The Fed exceeded their mandate by outright purchasing corporate debt. It was a bailout that caused Wall Street to diverge from whatever Main Street was seeing. When things started to open up, the Fed should've started unwinding that extraordinary act then (along with QT to unravel 2020 QE) but instead let the markets rip while everyone and the Governors included profited with inside trades. It's all ugly and messy entanglements that override whatever recent rationale they made to do the Extraordinary Circumstance. QE was supposed to be a last resort policy rather than a ratchet for parking troubled assets. This recent loss is much like AIG guaranteeing credit default swaps making pennies to the dollar. They make hundreds of billions with good years and prop up investments of all forms while generating collateral. All that profit is washed away with times like these and the gains they propped up in 2020 are mostly gone with the Fed holding the bag for the trash assets. Ironically, it makes them want to revert back to ultralow interest rates to get Congress off their backs because they were used to the 100B paychecks... Which then promotes another viscous cycle of Moral Hazard as everyone and their connected cousin wants an inside trade on the next asset pump. So no, it's not smoking cigarette man fixing markets, but rather short term minded policy makers who care more about their annual returns than the responsibility of creating a stronger and more resilient economy. That's where the credibility of the Fed dims as we're not reaching for the best but rather the most convenient or the most Recommended. The thing about bailouts and moral hazard is that they're not a one off thing. So you see idiot low performing executives trust falling into government hands while pumping loans to do stock buybacks. These same shitbags who virtue signal about Liberty, zero regs, and small governments are the first in line for Big Government Paychecks. So you have an AIG event where they cosign risk that should never have been cosigned (pricing known unknown risk with the chance of eating 100x fat tailed unknown unknown events), until one day they all say "Whoops... I did it again." Ofc we then plead and rationalize the bailout as saving jerbs because this is now a hostage situation. Do we lose 1000 white collar jerbs outright or bleed half that over five years because the corporation is a zombie that dies in the heat of high interest sunlight? CEOs got b*stard children to send to private college, so consolidation waves and wage controls are always the best way to do that while using revenue to service a mostly unserviceable debt. These Good Ol Boys are making their companies act more and more like broken gambling addicts panhandling for money or selling their kids PlayStation for the next big score. Or do we let it all burn so that there can be an unwind and an end to risky bet taking? This **** is snowballing. Covid covered up a recession that should've happened without it. Bill will come due at some point.
there is NO mandate on how much Corporate debt the Fed can purchase i .' i wish that you'd force-fitting a square into a circle. don't think that you understand what a credit default swap is.
I'm sure the Fed would argue that it didn't exceed their mandate of price stability and maximum sustainable employment. The economy is affected by monetary policy (Fed) and fiscal policy (Congress) as it's like yin and yang. QE doesn't happen in a vacuum and the bigger problem was not having the appropriate fiscal policy to go along with QE. Instead of doing smart things like the Infrastructure Bill or Build Back Better-esque back in 2008, we opted for healthcare (Dems) and dumb f*ck austerity (GOP). From my perspective we did too little in 2007/2009 and too much in 2020/2021.
I love your forest for the trees tit-for-tats, so I'll cut this short. It was a bailout that bypassed Congress that they later papered up in coordination with the Treasury. You could whine that TARP-took-too-long!!, but that's their mandate. This example is a matter of convenience and a pandora's box of sorts... If you don't know why this is different than their previous QE policies, then you should probably read a little deeper on what the Fed can and can't do. The goals are different, but the outcomes are still the same. AIG had a AAA rating that gave them credibility to insure CDS because their credibility was treated one level lower than Treasuries. That machine spiraled out of control when the market adjusted to another form of pristine collateral and took them as an insurer for granted. The Fed parking trillions in assets through QE for what's going to be 2 decades has made markets adjust around it. Switching off to QE with trillions on hand won't be easy, and the Fed will back pedal. This will happen until the machine spirals to the point where the Fed can't control it. Because it's the easiest low-pain short-term course.
I agree that these situations are different and it's plenty easy to armchair. I just don't have any confidence with the Fed right now and that's probably one level higher than I have with Congress or the Executive.
I hear ya. The Fed is less transparent and less accountable so it will always be viewed a certain way while much people just expect Congress to be incompetent.
you know that the Fed has to do w the monetary policies and you post refers to the fiscal (Congress, TARP, bail out, etc.) actions . policies, no? seems to me that UR confusing the Feds monetary policies w the fiscal actions/policies that outside the province of the Fed.
That dude on the right is such a jacka.ss , he could care less about the hapless common folk struggling to make ends meet. Kudos to CNN for asking the question at least
Wow... so steeped in bullshit, I think he actually believes it. "Humbling Russia" or "Letting the Ukranians Decide" are fluffy and hazy goalposts when the public mostly knows that 1) Russians are there to stay...possibly for years, and 2) Ukranians don't decide **** insofar as US, through the West, backing them up. Decisions...decisions...
Oh for sure, the whole ****ing system is broken. I think that's one of the few things everyone can agree in. We have socialism for the rich and cut-throat free market capitalism for the poor.
I believe you are surely kidding about trusting the process. The people who pulling the strings on the process are, at a minimum, experts at causing massive unanticipated collateral damage and ruining the lives of many hundreds of millions of people, not only by by financial devastation they have caused, but by the strife they have sewn and the violence that has occurred related to that, to huge mental health problems that their mishandling of the coronavirus caused, and of course the incalculably large educational debacle that this mishandling caused, disproportionately for lower income and working class people. The Liberal World Order - world domination of all humanity by the North Atlantic globalist elites - is they greatest geopolitical adversary to our nation on earth, and to humanity as well. Whatever enemies we may think we have, we all need to stop pointing our weapons at each other and all turn as one to take down these monsters.
the video went viral today . . . not sure that's a good thing Video of Biden Adviser Defending 'Liberal World Order' Viewed Over 1M Times https://www.newsweek.com/video-bide...eral-world-order-viewed-over-1m-times-1721022
Do you believe that if the Ukrainians said we want a peace treaty with Russia the US would force them to keep fighting?
