How much is $17 trillion? Visualized for reference.

[Tony_SS]

Originally Posted by parsonsj

Tony,

We probably agree a lot about the underlying mechanism of the housing bubble, but you can't put all of the bubble at the feet of interest rates that were too low, along with the moral hazard of too big to fail. You have to also acknowledge two other contributing factors:
1. The repeal of the Glass-Steagall act, and
2. The complete lack of regulation of credit-default swaps.

Neither of those significant contributing factors had anything to do with the Fed.

Yes, Wall Street caused our housing bubble, with the Fed supplying some of the cash. But better / more regulation of Wall Street is essential to keep it from happening again. You'd think they'd be a bit humbled after their performance leading up to 2008-2009, but they are fighting Dodd-Frank with everything they've got.

You need to read Krugman in context:

John I agree with your 1st point. No doubt that was a factor. The repeal opened the doors for abuse. But to your 2nd point, the SEC was supposed to regulate Bernie Madoff. The fact is they failed and/or covered for him in that regard. So we just can not rely on 'regulations' alone.

However, the fact still remains. The Fed is the great facilitator. Without them fixing the rates too low for too long, the sharks would have nothing to feed on. So, yes, the Fed gave Wall St the fuel to start that fire. And Wall St did have the cover too, making the Fed a huge moral hazard. These banks took risks and as an insider cartel members, they put their competition out of business and their losses on to the US govt/taxpayers.

We are talking about a private banking institution, who by law can create dollars out of thin air. All with NO oversight, rules or regulation. So would you agree that the regulation needs to be on the Fed?

To avoid this again, interest rates need to be a result of the free market, not fixed by a handful of special interests at the top of the pyramid.

And the whole Krugman article does not change much for me. Those are still his words and ideals.

[parsonsj]

Somebody overheard us:

http://money.cnn.com/2012/07/25/news....htm?hpt=hp_t3

Interesting stuff.

[parsonsj]

Originally Posted by Tony

We are talking about a private banking institution, who by law can create dollars out of thin air. All with NO oversight, rules or regulation.

That's not true. The Fed is run by a set of regional governors appointed by the President and confirmed by the Senate, with a clear mandate: manage inflation, and maintain full employment. There is a need to keep it from being directly managed by the government, because we don't want politicians managing our economy for political gain.

Creating dollars out of thin air has been the way of the US currency for a long long time, and it is a necessary tool for managing the economy. See Spain, Greece, and Italy as we've been discussing.

I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best in an unbelievably complex environment. Sometimes thing get missed and asset bubbles arise. Sometimes they get flattened in time (dot com), and sometimes they don't (housing).

I'm sure we aren't going to agree on this.

[Tony_SS]

Originally Posted by parsonsj

Somebody overheard us:

http://money.cnn.com/2012/07/25/news....htm?hpt=hp_t3

Interesting stuff.

This from the guy who lobbied to repeal Glass-Steagal. Yeah, it should be brought back, even after the damage has been done.

Originally Posted by parsonsj

That's not true. The Fed is run by a set of regional governors appointed by the President and confirmed by the Senate, with a clear mandate: manage inflation, and maintain full employment. There is a need to keep it from being directly managed by the government, because we don't want politicians managing our economy for political gain.

Creating dollars out of thin air has been the way of the US currency for a long long time, and it is a necessary tool for managing the economy. See Spain, Greece, and Italy as we've been discussing.

I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best in an unbelievably complex environment. Sometimes thing get missed and asset bubbles arise. Sometimes they get flattened in time (dot com), and sometimes they don't (housing).

I'm sure we aren't going to agree on this.

We agree on some things though.

As for the Fed chairmen, The president can only appoint from a pre-selected pool of people. Pre-selected by the heads of the Federal Reserve banks. The chairman is accountable only to the shareholders within the Fed system. An the regional directors are all chosen from within, outside of politics.

Let me ask this... What is more dangerous, a top down monetary policy controlled by a cartel or monopoly of private banking institutions, or a monetary policy that is transparent and accountable and reflects the will of the people?

John: I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best...

Well no one see's ANY conduct because the Fed isnt transparent or regulated in any shape or form! It's ironic that people want to regulate Wall St and banks, but not the Fed.... that is made up of banks. The Fed conducts policy completely outside of any oversight.

This is supposed to be our nation's currency, not the bank's currency, that is used for their gain, at our expense. John, I think you give these institutions far too much clout and trust. Even IF they are innocent, trust worthy principled little bankers, they still need to be transparent and held to certain laws to protect our economy.

But c'mon, you gotta get peeved when Goldman Sachs CEO Blankfien said "he's just a banker, doing God's work". My question is which God?

[Bucketlist2012]

Originally Posted by Tony_SS

This from the guy who lobbied to repeal Glass-Steagal. Yeah, it should be brought back, even after the damage has been done.




We agree on some things though.

As for the Fed chairmen, The president can only appoint from a pre-selected pool of people. Pre-selected by the heads of the Federal Reserve banks. The chairman is accountable only to the shareholders within the Fed system. An the regional directors are all chosen from within, outside of politics.

Let me ask this... What is more dangerous, a top down monetary policy controlled by a cartel or monopoly of private banking institutions, or a monetary policy that is transparent and accountable and reflects the will of the people?



Well no one see's ANY conduct because the Fed isnt transparent or regulated in any shape or form! It's ironic that people want to regulate Wall St and banks, but not the Fed.... that is made up of banks. The Fed conducts policy completely outside of any oversight.

This is supposed to be our nation's currency, not the bank's currency, that is used for their gain, at our expense. John, I think you give these institutions far too much clout and trust. Even IF they are innocent, trust worthy principled little bankers, they still need to be transparent and held to certain laws to protect our economy.

But c'mon, you gotta get peeved when Goldman Sachs CEO Blankfien said "he's just a banker, doing God's work". My question is which God?

Man, I agree with everything you wrote.

The House just passed a bill to audit the Feds, but as usually, Harry Reid will not bring it up for a vote, and he will put it on his desk with the other 33 Bills that he won't vote on..

[parsonsj]

We're coming up on 4 years since many economists claimed that fiscal stimulus and Federal Reserve quantitative easing were going to cause massive inflation and high Treasury bond yields.

So far they've uh, been a bit on the wrong side.

http://delong.typepad.com/sdj/2012/0...epartment.html

[GregWeld]

I disagree.....


#1 -- Tell me a bill that you pay today that isn't higher than it was last year.

#2 -- What's saving us from INFLATION is the Europe crisis.... companies don't have pricing power or stickiness

#3 -- What's really helping the inflation numbers is GASOLINE prices -- and they're down because GLOBAL demand is down... otherwise we'd be at $5 a gallon already.

[camcojb]

I don't know how anyone believes there is no inflation if they do their own shopping. I have a friend I support who I had to give a "raise" because of the increased food costs, and he can't make it on the same amount of money as he could a year or two ago. He knows all the prices of the food he buys, and it's climbed a lot, and/or the packaging has been reduced in size/weight and price stayed the same. It's undeniable.

[parsonsj]

Jody -- let's look at data:

http://ycharts.com/indicators/us_cor...ion_rate/chart

[Tony_SS]

John,

The Fed is PRO inflation as one of their mandates. And if you believe the "official" inflation numbers, I have a bridge to sell you. As for your last link: The "official" numbers does NOT include the cost of food or energy! So yeah, 'lies, damn lies and statistics' a man once said.