patrick.net

smaulgld says

Its not misleading- you cited two links that predate the bloomberg link I used.

I agreed that it's hard to find good data on a quick search.

But the links I provided talk about how much of all debt is purchesed by the fed, and not just a record breaking single auction.

Up to 90% ?

If some readers perhaps infer that the fed is buying somewhere close to 90% of our debt issues, does that bother you ?

Do you even understand the distinction ?

Marcus"Here are a couple of sources, but I didn't find great data. I know that 90% is way off though.

Yes, I know you said "up to 90%" which is kind of like saying nothing except suggesting something misleading.

http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106

http://www.motherjones.com/kevin-drum/2012/09/fed-really-buying-three-quarters-all-treasury-debt"

I changed the comment above to:

"The Fed is buying depending on which source you believe between 50-90% of the newly issued treasuries-that should put the problem in perspective."

I was using the Bloomberg reference for my 90%-thanks for providing others.

The problem remains as start as ever irrespective of a 90% or 50% purchase number by the FED

By the way, the quote feature is really not that hard to use, but you might find also knowing how to do cut and paste and a few other really basic word processing tasks useful.

dAILY pr "There is something else that needs to be covered, it's kind of the elephant in the room.

The fed is backstopping MULTI TRILLIONS upon MULTI TRILLIONS in derivatives from the big banks. What happens if there is a margin call they cannot cover?"

There are so many ways this can go wrong. This grand QE experiment has caused more systemic risks than the benefits of a few part time jobs and a mini housing bubblet and a "recovery"

I don't even know if 50% is correct for a low end of the range. Mother Jones thought 3/4 was ridiculous, but they didn't put a number on what it actually is.

marcus says

By the way, the quote feature is really not that hard to use, but you might find also knowing how to do cut and paste and a few other really basic word processing tasks useful.

I know but I don't like to see the html when I am responding.thanks so I cut and paste

waiting_for_the_fall

Correct. Indeed China and other investors are really pissed off that the Fed is hogging all those treasuries for themselves.
They are waiting for the day that the treasury stops buying whatever percentage it is that they are buying because the less the Fed buys the more they can buy.

NOTHING will interfere with this RECOVERY not even tapering of QE or cessation of the program

marcus says

I don't even know if 50% is correct for a low end of the range. Mother Jones thought 3/4 was ridiculous, but they didn't put a number on what it actually is.

The Fed is buying an enormous amount $45 billion in US treasuries a month.

We can do our own math.

Multiply $45 billion times 12 months and you get $540 billion annually. I think they said the deficit because of Fannie mae payments, the sequester and tax increases will be about $680 billion this year.

So that would make the Fed the purchaser of 80% of the annual debt.

If the deficit were a trillion it would be 54%.

so 50-80% this year

And of course mother jones didn't put a number on it -at the time they were gleeful of their coup on catching mittens in his 47% comment.

We have above come up with a non politically motivated number-54-80% for 2013 and have a bloomberg number at the end of 2012 (post mother jones) of 90%
The point remains- the Fed is buying a boat load of US bonds and who will pick up the slack when they stop buying?

smaulgld says

The point remains- the Fed is buying a boat load and who will pick up the slack when they stop buying?

There will be buyers, the question is how much does the price change (interest rates increasing) to sell that much.

marcus says

smaulgld says

The point remains- the Fed is buying a boat load and who will pick up the slack when they stop buying?

There will be buyers, the question is how much does the price change (interest rates increasing) to sell that much.

That's right! That is the question and can we afford to pay the additional interest.
This is what I have been thinking long and hard about. The problem is really staggering no matter if its 50%or 90%.

Marcus-BTW-my guess is the solution they will use is that the US citizens will end up buying the treasuries from their retirement accounts http://smaulgld.com/funding-the-government-without-the-fed-and-quantitative-easing/

The funding of the US government is a bigger issue than what happens to the real estate or stock markets-they always go up and down

I don't think the US could afford the market rate that is why I am thinking they would mandate 401K purchases of T-bonds at a rate set by the US government that they could pay, say 3%

they could mandate a percentage of the 401K to be in tbonds-a percentage that would increase each year as their borrowing continued to grow

"How will the Government fund its self with out QE3?"

Oh deer, where do I begin?
First of all, the Left has been patting them selves on the back, for the last 6 years, claiming that they made a profit from every money sack, dump truck delivery to the Wallstreet banks.

Please tell me that they've been depositing that money into bank that has the "REAL" money!

OR!

There was no profit after all and like with this administration, everything they claim is LIE!

smaulgld says

they could mandate a percentage of the 401K to be in tbonds-a percentage that would increase each year as their borrowing continued to grow

https://www.youtube.com/watch?v=xhf49cq7a-Y

Blurtman says

smaulgld says

they could mandate a percentage of the 401K to be in tbonds-a percentage that would increase each year as their borrowing continued to grow

https://www.youtube.com/watch?v=xhf49cq7a-Y

I really think so...

.CaptainShuddup says

"How will the Government fund its self with out QE3?"

Oh deer, where do I begin?

First of all, the Left has been patting them selves on the back, for the last 6 years, claiming that they made a profit from every money sack, dump truck delivery to the Wallstreet banks.

Please tell me that they've been depositing that money into bank that has the "REAL" money!

OR!

There was no profit after all and like with this administration, everything they claim is LIE!

Its a misnomer to say the government makes investments.

Investments are made without concern for political outcome or votes, but to make profit.

When the government SPENDS money occasionally they want a return- as in a bail out (GM)or subsidy for green energy(Solyndra). This is not really investment but political favors or crony capitalism

Usually government investment is nothing more than spending money on entitlements to secure votes.

smaulgld says

Usually government investment is nothing more than spending money on entitlements to secure votes.

That's exactly how I view Quantitative Easing.

The Fed has provided a vehicle to create these huge cash reserves in corporations, and the wealthy.

I think though that as the Fed winds down the economy will improve by the next set of elections, and the Democrats are hoping to look like heroes.

"David Losh
smaulgld says

Usually government investment is nothing more than spending money on entitlements to secure votes.

That's exactly how I view Quantitative Easing. "

Yep- QE is corporate/bank welfare that tosses in some money for the government for "general welfare".

Basically QE allows both parties to feed its constituencies without having to ask for tax money to do so.

David Losh says

Democrats are hoping to look like heroes.

Provided everybody's chaffed asshole heals by then.

CaptainShuddup says

Provided everybody's chaffed asshole heals by then.

I think the people here, and on many blogs forget that for most Americans this last down turn ruined them financially.

Smug little assholes brag about the moves they made to take advantage of the down turn, but for most Americans they will either hold tight, or spiral down into poverty.

That growing middle class that China is so proud of is what was hit hardest in this country; enter the Green Party.

I'm personally amazed that people put the government on trial when it was the corporate structures we have that did the exploiting.

Using the Green Party as an example they are against the government setting medical insurance policy, but don't see the medical insurance industry as the problem that needs to be reigned in.

People are blaming Fed policy for the economic crash, but give the bankers a free pass, as though these thieves are some sort of American icons.

We'll see what kind of show the Democrats trot out, but after the Mitt Romney fiasco I don't see Republicans getting much traction.

QE was a good game to play, and a better game to get rid of.

David Losh says

Using the Green Party as an example they are against the government setting medical insurance policy, but don't see the medical insurance industry as the problem that needs to be reigned in.

People are blaming Fed policy for the economic crash, but give the bankers a free pass, as though these thieves are some sort of American icons.

They are a Lot chocked full of Irony aren't they?

That's like the OWS rallies had Buffet, Gates and Bloomberg as the grand marshal of the parade. Shouting the battle cry...

"Get the 1% they are bad, but not us, we're good. "

Looks like consumers aren't spending- maybe they are saving money for their 401k's!

David Losh says

We'll see what kind of show the Democrats trot out, but after the Mitt Romney fiasco I don't see Republicans getting much traction.

I don't expect either side to trot out anything useful that changes the print and borrow economy we are trapped in

robertoaribas says

I'll be that smug asshole, you be the idiot who spirals down into poverty. Fair enough? we each have a role to play!

We're turning away business this week, like we did the week before, and the week before that. We are interview to add more people to the two others we already hired.

You're just in the wrong business. Ours is growing.

Now, Bob, seriously, do you think the National economy is just humming along?

Do you think everyone has it as good as we do?

You certainly talk that way, as a smug asshole who has job that pays well.

You also are lucky enough to live in an epicenter of housing recovery, so much so Obama came to visit. We're also fortunate to live in Seattle where wages, and job opportunities continue to grow.

To me I feel lucky, and grateful, but you still sound like an asshole.

smaulgld says

I don't expect either side to trot out anything useful that changes the print and borrow economy we are trapped in

and I think the debt ceiling debate will crush Republicans.

David Losh says

smaulgld says

I don't expect either side to trot out anything useful that changes the print and borrow economy we are trapped in

and I think the debt ceiling debate will crush Republicans.

It could but as I wrote elsewhere

Both parties excuse their short comings by reference to the other party.

Scoring points in reference to each others failures is still a failure.

What should scare Democrats the most is that not every one that opposes them are Republicans

What should scare Republicans the most is that not every one that opposes them are Democrats

Some of the worst arguments I have heard on both sides go like this:

R: what D did sucked
D: Yeah but what R did sucked more
R: well that's because you are a D
D: at least I am not R

USELESS debate

smaulgld says

Some of the worst arguments I have heard on both sides go like this:

R: what D did sucked
D: Yeah but what R did sucked more
R: well that's
because you are a D
D: at least I am not R

USELESS debate

How do these people look themselves in the mirror? Here is what WE are paying these people: The current salary (2013) for rank-and-file members of the House and Senate is $174,000 per year.

Here's a suggestion: the $6 trillions of debts the gov added since 2008 didn't disappear. This is money that was spent, distributed etc....

I.e. people in the private sector collectively have $6 extra trillions, compared to what they had in 2008.

Granted a share of that leaked abroad, to China and other countries.

But ignoring this for a minute, the government can easily just take back $500billions of it through taxes / year and still leave the private sector with a large excess.

Also note that the deficit is scheduled to be smaller than nominal GDP growth, meaning the debt as a percent of GDP will start shrinking next year.

Government financing itself is clearly not a problem at this point.

Analyzer says

smaulgld says

Some of the worst arguments I have heard on both sides go like this:

R: what D did sucked
D: Yeah but what R did sucked more
R: well that's

because you are a D
D: at least I am not R

USELESS debate

How do these people look themselves in the mirror? Here is what WE are paying these people: The current salary (2013) for rank-and-file members of the House and Senate is $174,000 per year.

PLUS non Obama care health care!

Heraclitusstudent says

Here's a suggestion: the $6 trillions of debts the gov added since 2008 didn't disappear. This is money that was spent, distributed etc....

I.e. people in the private sector collectively have $6 extra trillions, compared to what they had in 2008.

Granted a share of that leaked abroad, to China and other countries.

But ignoring this for a minute, the government can easily just take back $500billions of it through taxes / year and still leave the private sector with a large excess.

Also note that the deficit is scheduled to be smaller than nominal GDP growth, meaning the debt as a percent of GDP will start shrinking next year.

Government financing itself is clearly not a problem at this point.

Taxing would be the worst-they already misspent the money then they come crawling back for more! They shouldn't tax any one including the 1%-people who EARN millions from honest hard work and ingenuity.

But for those that make millions because they have friend somewhere in government who gave them a break/subsidy should give the money back and the politicians who helped him sent to jail.

smaulgld says

Taxing would be the worst-they already misspent the money then they come crawling back for more! They shouldn't tax any one including the 1%-people who EARN millions from honest hard work and ingenuity.

As I said, they distributed $trillions that didn't exist before to the private sector.

You call that earning money through hard work and ingenuity???
I beg to disagree.

Most profited from the cash rain and especially the richest 1%.

Heraclitusstudent says

smaulgld says

Taxing would be the worst-they already misspent the money then they come crawling back for more! They shouldn't tax any one including the 1%-people who EARN millions from honest hard work and ingenuity.

As I said, they distributed $trillions that didn't exist before to the private sector.

You call that earning money through hard work and ingenuity???

I beg to disagree.

Most profited from the cash rain and especially the richest 1%.

I don't I have a problem with government taking our money and dishing it out to their private sector buddies more than I do dishing it out for entitlement programs to get votes.

I think I made the distinction between those that do well without government help vs those that get rich solely because their association with the right politician.

The guy or gal that works hard and makes a good product that we all like and use at a good price is our friend-no point in taxing that person.

The guy or gal who grabs a subsidy or has access to capital that the rest of us don't have and makes a fortune is living at our expense.

There is a huge difference between a Thomas Edison and a CEO of a Wall Street bank.

I don't view "the 1%" as all the same. Some are social benefactors, others are leeches but income is all they have in common.

Heraclitus student:The current cash rain as you call it does benefit only the wealthy because unlike the last housing bubblet only the wealthy have real access to these low interest rates.

They are the ones who can buy multiple homes and flip houses.

This QE creates wealth disparity and does not add anything meaningful or sustainable to the economy.

Rich people invest in real estate at low rates because they can make money.

So because they can make easy money in real estate they are not funding companies that might create new products and services and create jobs.

smaulgld says

I don't view "the 1%" as all the same. Some are social benefactors, others are leeches but income is all they have in common.

True. But the person that has a good product benefits if the guy on welfare buys his product.

Whether we like it or not, we all live in a world that is inflated and infused with new money from the government. Many hardworking people wouldn't make it without that extra boost. This is why no one can claim independence from the government and why paying some taxes back in not that unfair.

Dependencies are everywhere.

Heraclitusstudent says

smaulgld says

I don't view "the 1%" as all the same. Some are social benefactors, others are leeches but income is all they have in common.

True. But the person that has a good product benefits if the guy on welfare buys his product.

Whether we like it or not, we all live in a world that is inflated and infused with new money from the government. Many hardworking people wouldn't make it without that extra boost. This is why no one can claim independence from the government and why paying some taxes back in not that unfair.

Dependencies are everywhere.

Clearly what you say is 100% correct. Unfortunately the government plays too great a role in economy.They are an actor/player as opposed to the regulatory referee.

Hard to be a good ref if you are rooting for one side over the other.

So you are right people benefit and are penalized by the government's involvement whether they like it or not.

I still hold scorn for those who seek out and get special favors with tax payer money.

If there were fewer tax payer dollars there would be less to take and fewer politicians to corrupt

The solution is not to say well we all benefit so we should all pay more-this just perpetuates an unjust and corrupt system

Generally when people are in favor of higher taxes they are in favor of higher taxes on someone else!

this leads to a misappropriation of the money.If its OUR money they are taking we might demand more accountability.

If its someone elses' and they have more they we do many are of the view that it is sufficient to tax them more- at least they are paying more irrespective if the money gets lost in waste fraud or abuse or actually makes it back to the taxpayer in the form of a subsidy!

The higher tax argument for that reason is always a loser.

smaulgld says

Generally when people are in favor of higher taxes they are in favor of higher taxes on someone else!

I'm not saying I'm in favor of higher taxes. I'm just observing that the government will have no problem financing itself for the next 5 years.

This being said the main barrier to economic growth can be described in 2 words: accumulation points.

The economy works well when money circulates well. When large amounts of money are accumulated and don't circulate, the economy doesn't work well.

This is typically the case now, and it is the case because of economic inequality. The banks have trillions of deposit that are not lent. Businesses have record amount of cash. They need to either invest or distribute the cash to shareholders. And the rich need to spend, instead of accumulating rents at an exponential rate. The only other way to break the deadlock is through taxes.

Heraclitusstudent says

And the rich need to spend, instead of accumulating rents at an exponential rate. The only other way to break the deadlock is through taxes.

That hits the nail on the head. All of the tax breaks handed out, all of the low interest loans, easy money, that's the problem right now.

Get the Fed, and Central Banks out of our economy, get tax reform, and regulation as the government role, and we will come out ahead.