Skip to comments.Fed Bond-Buying Bonanza: $85 Billion a Month Until Unemployment Hits 6.5%
Posted on 12/12/2012 7:34:41 PM PST by chessplayer
In an unprecedented and surprising move, the Federal Reserve announced on Wednesday that it will keep interest rates near zero and will purchase $85 billion in bonds every month until unemployment falls from its present 7.7% to 6.5%.
The new plan will maintain the $40 billion a month of mortgage-backed bond buying it began in September while adding another $45 billion in Treasuries.
Where will the cash to bankroll the $85 billion-a-month bond-buying binge come from? The Fed plans to expand it's $2.8 billion balance sheet.
The new round of so-called stimulus is meant to replace the soon to expire Operation Twist program that shoveled $45 billion a month into long-term Treasuries funded by the sale of short-term debt. Since that effort failed to create economic growth, and the Fed has no more short-term securities left to sell, the Wall Street Journal says the Fed will effectively PRINT MORE MONEY OUT OF THIN AIR to fund the scheme.
(Excerpt) Read more at breitbart.com ...
Until they stop free trade with low wage countries, unemployment is going to be high.
Sure we will, when another 5 million people drop out of the workforce.
>”Bernacke is nuts. We’re not going to see 6.5% unemployment ever again”<
Yes we will. They just have to change the definition of “unemployment”.
If they trash the system enough, maybe everyone will just give up entirely and we can get the unemployment rate down to 0%.
Sure we will, when another 5 million people drop out of the workforce.
I’m sure these smart guys will find a way.
These guys must know what they are doing - they went to Harvard.
>> will purchase $85 billion in bonds every month until unemployment falls from its present 7.7% to 6.5%.
As If there is such a cause-and-effect relationship...
reminds me of that tee shirt humor: “The beatings will continue until morale improves”
I was starting to worry about the wisdom of shifting to hard assets in anticipation of inflation. Not so worried now...
>Bernacke is nuts. Were not going to see 6.5% unemployment ever again<
Yes we will. They just have to change the definition of unemployment
Or change the definition of %
Just have the Fed buy all $16 billion of the debt and then forgive it.
It’s all so simple.
It’s the progressive way of doing things ... doubling down on stupid!
>> Which brings up the interesting question of how you can sustain an inflationary wage - price spiral when over half the country is unemployed.
Bernanke always DID want to be a pioneer, when he grew up.
He’s got no ideer what he’s gonna do when the inevitable happens. No siree. None at all.
Until they stop idiotic regulations, high taxes and government mandates, unemployment is going to be high
The following quotes are only a few on the subject from essays on the subject in "Our Ageless Constitution". Dr. Edwin Vieira, who contributed to that volume, also has written extensively on the Founders' protections for liberty through their provisions for a sound money system. A search of his many published writings might enlighten those who would like a better understanding of the dangers of fiat money.
Thomas Jefferson: "Paper is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted."
". . . although the other nations of Europe have tried and trodden every path of force or folly in fruitless quest of the same object, yet we still expect to find in juggling tricks and banking dreams, that money can be made out of nothing. . . The misfortune is. . . we shall plunge ourselves in unextinguishable debt, and entail on our posterity an inheritance of external taxes, which will bring our government and people into the condition of those of England, an nation of pikes and gudgeons, the latter bred merely as food for the former."
"Stock dealers and banking companies, by the aid of a paper system [paper money] are enriching themselves to the ruin of our country, and swaying the government by their possession of the printing presses, which their wealth commands, and by other means, not always honorable to the character of our countrymen."
Then there is John Maynard Keynes observation in "The Economic Consequences of the Peace - 1920":
"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. . . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. . . . (It) does it in a manner which not one man in a million is able to diagnose. . . ."
When I rule Earth my first order will be to burn the Harvard Schools of Business and Law to the ground and exile anyone who has a degree from either.
All these financial gimmicks can never create real wealth or prosperity. Three generations of deficit spending, huge and growing debts, unfunded entitlements and government policies such as a bizarre, anti capitalist EPA spewing business killing regulations will never be ameliorated with more borrowing and dollar printing. Bernacke is the Prince of Paper and will be remembered as the worst individual ever to hold high appointed office in American history. Obama of course is the greatest borrower, spender and squanderer of any President to date.
Ah, I understand: by expanding the money supply by 85 billion a month (that’s a trillion a year), they devalue the dollars current employed people get paid, freeing up funds for more employees. Genius! And as a bonus, everyone gets pushed up into higher tax brackets!
It’s so fun falling to socialism! Wooohooooooooo!
When I’m appointed King I will mandate one cell phone power connector and outlaw all others.
Also, I think we should have only one screw head. Philips I think.
No, star drive. After all, if you're King, you might as well have deck screws that don't strip.
Yes we will see 6.5 unemployment again. Another year or 2 of Obama’s driving out or destroying jobs while not counting the idled workers as being in the labor force any longer, and we’ll be reading about 5.5 or even 4.5 unemployment (while we’re all queued up for the dole).
LOL, yea. Actually I meant bazillion. What the heck’s the difference. It’s all make believe now.
No difference in principle from the 2T platinum coin proposal. I actually prefer the bogus coin scheme. At least it’s transparent
Memo to self: short Charmin stock
No kidding. LOL
Don’t be silly!
The way Obama’s BLS fudges unemployment numbers every week we’ll hit under 6% unemployment by spring.
I just got a new blu-ray disc...Hatfields and McCoys...
Maybe best I don't watch...ben giv'n me bad ideers.
It is the exactly like what is happening with the current economy. A little boost of cash might get it started again but flooding it with counterfeit money is destroying the true capital that is capable of reviving the economy.
Why would Bernacke want to create runaway inflation? Maybe he has been secretly laying up a personal stash of gold?
If you want to win, try this simple strategy:
Go to your local Bank, and demand higher interest rates on your account. Better yet, organize an Occupy style protest to demand higher interest rates from banks.
This has two advantages:
1. It has a populist appeal that is hard to argue with. Most everyone hates banks and those who save hate getting such low interest on their accounts.
2. Low (nearly zero) interest rates are the only thing keeping the Entitlement State afloat. If short term interest rates were to even rise to 4%, the Entitlement State would come crumbling downthere is no way the Government could fund it. Which is why the Federal Reserve has been pushing interest rates to near Zero.
This strategy would be far more effective than any political grandstanding that House Speaker Boner could possibly execute.
Lenin only said that because he thought it was inconceivable that the American people would foolishly elect and reelect an affirmative action Kenyan to the presidency of this country. The inmates are in charge of the asylum.
No, those were typos on their resumes. They actually graduated
Trillion, with a T.....
The only reason we don’t have a full blown depression is the huge number of families are 2 earner househoulders.
Overall employment is dropping and will continue to drop as long as these mental midgets are in positions of power.
We truly are in a "zombie" economy ... moving, but not alive.
A trillion dollars a year.
When did they announce that unemployment was down to 7.7% ?
It’s the Obamacare solution. Making the problem bigger will solve everything. Let see they done it to Healthcare, To Big to Fail Banksa and now Federal Debt.
“We’re not going to see 6.5% unemployment ever again. ‘’”
Cut the unemployment benefits back to 26 weeks and the fake number should go below 6.5%!
“Just have the Fed buy all $16 billion of the debt and then forgive it.”
No, just cancel the national debt and stick everyone holding a US bond!!!
You can eliminate all taxes and all regulations and we still can’t compete with $2/day labor.
Communist China taxes their firms 90%. That’s why they don’t buy much from us. The Chinese government takes it all and then buys our debt or worse buys more firms to dismantle and ship overseas.
90% taxes aren’t keeping them from being competitive, because the labor rate is so low.
Better include the entire Ivy League and a few other of our most 'prestigious' universities, just to make sure. Their grads infest every branch of government and our largest financial institutions, and have played major roles in the decisions that have brought this nation to it's current sorry state.
I can't imagine what this shell game will do to the dollar but I don't see this creating jobs.
The Bernank can’t afford to let the economy grow, not with all the toxic global debt on his books. Inflated rates would wipe him out.
“Bernanke is nuts.”
I find it ironic that Bernanke, who seems determined to destroy the dollar, was appointed by the “conservative” George W. Bush. The same Bush who over 8 years went from balanced budget to doubling the deficit accumulated over the entire history of the nation.
In contrast, Paul Volker, the Fed Chairman who invoked the tight money policies that ended double digit inflation in the early 1980’s was appointed by the liberal Democrat Jimmy Carter.
The irony is the Democrat appointed Volker worked with Reagan to restore sound money and a vibrant economy while the Bush appointed Fed chair seems intent on working with the socialist Democrat president to destroy the currency and the economy. Bernanke is part of the disastrous economic legacy of the faux conservative Bush.