[CNBC] S&P contacts White House to notify about a downgrade coming

If the government manages their debt rollovers properly, they have a chance to improve the budget situation a bit simply by cutting interest levels for all their expiring debt.

 

I'm not a big fan of QE, but---

yeah, let's set the rates high, and fight inflation with crippling unemployment.

OH, while we're at it, let's destroy EPA regulations (???) and disband the SEC! The two are features A and B in regulatory capture, but er, externalities don't exist, and certainly long-term thinking is for losers.

Regulatory overwork will contribute to the death of all.

Surely private enterprise must be allowed to do whatever they wish.They're so smart! they pay themselves millions to think up credit-default swaps and asset bubbles, just for example! They will also flee at first sight, and have NO notion of responsibility of paying back the gifts they have been given.

To threaten them with taxes? to even tarnish them with dirty accusations? PERISH THE THOUGHT

 

I know what he said, its actually pretty amusing he can hold a straight face while saying that. So helicopter ben, where did the money come from when you bought all the treasures from the primary dealers? Yeah you didn't physically print the money, but you are sure turning a lot debt into real money electronically.

 

to be fair, quoting HeliBen on this isn't really the most unbiased source.

QE is, for all intents and purposes, printing money. You can hide it in semantics, but the basic idea is there.

http://krugman.blogs.nytimes.com/2009/03/20/fiscal-aspects-of-quantitative-easing-wonkish/

-The Krugs

 

do these freaks have no shame?

Boehner Claims S&P Downgrade Happened Because Democrats Blocked The GOP’s Attempt To Eliminate Medicare

 

So he's not actually printing money.

Is he increasing the money supply?

 

I may get dizzy from the GOP spin. It makes you wonder if any of them know anyone on Medicare. I know several folks on Medicare, and they have no interest whatsoever in the Republican "plan."

 

I would love to see the GOP explain to seniors why it's good for the country to eliminate Medicare

 

No he is not PHYSICALLY printing paper money, but he did print lots of money electronically, not a hard concept to understand.

And yes he did increase money supply.

 

No, he didn't, because monetary base =/ money supply.

They are two different things.

You really ought to stop using Paul-tard terms like "fed is printing money!" when you mean "expanding its balance sheet" because I get the feeling that most people who say "printing money" actually believe that that's what happening.

 

Now you are pulling semantics, monetary base is one of ways to measure money supply, are you saying Fed increased monetary base but kept the money supply constant?

Simple question, if the Feb bought 1 trillion dollar worth of us treasuries on the secondary market, putting 1 trillion into the system. Where did that trillion dollar come from?

 

Sam is actually correct that technically we don't print money, we simply borrow it via bonds. But this is actually much worse than if we would just print the money out of thin air b/c in this case we must actually pay out interest on the borrowed money >>>> pure lunacy.

 

Borrowing and printing money are two different things done by two systems.

Borrowing is done by the Treasury through auction of government debt on the primary market to the dealers. Printing money in this case is done by the Fed through expanding of its balance sheet, specifically buying US treasuries on the secondary market.

We were doing both.

 

But they also took 1 trillion in liquid assets out of the system.

 

The interest was already being paid out - the Fed isn't issuing bonds. It's buying bonds. So instead of paying interest out to the general public, the government just pays that interest to the Fed.

 

monetary base is exactly a part of the money supply
I think you are confusing monetary base with what is booked in the Fed accounts, even though it is not measured in M2 it is still a debt obligation and an increase in money supply.

 

correct

 

Monetary base is to money supply as to saying the score after the first quarter of a game is the same as the final score, and it's "pulling semantics" otherwise.

Where did the trillion dollars worth of treasuries go?

 

Technically no, the Fed is bound by law to return all "profits" to the Treasury, so theoretically, all interest payments simply flow back.

where it gets tricky is the fact that the Fed loses money on things like QE...by stimulating long-term interest rates, the valuation of the holdings they must acquire to do so goes down. Also, the Fed always take a small slice of the profits. However, in 2010, the Fed recorded a pretty hefty profit, and turned almost all of it over to Treasury.

http://www.reuters.com/article/2011/03/22/us-usa-fed-profits-idUSTRE72L6D320110322

 

A trillion asset at inflated price so the proceeds can be loaned out by the banks. Major, do you honestly believe adding a trillion to fed's balance sheet would have no impact on the money supply?