The Federal Reserve is trying to stimulate the economy by buying billions of dollars worth of bonds from banks. Senior Editor Paddy Hirsch explains how that's supposed to work.
@Michael First off the FED is a private banking system so they're trying to make money for the banks not consumers. Second the Republicans have control of the House of Representatives and have cut off all spending <unless you're an oil company, pharmaceutical company, or other lobbying group> so they won't approve any stimulus spending to consumers. Republican's would rather see a double dip recession than see Obama get credit for pulling Bush's economy out of the toilet.
Mr. Paddy, I really love your way of simplefying alot of your meanings but, who is going to let the U.S. treasury know that there is a far better way of letting us "Joe Customers" spend the Govt's money and get bussinesses created and sprading the wealth all over the U.S. ; Give us the FREE,CHEAP,MONEY!!!We will spend and borrow,spend and borrow. Get the Picture!
Thank you for this wonderful resource.
I am oftrn so confused about the rationale supporting various economic strategies - how refreshing to receive explantions that are not framed in political justifications!
So, every month another european country have some king of a crisis. Greece, Ireland,spain,... .
My question is how is that crisis triggered what do investors do that triggers those crisis,... how do they short those countries ??
Can you please do one of your excellent pod-casts explaining how the shorting happen to those countries...
Please disregard my suggestion -- I just found your previous video on HFT and flash trading.
Your exposition is clear, concise, and much appreciated.
In the near future, could you please explain the competitive advantages of high speed over low speed trades? In particular who is allowed high speed access and why? Is it multi-tiered?
brilliant in its simplicity.
Greg Weldon (see article below-posted on John Mauldin's blog) presents evidence that the Fed IS NOT WALKING THE WALK (i.e. buying lots of treasuries from banks) but simply TALKING THE TALK.
See charts of Treasuries in custody of the Fed versus Treasuries of foreign official accounts. Seem that there is a huge gap and that only very recently the Fed has very "slightly" increased their holdings.
So, if this is true all the rally in the bond market is "front-running" attempt of the market ....before the Fed actually acts.
My confusion here is that, from what I know, the banks are borrowing free money from the Fed which they use to buy treasury bonds and then the Fed turns around and buys them back again to stimulate lending. Sounds like the Fed is just padding the banks capital reserves with free cash. To top it off, we now talk about forcing them to hold more capital against their liabilities.
Listen, the last thing I want to do is to be any further in debt. I'm looking at cutting all corners that I can. My god, I spend 20 minutes to argue with my service providers over $5 in billing errors.
How about this. Instead of giving banks more free money to lend to people that don't even want to borrow it, why don't you just give us the cash and we'll promise to buy something nice? I'll even show the IRS my receipt.
There is one another dimension here. The US shoe company is manufacturing in China. If at all it does borrow to expand production, it will create jobs in China, not US. Thanks to globalization and free trade policy.
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