the fed is not printing money?

[gooseman]

check out t-notes this morning. qe2-what was that again?

 

[Rhody Trader]

check out t-notes this morning. qe2-what was that again?

Ummm...Did you notice how they went from circa 4% to round about 2.4% in anticipation of QE2?

This "it didn't work" response that is coming from so many places is driving me nuts. The 10yr is still well off it's mid-year highs and the Dollar Index is only trading at about 80 after dropping from above 88 to below 76 in anticipation of the Fed move. I'm not saying I necessarily agree with QE2, but if Bernanke was after lower rates and a weaker dollar, he got them.

 

[meanreversion]

Whilst it's easy to say "it's a Ponzi scheme" or "QE hasn't worked", we can't know what life would be like right now without QE, it might possibly have been much worse.

However, what about the alternative angle.. is it possible that QE is self-defeating because it sends out the wrong message? If people now start to think QE3 is around the corner, will it encourage speculators to chase commodity prices higher, and dis-incline banks from lending?

In addition, QE may keep assist to lower long term rates, but how is this benefiting the individual investor? Mortgage and small business funding is now excessively hard to obtain, and it comes at a spread to base which is significantly higher than in the past. If the central banks really wanted to give the consumer a push, why not directly credit their bank accounts? In my mind, the banks have been the main beneficiaries of QE so far, without the real driver (the consumer) properly benefiting.

 

[Martinghoul]

All valid arguments raised by a variety of people, including other Fed guv'nors (e.g. Bullard and Kocherlakota).

 

[SanMiguel]

So, what happens when the banks start lending again?
That's increase in money supply AND the Fed printed all the money beforehand?

 

[scose-no-doubt]

Ummm...Did you notice how they went from circa 4% to round about 2.4% in anticipation of QE2?

This "it didn't work" response that is coming from so many places is driving me nuts. The 10yr is still well off it's mid-year highs and the Dollar Index is only trading at about 80 after dropping from above 88 to below 76 in anticipation of the Fed move. I'm not saying I necessarily agree with QE2, but if Bernanke was after lower rates and a weaker dollar, he got them.

Hmmm. Never though of it that way. Maybe this is the first phase rather than a magic bullet

 

[meanreversion]

So, what happens when the banks start lending again?
That's increase in money supply AND the Fed printed all the money beforehand?

Another bubble boom. Followed by the usual "this time it's different" remarks.

 

[scose-no-doubt]

So, what happens when the banks start lending again?
That's increase in money supply AND the Fed printed all the money beforehand?

When the bonds mature the fed may contract the money supply by the amount.

What would happen if the fed waived the principal?

 

[Martinghoul]

As the Fed's been sayin' (and I, for one, believe them in this), withdrawing liquidity isn't gonna be an issue, in terms of the tools and the methods. What lots of people question is the will to do it, but that's a bit unfair.

 

[gooseman]

Ummm...Did you notice how they went from circa 4% to round about 2.4% in anticipation of QE2?

This "it didn't work" response that is coming from so many places is driving me nuts. The 10yr is still well off it's mid-year highs and the Dollar Index is only trading at about 80 after dropping from above 88 to below 76 in anticipation of the Fed move. I'm not saying I necessarily agree with QE2, but if Bernanke was after lower rates and a weaker dollar, he got them.

not saying it didn't work but after the hullabaloo of will they/won't they/how much/oh, only 600-is that all/so when's qe3 i find the moves quite interesting, especially the decoupling of the lockstep equity/bond moves and the recent flattening at the long end.

 

[Rhody Trader]

What would happen if the fed waived the principle?

In a manner of speaking they do. The Fed pays the Treasury the bulk of its profits each year.

 

[meanreversion]

In a manner of speaking they do. The Fed pays the Treasury the bulk of its profits each year.

Do you have some data for this? I've seen P/L reports for the BoE (that SLS was a real earner!) but not for the Fed.

If the bulk goes to the government, what about the rest?

 

[scose-no-doubt]

the recent flattening at the long end.

what do you think that suggests? When it comes to curves I'm tapped out on anything more complicated than superficial inflation outlook and rate hike expectation

 

[scose-no-doubt]

I beg you, post the Boe link MR

 

[Martinghoul]

Do you have some data for this? I've seen P/L reports for the BoE (that SLS was a real earner!) but not for the Fed.

If the bulk goes to the government, what about the rest?

It pays the costs of running the Fed. You can find the Fed's financial statements here: http://www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm

 

[meanreversion]

It pays the costs of running the Fed. You can find the Fed's financial statements here: http://www.federalreserve.gov/monetarypolicy/bst_fedfinancials.htm

$11 bio of gold, nice. I bet they wish they had sold at the same time as Gordon

 

[SanMiguel]

M2 supply increasing:
http://www.zerohedge.com/article/m2...the+survival+rate+for+everyone+drops+to+zero)

 

[Martinghoul]

what do you think that suggests? When it comes to curves I'm tapped out on anything more complicated than superficial inflation outlook and rate hike expectation

It suggests that the Dutch are in deep dooodooo, partially as a result of the recent EUR periph malarkey...

 

[scose-no-doubt]

I have no idea of what the hell kind of nth degree of separation logic lead you there...
Are you saying this is gonna be a "piranha attack" on the dutch/german spread or light demand?
Wtf does that have to do with flattening of the longer UST?
I'm missing the writing between the lines somewhere.
You think money is coming out of bonds :S ?
I hate this sh1t sometimes

 

[Martinghoul]

I thought you were referring to the flattening in EUR, hence my reference to the Dutch. As to the US it flattened recently, IMHO, simply because it steepened too much in the first place. We're still near the previous all-time highs in UST 10s30s.