Posted on 04/27/2008 3:01:19 PM PDT by shrinkermd
Amazing. We have a freeper who claims to know better than the FOMC, the Fed Governors and the Fed Chairman how much the money supply should be allowed to grow.
Wrong. What is amazing is we have three dolts who don’t think that the Federal Reserve has anything much to do with how much the money supply does grow.
Actually not even the Fed Governors agree among themselves what the monetary policy of the Fed should be, so even THEY don't know what the policy should be. As far as this and the previous chair are concerned well they have been a disaster.
Who would that be? Please show us where that was said.
You’ll be happy to know that the Fed just lowered the O/N rate by 25 bps and the disco rate by the same. Oh, and two Fed members voted against the O/N decrease. I guess they must be good old conservative economists. LOL.
But you said yourself that true "conservative" Fed members wouldn't allow money to grow so fast. Good old conservative members would keep growth under their good old thumbs.
Oh, and during the last five years we kept hearing the expression "goldilocks economy", you know - just right.
I rememeber calling it the "Mary Poppins economy": practically perfect in every way (except for one, AJ didn't like it). BUT EVERYBODY ELSE DID!
I think we have some time to go before we see how this particular bust works out, but hey, "we" made our beds and now "we" must lie in it, even if it turned out we short sheeted ourselves.
This is a position that no serious economist has ever taken anywhere. There is no argument for it, and none of you have made one for all of your smarmy sneering.
Yes, there is strong and vigorous policy debate whether the FED should target interest rates, or short term monetary growth, or long term credit growth, or explicit inflation (such as it is calculated by the keepers of these numbers and all the magical incantations involved), or some measure of economic growth as the FED can only really control one of the monetary variables at at time and the connection to economic growth is tenuous at best.
But until you and Tikester and JasonC I have never ever heard or read a serious economist or financial policy guru claim that the FED did not have effective control of the knob it was trying to turn. NEVER, NEVER NEVER once anywhere except from you idiots.
It is clear that the FED can set short term rates at 1.5% or they can set it at near 20% since they have done both as a matter of deliberate policy within recent memory. They can expand credit (as MZM and M3 discontinued show) and they can collapse credit (as 1929 showed). They can tank the entire banking system, or cause wheelbarrows to be required to haul the money around. They can effectively take long treasuries out of circulation. Each of these is within the power of the FED, if they choose to do it, since they have done it within memory (ok the wheelbarrows of money was Weimar, but our FED COULD do it if they choose). What the economic consequences of any of these would be is subject to vigorous debate and how they might achieve two simultaneous contradictory measures might be beyond their powers, but they can move one of these variables as far any direction they want to, and there is no argument about that since they actually have.
What should FED policy be? We can debate that. What is beyond question is that the FED can control monetary growth, if they choose, or near term interest rates if they choose. That is not subject to reasonable debate, but you three quibblers stake your case on the debate.
Should the FED have poured liquidity in to undo the disaster of BSC, hedge funds, CDO's, etc. We can debate that. Did they? That is beyond questioning but you three seem to think that the FED sat around and did nothing, or might as well have since FED policy is ineffectual in what actually happens.
I thought you three idiots thought that the FED does not control monetary growth. If so, why does it matter what I think of the Federal Reserve. Just another bunch of useless bureaucrats sitting around collecting fat government paychecks to do nothing that makes any difference. Surely you agree with me that useless bureaucrats drawing government pay should be put to better use painting lines in parking lots or skill within their powers, however limited they may be.
All over the place on this thread. JasonC and tikester in particular. You sure seem to like partying with them. Or have you just been posting away in your drunken state not actually paying any attention to what the debate is, which I have long long suspected.
Then WTF are you arguing about? Or can you not draw the dots from the things you agree with to the obvious conclusions that follow?
And if none of the above is your own position, then maybe you need to find different dogs to lie down with.
March 18, 2008, 11:06 pm
Volcker: Fed’s ‘Extreme’ Intervention ‘Raises Some Real Questions’
Former Federal Reserve Chairman Paul Volcker said the Fed’s decision to lend money to Bear Stearns Cos. to keep it from collapsing is unprecedented and “raises some real questions” about whether that’s the appropriate role for the Fed. The wisdom of the decision depends on “how severe this crisis was and their judgment about the threat of demise of Bear Stearns,” Mr. Volcker said on the Charlie Rose Show on Tuesday evening. “That’s a judgment they had to make and an understandable judgment.” It is “absolutely” not “what you want for the longstanding regulatory support system.”
Excerpts:
Volcker: We’ve seen the Federal Reserve take more extreme measures in some respects than any that have been taken in the past to deal with a financial crisis, which raises some real questions about not only for the Federal Reserve and its authorities, but for the structure of the financial system… The Federal Reserve is designed to lend to banks. And the banks were considered to be at the center of the financial system, and lend liquidity, provide cash in return for good assets, when a bank got in trouble. Now they found in this case, where some of the investment houses were in trouble, and prototypically Bear Stearns … it’s lightly regulated by the SEC or some other, but not for the same reasons. They haven’t got the concern over the stability of those things….We’re going to lend to them and protect them, shouldn’t they be regulated?
Rose: Is it a wise precedent?
Volcker: Whether it’s wise or not depended upon how severe this crisis was and their judgment about the threat of demise of Bear Stearns. That’s a judgment they had to make and an understandable judgment. There is no question about it.
Rose: Could we have risked the failure of Bear Stearns?
Volcker: Well who knows? It would take a lot of courage.
The Federal Reserve … has not, in the past, been conceived as a place where you put in bad assets, possibly bad assets. Lending institutions take risks. I’m not suggesting the assets are terrible, but they have collateral. But that is a new departure. And at some point, the government ought to — in my view, the government ought to be taking responsibility for that kind of action, not the Federal Reserve, which is an independent agency designed to provide an ample supply of liquidity to the economy but not too much, protect against inflation, not to protect particular sectors of the economy from bad loans.
Rose: So the Federal Reserve should not be doing that, in your judgment. It’s not because it shouldn’t be done, it’s the role of the federal government.
Volcker: Absolutely. In this situation, they stepped in and nobody else was there to do it…They stepped into a vacuum, and I think quite appropriately, it’s a judgment they had to make. But is this what you want for the longstanding regulatory support system? My answer is no.
Rose: Somebody said to me that we entered a period in which they were worshiping mathematical models … And mathematical models had no business sense.
Volcker: The market was being run by mathematicians that didn’t know financial markets. And you keep hearing, you know, god, that event should only happen once every hundred years, according to my model. But those every hundred years events are coming along every two or three years, which should raise some questions.
Rose: Tell me about how you see the relationship of the U.S. economy to the global economy. And is it changing?
Volcker: Here we have this factor entering into this domestic crisis that inevitably is international … because foreign institutions have invested in these American securities, but the world, as a whole, has been dependent upon the dollar. And you know it hurts my feelings, if nothing else, that the Swiss franc is worth more than the dollar.
Rose: Does it hurt your feelings that the Euro’s worth more than the dollar?
Volcker: Well, no, the Euro was sort of born more than the dollar.
Rose: Has [the economy] bottomed out, or have we seen the worst?
Volcker: Look. The basic economy is not irretrievably damaged in any way, shape, or form. We had to go through an adjustment, which is tough. It’s happening much quicker. You’d rather have it happen gradually. But I’m optimistic that, okay, we’ve got to get the consumption down, we got to get spending in line with our capacity to produce. I think that’s going on. And that process is going to take a while. If we can stabilize the financial market, we ought to come out of this. Then we’ve got a lot of work to do about what we do with the regulatory system, the supervisory system, what the role of the Federal Reserve is, what the role of the Treasury and the government is, because this is a different financial market.
Good grief. Isn't that what most of us have been saying here? I guess that is what we get for agreeing with the some bizarro former fed chairman thankfully long out of the way before he could get in the way of the last 5 or 6 or 7 of Greenie's bubbles.
There are always local trends that buck nationals... for most of the last many many decades the national trend was up, but there were always cities or locals that bucked... but never so much that they were enough to drag down the national average home price.
Now the trend is exactly the opposite.. national average home prices are declining, and will continue to do so for quite some time. Anyone who thinks this thing is near the end is naive, dillusional, or misinformed.
Care to document the “errors” ?
Ludwig von Mises would agree with the video.
Agreed. So-called reserves are not what they used to be, nor is the Fed sticking to keeping only treasuries on their balance sheet.
All over the place, huh? What the hell is that supposed to mean?
I happen to agree with statements that are correct. Which is why I disagree with you most of the time.
It is you who is infested with fleas.
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