patrick.net

Blurtman says

The Fed can go along with getting stiffed. What does it care, it's not like it earned the money. No one audits the Fed really, and it is all make believe anyway. The Fed's accumulation of Treasuries is not being done for investment purposes, but for the purpose of interest rate control.

The whole system is absolute bullshit, and yet the little people are made to dance on the hot griddle while others have access to the bogus mainline, free money conjured from thin air.

That is a good argument because they ALREADY printed the money so would the other bond holders care if the Fed didn't get paid? It would however high light the absolute BS that the system is but haven't they already shown that?

Heraclitusstudent says

This money is 'accounted' for as debt but it doesn't work as debt. This is the base money. It is not paid back, it is rolled over. It gathers no interests, interests are returned to the treasury.

True- QE is even bigger than they say it is as they have rolled over every last penny of interest back into more bonds-Operation twist accomplished this and they made sure they reinvested the interest in longer term bonds to push the can further down the road

Blurtman says

Why can't the Fed buy excess auto inventory?

They can buy what ever they like- How about student loans that aren't getting repaid?

smaulgld says

Blurtman says

The Fed can go along with getting stiffed. What does it care, it's not like it earned the money. No one audits the Fed really, and it is all make believe anyway. The Fed's accumulation of Treasuries is not being done for investment purposes, but for the purpose of interest rate control.

The whole system is absolute bullshit, and yet the little people are made to dance on the hot griddle while others have access to the bogus mainline, free money conjured from thin air.

That is a good argument because they ALREADY printed the money so would the other bond holders care if the Fed didn't get paid? It would however high light the absolute BS that the system is but haven't they already shown that?

No. As long as I get paid nominally, what do I care if the Fed eats the Treasuries? As long as you get paid, and the US dollar is still worth something, all is well.

The system is total BS. I move over digital dollars to the US government ledger, and I record digital unit payments back. As long as that keeps happening, all is well.

Some folks have access to unearned digital dollar units given to them by the Fed. These folks can use these free digital credits to invest, buy things, and pay themselves huge amounts of money. These folks can also commit fraud and will not go to jail. And when out of control fraud again crashes the economy, real people lose their jobs and homes. The criminals keep their money and even receive bonuses from the company they bankrupted.

It truly is time for an armed revolution.

Blurtman says

No. As long as I get paid nominally, what do I care if the Fed eats the Treasuries? As long as you get paid, and the US dollar is still worth something, all is well.

Nope they wouldn't care at all

smaulgld says

Nope they wouldn't care at all

Understand this is a 100 year old tradition of entitlement. It has become a part of the water we swim in, most people never question or notice it.

indigenous says

Understand this is a 100 year old tradition of entitlement. It has become a part of the water we swim in, most people never question or notice it.

and many defend it!

smaulgld says

and many defend it!

Ah the Hubris of it all, it is palpable. Pride goeth before a fall.

indigenous says

Ah the Hubris of it all, it is palpable. Pride goeth before a fall.

Bernanke once said on 60 minutes that if there was price inflation he was 100% confident he could stop it

smaulgld says

Bernanke once said on 60 minutes that if there was price inflation he was 100% confident he could stop it

Yes akin to a redneck's last words, which are hey earl watch this.

smaulgld says

indigenous says

Ah the Hubris of it all, it is palpable. Pride goeth before a fall.

Bernanke once said on 60 minutes that if there was price inflation he was 100% confident he could stop it

Price inflation of what exactly? Equities? RE?

Blurtman says

Price inflation of what exactly? Equities? RE?

i'll have to dig up the you tube- he was talking about price inflation of consumer goods- he has already created price inflation for RE and the stock market- he stated that was an objective of QE

smaulgld says

Blurtman says

Price inflation of what exactly? Equities? RE?

i'll have to dig up the you tube- he was talking about price inflation of consumer goods- he has already created price inflation for RE and the stock market- he stated that was an objective of QE

Yes, quite true. But the helicopter cash is not making it into the hands of the consumers, and so from that perspective, will not cause a classic too much cash chasing too few goods inflation. Wages are not rising and fewer and fewer people are working. StagAssFlation. You heard it here first.

Bubbabear says

Strategist says

smaulgld says

Strategist says

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.

Sick sick sick.

the "country" hit an all time high-that is like saying casino profits are up so the country is doing well- there is a severe disconnect between the health of the economy and the stock market

The stock market is forward thinking. It generally precedes the state of the economy 9 months in advance. What the stock market is telling us today is that good times are ahead.

Corporation buybacks, Ya Boy we're really cooking!

According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter! Each quarter since 2008 companies within their same index bought back their own stocks.... Yet they call that business sense.

Bubbabear says

According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!

and that prevents companies from hiring employees as they get a greater return on investment from buying their own shares back either with their cash on hand or by borrowing it at the artificially low interest rates
http://smaulgld.com/the-dark-side-of-artificially-low-interest-rates/

smaulgld says

Bubbabear says

According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!

and that prevents companies from hiring employees as they get a greater return on investment from buying their own shares back either with their cash on hand or by borrowing it at the artificially low interest rates

http://smaulgld.com/the-dark-side-of-artificially-low-interest-rates/

Only one problem , it creates a set point to keep innovation at all time lows

Bubbabear says

the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock

A lot of this is cash they earned. See Apple.

In other words, unused cash that was stuck in accumulation points, is returning to share-holders, from where it can start again circulating again in the economy (as these share-holders spend it or invest it).

This process by-itself means accumulation points are diminishing, cash is flowing again, and the economy is healing.

Bubbabear says

The stock market is forward thinking. It generally precedes the state of the economy 9 months in advance. What the stock market is telling us today is that good times are ahead.

Corporation buybacks, Ya Boy we're really cooking!

According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter! Each quarter since 2008 companies within their same index bought back their own stocks.... Yet they call that business sense.

When companies start buying their own shares it indicates their stock is undervalued. When they all start doing it, it indicates the market is undervalued.

Heraclitusstudent says

from where it can start again circulating again in the economy (as these share-holders spend it or invest it).

Cash used to buy back shares does not reenter the economy. All it does is remove shares from the public float raising the stock price so that the executives' stock options are worth more and they get bigger bonuses. The performance of the company, however lags the performance of the stock price as dollars are invested in the stock price rather than the company.

Stock buybacks are a sign that the company does not have more productive uses of its cash or worse when they borrow money to buy back their own shares to drive the price higher.

Strategist says

When companies start buying their own shares it indicates their stock is undervalued. When they all start doing it, it indicates the market is undervalued.

Perhaps in a normal market where interest rates are not manipulated lower artificially. The low interest rates creates a distortion whereby the companies are encouraged to speculate on their own shares

smaulgld says

Cash used to buy back shares does not reenter the economy. All it does is remove shares from the public float raising the stock price so that the executives' stock options are worth more and they get bigger bonuses. The performance of the company, however lags the performance of the stock price as dollars are invested in the stock price rather than the company.

I have 2 questions for you:
- Who do companies buy the shares from?
- What do these people selling the shares do with the money?
I think you'll find it is likely to reenter the economy.

Whether or not it makes the stock rise faster than actual company growth is irrelevant.

smaulgld says

Strategist says

When companies start buying their own shares it indicates their stock is undervalued. When they all start doing it, it indicates the market is undervalued.

Perhaps in a normal market where interest rates are not manipulated lower artificially. The low interest rates creates a distortion whereby the companies are encouraged to speculate on their own shares

Stocks are undervalued because companies expect a good economic rebound, pushing the value of their stocks even higher. Apple is the best example, a pathetically low stock price compared to its potential.

smaulgld says

Stock buybacks are a sign that the company does not have more productive uses of its cash

If all companies collectively decide to keep all cash they earn and not invest, then there is no productive use for it for the simple reason that the rest of the economy is starved.

If they return cash to shareholders, and the cash returns in the economy, as spending or investment, then productive use will appear.

Heraclitusstudent says

I have 2 questions for you:

- Who do companies buy the shares from?

- What do these people selling the shares do with the money?

I think you'll find it is likely to reenter the economy.

Unless they plan on tucking it under their mattress, it will reenter the economy.

Heraclitusstudent says

I have 2 questions for you:

- Who do companies buy the shares from?

- What do these people selling the shares do with the money?

I think you'll find it is likely to reenter the economy.

Whether or not it makes the stock rise faster than actual company growth is irrelevant.

The companies buy the shares from existing shareholders many of whom are institutional holders who can sell large blocks to the companies buying back their shares.

Institutional investors selling their shares buy other shares as they roll over their profits-a lot of it stays in the stock market

It is relevant if the stock rises faster than the performance of the company as it indicates the stock price is over valued and artificially so because it does not reflect the performance.

Strategist says

Unless they plan on tucking it under their mattress, it will reenter the economy.

or reinvesting it in the casino, I mean stock market.

smaulgld says

Strategist says

Unless they plan on tucking it under their mattress, it will reenter the economy.

or reinvesting it in the casino, I mean stock market.

Ha ha.
In a casino the odds are against you. In the stock market the odds are with you.
In 1950 the S&P was 19 points. Today 1900+.
Stocks and real estate are the best investments anyone can ever make.

smaulgld says

It is relevant if the stock rises faster than the performance of the company as it indicates the stock price is over valued and artificially so because it does not reflect the performance.

No. The value of shares is dependent on their number. Less of them means they are more valuable. Just because they are worth more, doesn't mean shares are overvalued. This has nothing to do with performance.

smaulgld says

Institutional investors selling their shares buy other shares

From whom do they buy these other shares?

Heraclitusstudent says

If all companies collectively decide to keep all cash they earn and not invest, then there is no productive use for it for the simple reason that the rest of the economy is starved.

If they return cash to shareholders, and the cash returns in the economy, as spending or investment, then productive use will appear.

That is all true. I am objecting to the ineffectiveness of the QE program that doesn't change the underlying fundamentals of the market that the companies are working in (as you mention the rest of the economy is starved) and only serves to juice the stock price by encouraging share buy backs.
Yes, some of the money ends up back in the economy but most of it stays in the stock market and in concentrated hands.

Heraclitusstudent says

Institutional investors selling their shares buy other shares

From whom do they buy these other shares?

other institutional shareholders- or actually high frequency bots run by institutional shareholders

Heraclitusstudent says

No. The value of shares is dependent on their number. Less of them means they are more valuable. Just because they are worth more, doesn't mean shares are overvalued. This has nothing to do with performance.

right the value of the shares is dependent on their number- fewer makes them worth more per share.

But that does make them overvalued as the earnings per share (one method of valuing shares) is artificially boosted by the removal of a certain amount of shares via the company buying back their shares and driving the price higher even though the company didn't earn more nominal dollars, but rather had more earnings per (reduced number) of shares.

hat Happens when The Fed and China Stop Buying U.S. Treasuries?

Presumably interest rates go up...

smaulgld says

From whom do they buy these other shares?

other institutional shareholders- or actually high frequency bots run by institutional shareholders

Yes but at any given time, there a fixed amount of shares on the market. If someone buys them from cash, at the other end of the "buy from" chain there is someone selling and not buying.

- either with an investor taking money out of the market to finance whatever they are doing
- or maybe with an IPO, or a company selling new shares to raise cash. Meaning this is an investment in a new company, i.e. in the economy.

Heraclitusstudent says

I am objecting to the ineffectiveness of the QE program that doesn't change the underlying fundamentals of the market that the companies are working in (as you mention the rest of the economy is starved) and only serves to juice the stock price by encouraging share buy backs.

Yes, some of the money ends up back in the economy but most of it stays in the stock market and in concentrated hands.

All true, again as I wrote above
"I am objecting to the ineffectiveness of the QE program that doesn't change the underlying fundamentals of the market that the companies are working in (as you mention the rest of the economy is starved) and only serves to juice the stock price by encouraging share buy backs.
Yes, some of the money ends up back in the economy but most of it stays in the stock market and in concentrated hands."

smaulgld says

Yes, some of the money ends up back in the economy but most of it stays in the stock market and in concentrated hands."

On that front, share buyback are a step in the right direction. Like people buying home cash. This is part of the healing process. The new cash is used to plug old holes.

Heraclitusstudent says

This is part of the healing process

arguably there are better ways for the economy to heal than for the Fed to print $4 trillion to lower interest rates so companies can buy back their shares to boost the stock market

The Fed will never stop buying. If they run out of space in their SQL tables (digital money), making them bigger is not a problem. I've done it a number of time professionally. And I'm not even a DBA!

jvolstad says

The Fed will never stop buying.

Print until they can print no more

What do you fellers think of this possibility?

/?p=1243305