool’s paradise.

[Praxeologue]

Federal politicians can fund all deficits by printing money. They have no incentive to limit expenditures. Only a minority of the population know or care that this will lead to ruin. The working middle class will bear the consequences.

[DuncanWaring]

One dozen eggs - $400,000,000,000 - that's four-hundred billion dollars for those of you in Rio Linda.

[DuncanWaring]

In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."

[Mr. K]

with all the money odumbass is spending we could buiuld a new nuclear power plant every single month and give everyone free energy

[humblegunner]

Wow, look at all the excerpted blog posts you’ve put up from a single source:

http://www.freerepublic.com/tag/by:whitedog57/index?tab=articles

One might almost think that you are fishing for hits for your blog.

Kind of like USING Free Republic as a free advertising tool.

Is that crazy or what?

[BfloGuy]

Wow, look at all the excerpted blog posts you’ve put up from a single source:

humblegunner on the job!

Y'know, this is actually good information. We are in a terribly dangerous situation.

But I've come to agree with you. If I had a blog with what would undoubtedly be excellent observations, I would post the entire article, disclose that it's my blog, and then invite interested FReepers to check it out if interested.

Honesty is the best policy!

[humblegunner]

But I've come to agree with you. If I had a blog with what would undoubtedly be excellent observations, I would post the entire article, disclose that it's my blog, and then invite interested FReepers to check it out if interested.

I see that decency and fair dealing are not dead.