patrick.net

David Losh says

This was a part of the scheme to get past the debt ceiling debate, and in a way set things up for the 2014 elections.

David Please explain this theory. Thanks

Call it Crazy says

smaulgld says

The Fed claims it needs to wait to see more evidence of a non existent recovery before scaling back its buying of $85 billion a month of U.S. Treasuries and mortgage backed securities (MBS’s).

What's the chance that as the economic conditions get worse, Bennie decides to ramp UP the QE from 85 Billion to 100 Billion or more??

The more they do QE the more
they have to do. The fed is caught in a no exit loop
They can try and slow their purchases but they have to keep buying

No one knows what this recovery means, all they know is that things are better than they were.

I think Bernanke was smart enough to see the debt ceiling debate as another threat to crashing the economy.

We can't keep going on the way things are, but a crash of our economy at this point would be devastating.

The Democrats have set a series of election year battles in motion. They want control of Congress again. My feeling is there is a cure for our economy, and that if the Democrats can present it well we can get some movement in Congress to get us back on track.

"A 21-hour talkathon by Ted Cruz whipped up the GOP's tea party wing even as it complicated efforts by House GOP leaders to assemble rank-and-file support for a temporary spending measure."

I think antics like this work against the Republicans. Most conservatives, myself included, see this as grand standing over legislation the Republicans presented as an alternative to the Obama Plan of a single payer Public Health Option to Health Care, and Health Care Insurance.

The Republicans rammed this ObamaCare/RomneyCare BS through Congress, and now they want to get rid of it.

The Tea Party gave the Republicans the House, but I pretty much see that as turning over the House to a bunch of militants.

It just doesn't look good, and I think Bernanke was smart to delay past this fiasco.

I just believe that the Fed thought by doing QE that the money would produce jobs, and start going back into the economy as a whole, and start the recovery, but the top 1% is playing with each other, i.e. the recent rise in housing due to large investors entering the market and not first time home buyers who plan to live there.

As long as money is cheap, the top 1% can keep playing without producing anything...thus no recovery...

smaulgld says

Call it Crazy says

smaulgld says

The Fed claims it needs to wait to see more evidence of a non existent recovery before scaling back its buying of $85 billion a month of U.S. Treasuries and mortgage backed securities (MBS’s).

What's the chance that as the economic conditions get worse, Bennie decides to ramp UP the QE from 85 Billion to 100 Billion or more??

The more they do QE the more

they have to do. The fed is caught in a no exit loop

They can try and slow their purchases but they have to keep buying

You are absolutely right. There is no way out and digging a deeper "hole"....

David you wrote the republicans rammed obama/romney care through
Wasnt the vote along party line
All dems for
All reps against and the dems won?

retire59 says

but the top 1% is playing with each other,

Yes the money has not been put towards investment in infrastructure, small business loans, bailing out mortgage holders, funding cancer research.

Not saying that it should have been but it would have been a better use of $3 trillion

Agreed

retire59 says

There is no way out and digging a deeper "hole"...

And they havent heard the old Will Rogers adage "If you find yourself in a hole, stop digging."

Very good ...

Call it Crazy says

Well, if he wants to base it on his suggestion, I would guess we won't see any taper for a while....

Of course not. They will use any excuse to print dollars and will use what ever data they need to in order to justify what they are doing-even though they don't need to justify anything as they dont' get audited any way

smaulgld says

All reps against and the dems won?

The Democrats didn't win, they took what they could get.

You may recall Obama wanted the vote on his legislation before the summer break, but the Republicans delayed, and we had the rise of the Tea Party. When Congress got back in session that was the bill, the Romney Care Bill, that the Republicans proposed, and the Democrats voted for.

It was a complete farce, but some reform is better than none.

David Losh says

The Democrats didn't win,

Actually no one won.
I don't think that anyone on either side is a big fan of the content and implementation of Obama Care.
Its interesting that a generally do nothing congress managed to pass something that requires a lot of thought and debate so quickly

smaulgld says

They will use any excuse to print dollars

Sorry, but there is an end game.

In my opinion you are focused too much on our current economy, not the past, not the trends, or the future, but just the crappy state of affairs we have now.

There are Trillions of dollars in our economic system globally. No one has to supply more dollars, the dollars we have need to go to work.

As long as the Fed prints there is no reason to put capital to work on long term projects. Why would anyone tie up cash when there is more coming every month?

There is an end game, and it will come with the elections of 2014, and 2016.

smaulgld says

Actually no one won.

Well, yes we did win, I mean the People of the United States.

We have been held hostage by a broken Health Care System that only caters to the Cadillac coverage, and those who can afford to pay the full freight of Health care.

Most people don't realize how screwed up our system is, and I don't really want to get into that.

The point is we have needed Health Care Reform since Nixon, and it took this long to get anything, but something is better than nothing.

David Losh says

broken Health Care System that only caters to the Cadillac coverage, and those who can afford to pay the full freight of Health care.

You mean the Cadillac coverage that Congress gets while exempting themselves from ObamaCare?

David Losh says

As long as the Fed prints there is no reason to put capital to work on long term projects

Yep that is a good point. Also because of QE large companies chose to spend excess cash on buying back their stock because they view the return in a higher stock price is better than return on hiring workers

David Losh says

In my opinion you are focused too much on our current economy, not the past, not the trends, or the future, but just the crappy state of affairs we have now.

Been thinking about that- my blog is mostly current analysis. Am working on something now that is less news/Fed action focused.
It still relates to economics but it will be more general observations

smaulgld says

You mean the Cadillac coverage that Congress gets

Exactly, what was proposed is that we all have access to the same system Congress has.

It was said that the cost would be prohibitive. Well, the costs are going up anyway, so why didn't we have access to that choice?

David Losh says

Exactly, what was proposed is that we all have access to the same system Congress has.

If government is going to get deeply involved in health care single payer would have been preferable to this mess. Or just creating a program for the uninsured or for those with pre existing conditions.

smaulgld says

health care single payer

That is what Obama proposed.

This is a long debate that makes no difference right now. The debt ceiling is today's problem which is compounding problems for the Republican Party.

Mitt Romney was a mistake to put up as a candidate for President. He outlined his Health Care program which anyone who wanted to see was ObamaCare.

It created another problem for Republicans.

The one Fed board member who voted FOR tapering actually thinks the economy is getting better

http://www.bizjournals.com/denver/blog/finance_etc/2013/09/feds-george-critical-of-decision-not.html

and worries about Fed credibility
http://finance.yahoo.com/news/feds-george-delay-bond-tapering-011502575.html

And this Fed board member (not Bullard) thinks the Fed can taper in October.

http://www.foxbusiness.com/government/2013/09/26/fed-lacker-no-reason-to-hold-off-tapering-in-october/

David Losh says

Mitt Romney was a mistake to put up as a candidate for President.

As was McCain

This fed board member also worries abour losing face if they dont taper in october http://mobile.reuters.com/article/idUSBRE98P07C20130926?irpc=932

More taper talk -"by end of year"

http://mobile.reuters.com/article/idUSL5N0HN1EK20130927?irpc=932

I've done a survey of the Fed presidents comments made after the fed meeting here http://smaulgld.com/more-qe-taper-talk-from-the-federal-reserve-regional-presidents/

"Could be a long time .."

http://news.yahoo.com/could-long-time-between-qe-taper-rate-rise-191436557--business.html

"Next Fed chair must not trim stimulus .."

http://news.yahoo.com/fed-sharpen-message-boost-jobs-kocherlakota-165113242--business.html

There you go, never.. just endless free money !

If it isn't obvious by now, it's different this time. They've learned their lesson. Bubbles pop only when you let them. Just don't let them and you can keep blowing forever.

It's different this time.

Thanks exfatgut will add dudleys and mr k's comments here
http://smaulgld.com/more-qe-taper-talk-from-the-federal-reserve-regional-presidents/ and here
http://patrick.net/?p=1229917

smaulgld says

As was McCain

McCain was a hail Mary who didn't stand a chance. The Republicans felt they didn't stand a chance.

Romney was always a contender, but my point was that it is his RomneyCare legislation the Republicans are now fighting, because of the Tea party.

The real question is why the Tea party isn't attacking the Fed.

Here is the companion podcast for the original blog post

http://patrick.net/?p=1229932

David Losh says

his RomneyCare legislation the Republicans are now fighting, because of the Tea party.

I don't understand the connection. Wasnt the tea party then and now adamantly against obama care and romney himself because of his association with romney care? Wasn't tea party candidate Michelle Bachman and libertarian ron paul un supportive of the Republican establishment pick of Romeny?

RentingForHalfTheCost says

It will change names multiple times in an effort to confuse and manipulate. ;)

Yes like perhaps some type of Fed emergency action required if there is a budget impasse of default-

We discuss that often on the smaulgld podcasts
here is the latest
http://www.youtube.com/embed/PtwpObSCJlI

smaulgld says

I don't understand the connection.

The Tea Party became empowered, and elected into office based on the ObamaCare legislation.

Yes, the Republicans saw the legislation through as a gift to the Insurance Industry. The Tea Party saw it as a new form of deficit spending, and higher taxation.

The question still, is why there isn't more focus on the Fed from the same group of Tea Party militants.

The word is DEFLATION. I don't know why everyone shies away from that word deflation.

We don't need to have inflation or grow the GDP. The stock market can drop to 12000 no problem. Mortgage rates can rise to 6%, no problem.

The Fed can stop at any time because they have already dumped in so much cash.

We can have deflation. It's time

David Losh says

We don't need to have inflation or grow the GDP. The stock market can drop to 12000 no problem. Mortgage rates can rise to 6%, no problem.

True there are many arguments that favor lower prices and higher rates.
That is the subject of my next post

Government shut down. Fed to the rescue?