FED buying 850 billion in bonds

Discussion in 'Off-topic' started by xls177, Nov 4, 2010.

  1. xls177

    xls177 Member

    570
    4
    18
    Looks like the fed reserve is buying at least 850 Billion in bonds by 2nd Qtr 2011.
    After promising the would not monetize the debt.

    Should we be worried that the dollar will lose more value?
    Estimate i heard was 20% loss of value of dollar
     
  2. EJR914

    EJR914 Cheezburger Operator

    44,830
    186
    63
    Yes, we should be very afraid about the value of the dollar.

    1.7 Trillion in monetized debt in and before 2008
    850 Billion more by 2Q 2011
    ________
    2.55 Trillion in monetized debt

    Yes that is a problem.

    To break it down, economist suggest this will devalue the dollar by 20%.

    If you have saved up for your retirement and you had $200,000 in your account. You now have $160,000 in your account, in actual buying power.

    Imagine if we woke up tomorrow and had a 20% tax added to your already crazy high income tax. That is exactly what it would be like.

    However, since its a hidden tax, there won't be a revolt tomorrow. You'll just notice that everything you buy is going to cost more because your dollars are going to by less.

    Watch this for a bit of an eye opener. Its Obama's good pal Billionaire George Soros. Watch what he says about the devaluation of the dollar.

    Watch at 3:25: http://www.youtube.com/watch?v=qu18lMrFvoc

    "An orderly decline of the dollar is actually desirable." -George Soros

    The U.S. Dollar is going to be like pesos if our government and the federal reserve keep this up.
     

  3. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    Well, since oil is imported, should you? You will be buying gas at pumps with dollars worth less . . . the price of oil is determined by imported oil prices.

    I am worried.

    This is the first time in history that the fed has taken on a policy of devaluing our currency, I think.
     
  4. Nullifier

    Nullifier Active Member

    4,414
    10
    38
    Look at it this way:

    Let's say you're not satisfied with your sex life at home, so you sleep around with 650 billion other women; all while telling you're wife she's still special and unique and that her "value has not been diminished in any way". Let me know how that works out for you.

    OF COURSE the dollar will lose value. Get ready for inflation, 'cuz here it comes.
     
  5. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    I think you have overstated the case. This devaluing is not necessarily against all goods and services, but against foreign currencies. Of course, since we import so much, the effect on pricing will still be great - without necessarily creating any jobs. The thinking is that a devalued dollar will make our exports look cheaper. Developing economies are screaming bloody murder, and we can expect China, which does not let its currency float, to be taking steps to counter the fed.
     
  6. Z33

    Z33 New Member

    383
    0
    0
    You should be very worried! look at gold, oil, wheat, copper, and other commodities just since the announcement yesterday... Gold was up 38 dollars and OZ (almost 3%) Oil topped 85 dollars a barrel. Wheat was up almost 2%. Copper was up better than 3% (almost 4.00 a lb)

    What does all this do to consumer goods? That's right sends them through the roof!

    On the bright side for those of you out there in debt this is great. It is easier to pay back debt with a weaker dollar and inflation. For people like myself and others who live with in there means and save, we get the big green weenie!

    I love this new system of socializing losses and privatizing profits. :screwy:
     
  7. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    Yeah, just as soon as all of those hugely inflated raises start rolling in . . . :righton:
     
  8. moga

    moga New Member

    5,194
    0
    0
    The Fed announces QE2 and it barely warrants a yawn from the majority of people. They don't know what it means and don't care to figure it out. Yet, when gas goes north of $4 a gallon in the six to nine month horizon and keeps going up, and people that are currently employed find themselves without a job so that their employer can better manage their energy expenses, those same people will be screaming bloody murder. The cruise ship is headed right for an iceberg at full speed but the guests barely register the danger because the band is still performing and the ambiance is blissful.

    The fact is there's been no buyers of our debt for a while, so the fed is using paper money to keep the government afloat. The same government that thinks it can pay for national medicine in a few years, mind you. Meanwhile, the Chinese are spending their dollar assets on durable goods as fast as they can while they're still able to buy anything of value. But after QE2, best believe that the fed won't be able to give T-bonds away. Unless, of course, they're to the UK or Japan, who along with us are also playing a shell game with their economy to mask that they're bankrupt. The writing is on the wall. The world economy is already decoupling from the US dollar. We're losing 500k jobs to China every year. The gap between the rich and poor in America is widening at an alarming rate, wiping out the middle class in its wake. If we can't borrow to cover our budget deficits, and the expenses can't be covered by taxes that fewer and fewer are contributing, how do we stay above water? Monopoly money. But that policy decision has very dire consequences. See Argentina 1999-2002, Zimbabwe 2003-2009, and Greece 2010-.

    We are in for a very rough ride ladies and gentlemen. Buckle up!
     
  9. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    Belshazzar, when he tasted the wine, commanded that the vessels of gold and of silver that Nebuchadnezzar his father had taken out of the temple in Jerusalem be brought, that the king and his lords, his wives, and his concubines might drink from them. Then they brought in the golden vessels that had been taken out of the temple, the house of God in Jerusalem, and the king and his lords, his wives, and his concubines drank from them. They drank wine and praised the gods of gold and silver, bronze, iron, wood, and stone.

    Immediately the fingers of a human hand appeared and wrote on the plaster of the wall of the king’s palace, opposite the lampstand. And the king saw the hand as it wrote. Then the king’s color changed, and his thoughts alarmed him; his limbs gave way, and his knees knocked together. The king called loudly to bring in the enchanters, the Chaldeans, and the astrologers. The king declared to the wise men of Babylon, "Whoever reads this writing, and shows me its interpretation, shall be clothed with purple and have a chain of gold around his neck and shall be the third ruler in the kingdom." Then all the king’s wise men came in, but they could not read the writing or make known to the king the interpretation. Then King Belshazzar was greatly alarmed, and his color changed, and his lords were perplexed.

    The queen, because of the words of the king and his lords, came into the banqueting hall, and the queen declared, "O king, live forever! Let not your thoughts alarm you or your color change. There is a man in your kingdom in whom is the spirit of the holy gods. In the days of your father, light and understanding and wisdom like the wisdom of the gods were found in him, and King Nebuchadnezzar, your father—your father the king— made him chief of the magicians, enchanters, Chaldeans, and astrologers, because an excellent spirit, knowledge, and understanding to interpret dreams, explain riddles, and solve problems were found in this Daniel, whom the king named Belteshazzar. Now let Daniel be called, and he will show the interpretation."

    Then Daniel was brought in before the king. The king answered and said to Daniel, "You are that Daniel, one of the exiles of Judah, whom the king my father brought from Judah. I have heard of you that the spirit of the gods is in you, and that light and understanding and excellent wisdom are found in you. Now the wise men, the enchanters, have been brought in before me to read this writing and make known to me its interpretation, but they could not show the interpretation of the matter. But I have heard that you can give interpretations and solve problems. Now if you can read the writing and make known to me its interpretation, you shall be clothed with purple and have a chain of gold around your neck and shall be the third ruler in the kingdom."

    Then Daniel answered and said before the king, "Let your gifts be for yourself, and give your rewards to another. Nevertheless, I will read the writing to the king and make known to him the interpretation. O king, the Most High God gave Nebuchadnezzar your father kingship and greatness and glory and majesty. And because of the greatness that he gave him, all peoples, nations, and languages trembled and feared before him. Whom he would, he killed, and whom he would, he kept alive; whom he would, he raised up, and whom he would, he humbled. But when his heart was lifted up and his spirit was hardened so that he dealt proudly, he was brought down from his kingly throne, and his glory was taken from him. He was driven from among the children of mankind, and his mind was made like that of a beast, and his dwelling was with the wild donkeys. He was fed grass like an ox, and his body was wet with the dew of heaven, until he knew that the Most High God rules the kingdom of mankind and sets over it whom he will. And you his son, Belshazzar, have not humbled your heart, though you knew all this, but you have lifted up yourself against the Lord of heaven. And the vessels of his house have been brought in before you, and you and your lords, your wives, and your concubines have drunk wine from them. And you have praised the gods of silver and gold, of bronze, iron, wood, and stone, which do not see or hear or know, but the God in whose hand is your breath, and whose are all your ways, you have not honored.

    "Then from his presence the hand was sent, and this writing was inscribed. And this is the writing that was inscribed: Mene, Mene, Tekel, and Parsin. This is the interpretation of the matter: Mene, God has numbered the days of your kingdom and brought it to an end; Tekel, you have been weighed in the balances and found wanting; Peres, your kingdom is divided and given to the Medes and Persians."

    Then Belshazzar gave the command, and Daniel was clothed with purple, a chain of gold was put around his neck, and a proclamation was made about him, that he should be the third ruler in the kingdom.

    That very night Belshazzar the Chaldean king was killed. And Darius the Mede received the kingdom, being about sixty-two years old.
     
  10. sirkut

    sirkut Member

    880
    0
    16
    Anyone noticed the jump in gas prices already? This is going to be an interesting ride.
     
  11. moga

    moga New Member

    5,194
    0
    0
    [​IMG]

    This chart maps the rise in oil after QE1 was announced. Every month that the fed purchased more bonds, the price of crude followed in lock step. We should expect it to happen again -- the chart shows that it has already begun.
     
  12. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    http://blogs.wsj.com/economics/2010/11/ ... -stimulus/
     
  13. fmlaw1

    fmlaw1 Active Member

    3,721
    0
    36
    Case in point.

    http://www.bloomberg.com/news/2010-11-0 ... rkets.html

    Oh, and if you reload, it may be a good time to buy stock up on raw materials (for all sorts of reasons), esp. lead.
     
  14. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
    http://sify.com/finance/emerging-market ... cajjh.html
     
  15. fmlaw1

    fmlaw1 Active Member

    3,721
    0
    36
    Sounds like a trade-war fought on many fronts.

    Interesting times.
     
  16. Malum Prohibitum

    Malum Prohibitum Moderator Staff Member

    67,025
    1,419
    113
  17. fmlaw1

    fmlaw1 Active Member

    3,721
    0
    36
    I am sure it did not tell you anything you did not already know, though it is bracing to see it in B&W.
     
  18. NTA

    NTA Well-Known Member

    7,226
    121
    63
    Most of the impact of the FED action has already been priced into ag and industrial commodities and gold.

    I believe oil has a ways to run and put money into Exxon Mobile stock a few weeks ago.

    Already up 10%. Time to put in some stop loss orders as this will not last more than a few months when things rebalance and the new politics take hold.

    The FED has to keep interest rates low in order to drive people into the stock and corp bond markets as they look for return. The interest rate on mid to long term US Bonds would have to rise a lot to get the feriners interested.

    We just print money and buy our own bonds now - that cuts out the new sucker money that a Ponzi scheme requires.
     
  19. moga

    moga New Member

    5,194
    0
    0
    "The Committee finally addressed the fourth question in the charge regarding the implications of a second round of quantitative easing. The member provided a presentation that considered market expectations of QE2 and its impact over the medium- and long-term horizons.

    The presenting member stated that the market expects the Federal Reserve to purchase $100 billion per month, as well as $30 billion per month in MBS reinvestments. This will total $1,560 billion in Treasury purchases over the next year. The member stated, however, that market participants believe the Fed will leave the status of QE2 open ended, with purchases ultimately dependent on economic conditions. The presenter also noted that the program should last six months to two years."

    http://www.ustreas.gov/press/releases/tg942.htm
     
  20. Teeter

    Teeter Active Member

    1,729
    13
    38
    I have two things on my desk I look at every morning:

    (1) My Pets.com sock puppet -

    [​IMG].

    He cost me a ton of money, and every morning he whispers to me: "You're not as smart as you think you are".

    (2) My 1862 Confederate $100 dollar bill - it reminds me how much intrinsic value paper money has.


    The way the Fed is going, pretty soon our beloved USD will look a lot like this -

    [​IMG]

    and we'll be making Argentina look like Switzerland . . . .