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Fire up the presses
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 2012-09-13 2:11 PM |
Pro  4277    Parker, CO |  Subject: Fire up the pressesLooks like Benanke is throwing 40-billion a month indefinately thinking he can jump start this economy....forcing the hand for many to riskier investments. I don't think he gives a flip what he is doing the the value of the dollar. The market is rallying right now on the news...an artificial rally. This is not going to end well. Alot of smart people here on BT...what say you? http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120913&id=15552233
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| 2012-09-13 2:16 PM in reply to: #4409959 |
Champion 18680   Lost in the Luminiferous Aether | Subject: RE: Fire up the presses Let's not forget keeping rates near zero until mid 2015 some time. Really?!?! Thanks!! |
| 2012-09-13 2:26 PM in reply to: #4409959 |
Champion 34263 Chicago | Subject: RE: Fire up the presses The Fed is sticking to its guns. We won't know for another two years at least if it works. Sadly, I don't think this `spend at all costs' approach is going to solve much. Buying mortgage-backed securities isn't going to save us, in my opine. Keeping interest rates low to spur buying would be great if the banks didn't make it so difficult to borrow. I say let the tax increases and spending cuts at the end of the year go into effect. Increased income and less spending = less debt. We'll all suffer in the short term but maybe we'll come out better in the long run. |
| 2012-09-13 2:27 PM in reply to: #4409994 |
Member 5452 NC | Subject: RE: Fire up the presses mr2tony - 2012-09-13 3:26 PM Increased income and less spending = less debt. What is that some kind of voodoo economics?
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| 2012-09-13 2:29 PM in reply to: #4409959 |
Elite 4564 Boise | Subject: RE: Fire up the presses I think all of this money goes into the important stuff like physical assets. Oil, gold, food all should go up. |
| 2012-09-13 2:36 PM in reply to: #4409959 |
Champion 18680 Lost in the Luminiferous Aether | Subject: RE: Fire up the presses Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? |
| 2012-09-13 2:38 PM in reply to: #4410011 |
Pro 4277 Parker, CO | Subject: RE: Fire up the presses trinnas - 2012-09-13 1:36 PM Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? at least not until AFTER the election. |
| 2012-09-13 3:15 PM in reply to: #4410011 |
Champion 34263 Chicago | Subject: RE: Fire up the presses trinnas - 2012-09-13 2:36 PM Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. |
| 2012-09-13 3:16 PM in reply to: #4409959 |
Champion 7347 SRQ, FL | Subject: RE: Fire up the presses We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. |
| 2012-09-13 3:23 PM in reply to: #4410086 |
Champion 34263 Chicago | Subject: RE: Fire up the presses TriRSquared - 2012-09-13 3:16 PM We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. |
| 2012-09-13 3:24 PM in reply to: #4410086 |
Champion 34263 Chicago | Subject: RE: Fire up the presses DP. My first in a while. Dang you computer. DANG YOU! Edited by mr2tony 2012-09-13 3:27 PM |
| 2012-09-13 3:27 PM in reply to: #4410113 |
Champion 7347 SRQ, FL | Subject: RE: Fire up the presses mr2tony - 2012-09-13 4:24 PM TriRSquared - 2012-09-13 3:16 PM I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. Wait... what? Too much equity? They are just not making sense anymore. |
| 2012-09-13 3:30 PM in reply to: #4410083 |
Champion 18680 Lost in the Luminiferous Aether | Subject: RE: Fire up the presses mr2tony - 2012-09-13 4:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? Actually yes I do have some of my portfolio in bonds but not much right now. I do not think the transition will be as gradual as you seem to when it comes to the stock market. The price signals in bonds are being manipulated, yes I know that is part of the Fed's function but it is no longer doing so in any kind of reasonable fashion. The cost of borrowing money should not be held at 0 for year after year after year. At this point it is like trying to push a chain up a hill. With no where to go people are investing on the stock market regardless of company fundamentals because the bond price signals are lies and that is classic bubble. When all the stocks and sectors move in pretty much lock step it is not fundamentals driving the change.
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| 2012-09-13 3:31 PM in reply to: #4410125 |
Champion 18680 Lost in the Luminiferous Aether | Subject: RE: Fire up the presses TriRSquared - 2012-09-13 4:27 PM mr2tony - 2012-09-13 4:24 PM TriRSquared - 2012-09-13 3:16 PM I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. Wait... what? Too much equity? They are just not making sense anymore. They haven't been making much sense for a while now! |
| 2012-09-13 3:40 PM in reply to: #4410125 |
Champion 34263 Chicago | Subject: RE: Fire up the presses TriRSquared - 2012-09-13 3:27 PM mr2tony - 2012-09-13 4:24 PM TriRSquared - 2012-09-13 3:16 PM I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. Wait... what? Too much equity? They are just not making sense anymore. I am not even joking. The bank (JPMORGAN/CHASE) has a program where you can get a really low rate because I've A) never missed a payment and b) have decent credit and c) have good income. So I was ``pre-approved,'' went through the paperwork, paid the fees associated with the refi and then was told, after three months of back-and-forth (which was confusing because they said it was an open-and-shut case) that I didn't qualify because I had too much equity in my home. They said because of that they'd start the process over again using a different program. I told them to go fly a kite, in not so many words. Eventually they did refund my fees because it was their fault. |
| 2012-09-13 3:44 PM in reply to: #4410149 |
Elite 6387 | Subject: RE: Fire up the presses mr2tony - 2012-09-13 2:40 PM TriRSquared - 2012-09-13 3:27 PM I am not even joking. The bank (JPMORGAN/CHASE) has a program where you can get a really low rate because I've A) never missed a payment and b) have decent credit and c) have good income. So I was ``pre-approved,'' went through the paperwork, paid the fees associated with the refi and then was told, after three months of back-and-forth (which was confusing because they said it was an open-and-shut case) that I didn't qualify because I had too much equity in my home. They said because of that they'd start the process over again using a different program. I told them to go fly a kite, in not so many words. Eventually they did refund my fees because it was their fault. mr2tony - 2012-09-13 4:24 PM TriRSquared - 2012-09-13 3:16 PM I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. Wait... what? Too much equity? They are just not making sense anymore. Well then it isn't that you could not refi, it is that you could not refi under the program you were doing because you did not qualify for that refi program. We decided we are staying for a while and refi'ing. Waiting for pricing to get better. Hopefully I won't go through any hassles like that cause ya... that sucks. |
| 2012-09-13 3:48 PM in reply to: #4410086 |
Elite 6387 | Subject: RE: Fire up the presses TriRSquared - 2012-09-13 2:16 PM We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. That I don't get. I get they can't flood the market, but they have to cycle through the inventory to get through it and most understand it will take years. Having hardly any houses on the market is not helping the banks. The longer they sit, the less they get. So why there is such a low inventory level, that I don't get.... because they can still shed inventory with reasonable prices. The market was never that bad here. Yes there is bank owned inventory here, but it has stayed pretty stable. Prices didn't crash, but we still could not get what we needed out of our house inorder to buy up. so now we are staying put and going a different direction. Edited by powerman 2012-09-13 3:49 PM |
| 2012-09-13 4:08 PM in reply to: #4410157 |
Champion 34263 Chicago | Subject: RE: Fire up the presses powerman - 2012-09-13 3:44 PM mr2tony - 2012-09-13 2:40 PM TriRSquared - 2012-09-13 3:27 PM I am not even joking. The bank (JPMORGAN/CHASE) has a program where you can get a really low rate because I've A) never missed a payment and b) have decent credit and c) have good income. So I was ``pre-approved,'' went through the paperwork, paid the fees associated with the refi and then was told, after three months of back-and-forth (which was confusing because they said it was an open-and-shut case) that I didn't qualify because I had too much equity in my home. They said because of that they'd start the process over again using a different program. I told them to go fly a kite, in not so many words. Eventually they did refund my fees because it was their fault. mr2tony - 2012-09-13 4:24 PM TriRSquared - 2012-09-13 3:16 PM I couldn't get approved for a refi I wanted with the lowest interest rate because I have too much equity in my home. How's that even possible? The banks are being ridiculous and, as you said, not helping. We are trying to find a new house right now. The inventory is almost nill. Our agent is saying it's as tight as they have seen it in years. Which means higher selling prices. However I can throw a rock on any random road and hit a house that is empty due to foreclosure. The banks are just not letting them go on the market. If they did the prices would fall and people would start to move... Not to mention the banks are saying it'll take 4-6 weeks to get approved for a loan. My last loan (4-5 years ago) took 1 week. Really, THAT many more people are borrowing? I don't think so. The banks are not helping this right now. Wait... what? Too much equity? They are just not making sense anymore. Well then it isn't that you could not refi, it is that you could not refi under the program you were doing because you did not qualify for that refi program. We decided we are staying for a while and refi'ing. Waiting for pricing to get better. Hopefully I won't go through any hassles like that cause ya... that sucks. Yeah as I said I couldn't get approved for the program I wanted ... And yes it sucks. All that paperwork and time. What really irked me is that I was ``pre-approved'' for a program that I didn't qualify for and spent oodles of time and effort getting them documentation for no reason. I also don't understand why they'd leave the houses off the market. I figured after a foreclosure they'd just dump everything at the lowest prices, take the loss, write it off and move on. I guess it doesn't work that way anymore. |
| 2012-09-13 4:15 PM in reply to: #4410083 |
Pro 4277 Parker, CO | Subject: RE: Fire up the presses mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? Tony, I wish I had your optimism. Yes, there are smart people at the Fed...but we all know that smart people make dumb decisions. QE1 and QE2 have artifically inflated the market while putting the screws to seniors that have counted on their low-interest baring, yet safe investments. QE1 and QE3 did not do much to help the economy along (yes, some say things would have been worse without it). Now we have QE3...indefinately! 40 billion dollars a month...indefinately! I don't know that it's going to work. One thing I certainly do know is it's going to continue the decline of the dollar. Which I think we can all agree is not a good thing. Bernanke is going to go down in history as the Fed Chairman that destroyed the dollar! |
| 2012-09-13 4:20 PM in reply to: #4410222 |
Elite 4564 Boise | Subject: RE: Fire up the presses rayd - 2012-09-13 3:15 PM mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? Tony, I wish I had your optimism. Yes, there are smart people at the Fed...but we all know that smart people make dumb decisions. QE1 and QE2 have artifically inflated the market while putting the screws to seniors that have counted on their low-interest baring, yet safe investments. QE1 and QE3 did not do much to help the economy along (yes, some say things would have been worse without it). Now we have QE3...indefinately! 40 billion dollars a month...indefinately! I don't know that it's going to work. One thing I certainly do know is it's going to continue the decline of the dollar. Which I think we can all agree is not a good thing. Bernanke is going to go down in history as the Fed Chairman that destroyed the dollar! The only reason I disagree with you about the dollar is, what will replace the dollar? The Euro? |
| 2012-09-13 4:23 PM in reply to: #4410222 |
Champion 34263 Chicago | Subject: RE: Fire up the presses rayd - 2012-09-13 4:15 PM mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? Tony, I wish I had your optimism. Yes, there are smart people at the Fed...but we all know that smart people make dumb decisions. QE1 and QE2 have artifically inflated the market while putting the screws to seniors that have counted on their low-interest baring, yet safe investments. QE1 and QE3 did not do much to help the economy along (yes, some say things would have been worse without it). Now we have QE3...indefinately! 40 billion dollars a month...indefinately! I don't know that it's going to work. One thing I certainly do know is it's going to continue the decline of the dollar. Which I think we can all agree is not a good thing. Bernanke is going to go down in history as the Fed Chairman that destroyed the dollar! While we agree that buying mortgage-backed securities to the tune of $40b a month isn't a good idea, I fail to see your argument about the decline of the dollar. The dollar has been declining since July ... not exactly a cliff. It's still up 12 percent from bottoming out in 2008 and is at the same level nearly it was at the end of 2004. Now, of course it's down from a high in 1980 and is still at an historically low level but it's been in a range for the better part of the past decade. I think your description of the dollar as `destroyed' is a bit of a misnomer -- more likely the dollar is stuck in a range and is currently on the low side of the new normal. And really, a weaker dollar is a boon to the U.S. economy because it makes our manufactured items, raw materials and other exportable goods that are based on the greenback attractive to overseas buyers. Too weak a dollar is a bad thing, yes, but I'd hardly say Bernanke is destroying the dollar. |
| 2012-09-13 4:26 PM in reply to: #4410083 |
Elite 4564 Boise | Subject: RE: Fire up the presses mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst?
Bernanke pretty much admits he's trying to blow a stock/housing bubble today. QUESTION: My question is -- I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn't see how that had helped the economy.
So I think there's a fear that over time this has been a policy that's helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different -- differ from trickle-down economics, where you just pump money into the banks and hope that they lend?
BERNANKE: Well, we are -- this is a Main Street policy, because what we're about here is trying to get jobs going. We're trying to create more employment. We're trying to meet our maximum employment mandate, so that's the objective. Our tools involve -- I mean, the tools we have involve affecting financial asset prices, and that's -- those are the tools of monetary policy.
There are a number of different channels -- mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more -- more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.
Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason -- their house is worth more -- they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest. |
| 2012-09-13 4:35 PM in reply to: #4410243 |
Champion 34263 Chicago | Subject: RE: Fire up the presses JoshR - 2012-09-13 4:26 PM mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst?
Bernanke pretty much admits he's trying to blow a stock/housing bubble today. QUESTION: My question is -- I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn't see how that had helped the economy.
So I think there's a fear that over time this has been a policy that's helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different -- differ from trickle-down economics, where you just pump money into the banks and hope that they lend?
BERNANKE: Well, we are -- this is a Main Street policy, because what we're about here is trying to get jobs going. We're trying to create more employment. We're trying to meet our maximum employment mandate, so that's the objective. Our tools involve -- I mean, the tools we have involve affecting financial asset prices, and that's -- those are the tools of monetary policy.
There are a number of different channels -- mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more -- more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.
Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason -- their house is worth more -- they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest. Where? I don't see that. He's saying that he's trying to prop up housing prices and stock prices, which is what I said he had said long ago he was trying to do. I know Bernanke isn't the sharpest tool in the shed but he's not stupid. He's not TRYING to create a so-called bubble and has the sense to at least not admit it if he were. It is not a conspiracy that he wants home prices to rise and people to invest in stocks to boost 401K values, thereby increasing personal net-value -- that's actually quite the point of quantitative easing. |
| 2012-09-13 4:36 PM in reply to: #4410238 |
Pro 4277 Parker, CO | Subject: RE: Fire up the presses mr2tony - 2012-09-13 3:23 PM rayd - 2012-09-13 4:15 PM While we agree that buying mortgage-backed securities to the tune of $40b a month isn't a good idea, I fail to see your argument about the decline of the dollar. The dollar has been declining since July ... not exactly a cliff. It's still up 12 percent from bottoming out in 2008 and is at the same level nearly it was at the end of 2004. Now, of course it's down from a high in 1980 and is still at an historically low level but it's been in a range for the better part of the past decade. I think your description of the dollar as `destroyed' is a bit of a misnomer -- more likely the dollar is stuck in a range and is currently on the low side of the new normal. And really, a weaker dollar is a boon to the U.S. economy because it makes our manufactured items, raw materials and other exportable goods that are based on the greenback attractive to overseas buyers. Too weak a dollar is a bad thing, yes, but I'd hardly say Bernanke is destroying the dollar. mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst? Tony, I wish I had your optimism. Yes, there are smart people at the Fed...but we all know that smart people make dumb decisions. QE1 and QE2 have artifically inflated the market while putting the screws to seniors that have counted on their low-interest baring, yet safe investments. QE1 and QE3 did not do much to help the economy along (yes, some say things would have been worse without it). Now we have QE3...indefinately! 40 billion dollars a month...indefinately! I don't know that it's going to work. One thing I certainly do know is it's going to continue the decline of the dollar. Which I think we can all agree is not a good thing. Bernanke is going to go down in history as the Fed Chairman that destroyed the dollar! IMO, the primary reason that the dollar has held up as well it has over the last several years is because there is because of all the problems in europe and the euro. I don't see a decling dollar as a good thing...even if we export more...consumers are going to pay more for basic needs. who is going to hurt the most...the working class and the poor! Gold is over $1,700 an ounce. Why are do so many investors and governments continue buying gold? |
| 2012-09-13 4:44 PM in reply to: #4410258 |
Elite 4564 Boise | Subject: RE: Fire up the presses mr2tony - 2012-09-13 3:35 PM JoshR - 2012-09-13 4:26 PM Where? I don't see that. He's saying that he's trying to prop up housing prices and stock prices, which is what I said he had said long ago he was trying to do. I know Bernanke isn't the sharpest tool in the shed but he's not stupid. He's not TRYING to create a so-called bubble and has the sense to at least not admit it if he were. It is not a conspiracy that he wants home prices to rise and people to invest in stocks to boost 401K values, thereby increasing personal net-value -- that's actually quite the point of quantitative easing. mr2tony - 2012-09-13 2:15 PM trinnas - 2012-09-13 2:36 PM To which stock bubble are you referring? Yes investing in bonds right now is a guaranteed income but it's also low return. That was done intentionally to get people to invest in the stock market, and it's working. When the Fed decides to raise interest rates, do you think they're going to do it all at once, from zero to 3 percent or something? No. They'll increase it a tick at a time, 0.25 percent a year or every two quarters or something like that. People will slowly make that transition back into bonds as interest rates rise. If there is a stock bubble, which I personally don't think there is, I feel the powers-who-be will be smart enough to deflate it slowly so it doesn't burst. Furthermore, it's not like the tech or housing bubbles -- investments are spread across enough sectors that people won't jump ship because of the same fundamental factors like they did in the late 90s or in 2006/2007. Unfortunately even if you don't like the tune as long as the piper is playing every one must dance or lose. Any predictions when the "stock bubble" the fed is inflating is going to burst?
Bernanke pretty much admits he's trying to blow a stock/housing bubble today. QUESTION: My question is -- I want to go back to the transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn't see how that had helped the economy.
So I think there's a fear that over time this has been a policy that's helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different -- differ from trickle-down economics, where you just pump money into the banks and hope that they lend?
BERNANKE: Well, we are -- this is a Main Street policy, because what we're about here is trying to get jobs going. We're trying to create more employment. We're trying to meet our maximum employment mandate, so that's the objective. Our tools involve -- I mean, the tools we have involve affecting financial asset prices, and that's -- those are the tools of monetary policy.
There are a number of different channels -- mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more -- more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.
Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason -- their house is worth more -- they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest. Artificially propping anything up is a bubble. It is not supported by growth or anything else, just fed printing. It has to come back down sooner or later. |
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