ELECTION MANIPULATION: Fed will print excess money, buy up $billions in mortgages

[Little-Acorn]

Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates - US Business News - CNBC

Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates
Published: Thursday, 13 Sep 2012 | 12:56 PM ET

by: Jeff Cox
CNBC.com Senior Writer

The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.

The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.

Enacting the third leg of quantitative easing will take the Fed's money creation past the $3 trillion level since it began the process in 2008.

"The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Open Market Committee said in a statement.TRANSLATION: At least, not in time for the November elections. So we must do something NOW.


In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. In other words, the Obama administration will throw away any chance of locking in the present super-low interest rates by selling long-term securities, and try to temporarily lower the amount we pay in interest on the $16 TRILLION National Debt to look good for the next few months only, until the votes are cast and counted. Who cares what happens after that?

BTW, remember the last time the Fed and its agencies, started buying up tons of mortgages?

Here's a hint: http://www.debatepolicy.com/showthread.php?36857-Dem-lie-of-the-month-quot-Republican-policies-caused-the-financial-crisis-we-re-in!-quot

Yes, this kind of huge buying, led directly to the economic crisis we've been in for the last four years.

Now they are going to do it again. "At least people will like us for a while... long enough to get their votes a few months from now."

GREAT plan.

[aboutime]

TRANSLATION: At least, not in time for the November elections. So we must do something NOW.

In other words, the Obama administration will throw away any chance of locking in the present super-low interest rates by selling long-term securities, and try to temporarily lower the amount we pay in interest on the $16 TRILLION National Debt to look good for the next few months only, until the votes are cast and counted. Who cares what happens after that?

BTW, remember the last time the Fed and its agencies, started buying up tons of mortgages?

Here's a hint: http://www.debatepolicy.com/showthread.php?36857-Dem-lie-of-the-month-quot-Republican-policies-caused-the-financial-crisis-we-re-in!-quot

Yes, this kind of huge buying, led directly to the economic crisis we've been in for the last four years.

Now they are going to do it again. "At least people will like us for a while... long enough to get their votes a few months from now."

GREAT plan.



Of course. It sounds really good to those who are always looking for someone else to foot their bills, or ways to get out of being personally responsible for their own actions.
If Obama and Company manage to do this, in bribing Americans for their votes...again.
The best surprise the gullible, and perpetually stupid Americans who fall for this will be.
When, and if Obama remains in Office. And THOSE who voted him back in. Get those wonderful, friendly notices from the Obama IRS, telling them...all that FREE money, and stuff you THANKED Obama for....has now come due.
HAND IT OVER. Our money is all gone.

[Kathianne]

If I've read the news on this correctly, if Obama is re-elected the fed will continue to do this at $80b per month, forever! There is no chance that jobs are coming back under his ministrations.

[Kathianne]

If I've read the news on this correctly, if Obama is re-elected the fed will continue to do this at $80b per month, forever! There is no chance that jobs are coming back under his ministrations.

Got along too late to edit, that $80b should be only $40b per month!

[fj1200]

TRANSLATION: At least, not in time for the November elections. So we must do something NOW.

What does the Fed have to gain from getting BO elected?

[red states rule]

So the Obama folks are adding $40 Billion a month to the Obama Excess credit card (on top of the other insane spending)

How the hell is this going to "stimulate" the US economy? Will it lower gas prices? Will it create private sector jobs? Will it ensure people will be able to make their mortgage payments and not go into default and foreclosure?

The anser of course is NO

All it is designed to do is to make some undecided voters THINK this will help and all is really is doing is adding more debt on to our kids and great grandkids

With libs good intentions are more important then actual postive results from their policies and programs

[Kathianne]

What does the Fed have to gain from getting BO elected?

I don't know, but I'm thinking they are really, really in the tank to the 'investment class', those 'i% 'ers. The only aspect of the economy doing 'ok' has been the markets.

Then an alternative view is the FED really wants to be dismantled, as Ron Paul argues? Perhaps they need emergency psychotherapy?

[red states rule]

I don't know, but I'm thinking they are really, really in the tank to the 'investment class', those 'i% 'ers. The only aspect of the economy doing 'ok' has been the markets.

Then an alternative view is the FED really wants to be dismantled, as Ron Paul argues? Perhaps they need emergency psychotherapy?

How will this benefit the investment class Kat? Buying up nonproducing mortgages is not usually a good investment

Given the current Obama economy, taxpayers aill lose momey on thi s deal just as we have lsot money on the auto bailouts

I have always thought if you can find the same service in the Yellow Pages, the Federal government usually should not be offering the same service

[Kathianne]

How will this benefit the investment class Kat? Buying up nonproducing mortgages is not usually a good investment

Given the current Obama economy, taxpayers aill lose momey on thi s deal just as we have lsot money on the auto bailouts

I have always thought if you can find the same service in the Yellow Pages, the Federal government usually should not be offering the same service

Stock markets love QE, until it 'runs out.' This though? No deadline! Whoopee!

[red states rule]

Stock markets love QE, until it 'runs out.' This though? No deadline! Whoopee!

Ahh, just like when the junkie get his/her fix from the local drug dealer - and the US taxpayer is taking the hit in the wallet

Like one of my bumper stickers reads

Socialism is great until you run out of other peoples money to spend

[fj1200]

I don't know, but I'm thinking they are really, really in the tank to the 'investment class', those 'i% 'ers. The only aspect of the economy doing 'ok' has been the markets.

Then an alternative view is the FED really wants to be dismantled, as Ron Paul argues? Perhaps they need emergency psychotherapy?

Or they are attempting to meet their dual mandate, stable prices AND full employment, with the realization that Congress and POTUS are in no position to be able to stimulate the economy fiscally. Of course it will only work to inflate bubbles and is doomed to long term failure.

[Kathianne]

Or they are attempting to meet their dual mandate, stable prices AND full employment, with the realization that Congress and POTUS are in no position to be able to stimulate the economy fiscally. Of course it will only work to inflate bubbles and is doomed to long term failure.

yep, my point of this post to RSR's question of how it helps the 'investment class.' However I managed to post it on wrong thread:

Two for 1 on 'bubbles':

Stock markets
Deficits

[fj1200]

So the Obama folks are adding $40 Billion a month to the Obama Excess credit card (on top of the other insane spending)

That's not how it works.

[fj1200]

yep, my point of this post to RSR's question of how it helps the 'investment class.' However I managed to post it on wrong thread:

Two for 1 on 'bubbles':

Stock markets
Deficits

You could be right in how it helps them but "being in the tank" is a whole different standard.

But, it's not a deficit bubble. It's a money supply bubble or future inflation.

[Kathianne]

You could be right in how it helps them but "being in the tank" is a whole different standard.

But, it's not a deficit bubble. It's a money supply bubble or future inflation.

How does a 'money supply bubble' differ from 'future inflation?'

[fj1200]

How does a 'money supply bubble' differ from 'future inflation?'

There might be no difference but I think the Fed is hoping that they can soak up the excess when the economy starts moving and velocity (http://en.wikipedia.org/wiki/Velocity_of_money) picks up. Maturity of their bond purchases will also sterilize the stimulus if not renewed. Of course with mortgages that could be a long time.

[Kathianne]

There might be no difference but I think the Fed is hoping that they can soak up the excess when the economy starts moving and velocity (http://en.wikipedia.org/wiki/Velocity_of_money) picks up. Maturity of their bond purchases will also sterilize the stimulus if not renewed. Of course with mortgages that could be a long time.

Why would 'bond' prices not fall, when they are being loaded with mortgage debt?

[fj1200]

Why would 'bond' prices not fall, when they are being loaded with mortgage debt?

I'm not sure I understand your question. Bond prices will go up with the increased demand which will lower interest rates; Which I recall is their goal.

[Kathianne]

I'm not sure I understand your question. Bond prices will go up with the increased demand which will lower interest rates; Which I recall is their goal.

I put that wrong. How is the fed 'demand' on bonds going to help those not 'investing and then selling back to fed?' How is it 'going to get things moving in the right direction?' I'm not an economist, certainly not a brilliant one. I do have a problem with the logic of 'buying' something that isn't worth anything and assuming/hoping that magically it will right itself?

Again, my knowledge of the specifics and how they work is weak to non-existent. However, seems to remind me of the GM debacle, only worse. At least GM has a product.

[fj1200]

I put that wrong. How is the fed 'demand' on bonds going to help those not 'investing and then selling back to fed?' How is it 'going to get things moving in the right direction?' I'm not an economist, certainly not a brilliant one. I do have a problem with the logic of 'buying' something that isn't worth anything and assuming/hoping that magically it will right itself?

Again, my knowledge of the specifics and how they work is weak to non-existent. However, seems to remind me of the GM debacle, only worse. At least GM has a product.

They're buying bonds to try and lower interest rates and stimulate the housing sector, mortgage bonds are just the vehicle to accomplish the goal. Also, your assumption that what they're buying is worthless is incorrect IMO.

[red states rule]

They're buying bonds to try and lower interest rates and stimulate the housing sector, mortgage bonds are just the vehicle to accomplish the goal. Also, your assumption that what they're buying is worthless is incorrect IMO.


How can they lower interest rates when they are damn near ZERO?

Maybe this is another "stimulus" plan to keep US MInt workers busy and give a jolt to the Big Paper and Big Ink industries

[Kathianne]

Fj, I am willing to hear the arguments, but your opinion that they are worth 'something' I'd have to add, 'substantial' leads me to ask why you hold that opinion.

I readily admit to any level of expertise on this subject, but I do read:

http://www.talkingbiznews.com/2/covering-qe3/

Seems right here that the idea of a credit downgrade for US is warranted.

[fj1200]

How can they lower interest rates when they are damn near ZERO?

Maybe this is another "stimulus" plan to keep US MInt workers busy and give a jolt to the Big Paper and Big Ink industries

They're holding Fed Funds at near zero, mortgage rates are higher, you'd likely know better than I exactly where; ~4%ish? But I agree, it speaks to the pointlessness of the action and my belief that the Fed will try anything because ain't nothing coming out of Congress anytime soon unless Romney wins and can claim a mandate to follow through on his agenda.


Fj, I am willing to hear the arguments, but your opinion that they are worth 'something' I'd have to add, 'substantial' leads me to ask why you hold that opinion.

I readily admit to any level of expertise on this subject, but I do read:

http://www.talkingbiznews.com/2/covering-qe3/

Did I say anything that contradicts your link? And what leads you to believe that whatever they're buying "isn't worth anything"?


Seems right here that the idea of a credit downgrade for US is warranted.

Any pending downgrade is a different issue.

[Kathianne]

...



Did I say anything that contradicts your link? And what leads you to believe that whatever they're buying "isn't worth anything"?



Any pending downgrade is a different issue.

That inflation is under control, regarding your first response. Food and all goods transported requiring oil based power are rising. Of course food is rising faster, more factors than just transportation.

The QE3 was cited as a factor, regarding your 2nd point.

[aboutime]

This thread only serves to prove how intellectually starved anyone who supports Obama, or his policies really are.
Instead of taking the time needed to Investigate, and learn the actual truth...on their own, with their own minds. Most liberals who instantly, and devotedly follow Obama. Simply haven't got the courage to QUESTION his accuracy, or his policies because. AT THE END OF THAT LONG LIBERAL DAY OF LYING...They know that questioning, or doubting anything Obama says...is tantamount to being RACIST. No IF'S, AND'S or BUT'S.

If you disagree with, or prove Obama wrong with actual, honest, proven facts that can be substantiated, and have been documented. Then you are a RACIST, or TERRORIST in the eyes of the Obama, ACORN Administration.

[Kathianne]

I'm unaware of Fj or myself being liberal in today's meaning of the term. Perhaps you mean that we can disagree and perhaps even learn something without the use of name calling or other pejoratives?

[red states rule]

I'm unaware of Fj or myself being liberal in today's meaning of the term. Perhaps you mean that we can disagree and perhaps even learn something without the use of name calling or other pejoratives?

Anyone calling you a liberal Kat is smoking or drinking something

FU on the other hand - well I have no idea what his problem is. And I starting not to care

[Kathianne]

Anyone calling you a liberal Kat is smoking or drinking something

FU on the other hand - well I have no idea what his problem is. And I starting not to care

I think the 'FU' deal is a bit off, just my opinion. My guess is that he's frustrated in trying to converse and finding few that want to, other than 'nuke them', 'they are liars! nuke them', and cartoons.

Personally I don't have any issues with the steel cage or folks started vent threads.

It does become a bit disheartening though to post something timely and of import, to have the thread immediately derailed with self-assigned oracles.

I can't speak for Fj, but I've found it difficult to muster the interest to post as much for awhile.

[fj1200]

This thread only serves to prove how intellectually starved anyone who supports Obama, or his policies really are.

And who would that be?

[aboutime]

And who would that be?


A better question you might ask yourself would be..."Is he talking about me...again?"

[fj1200]

That inflation is under control, regarding your first response. Food and all goods transported requiring oil based power are rising. Of course food is rising faster, more factors than just transportation.

The QE3 was cited as a factor, regarding your 2nd point.

No sense in arguing too much more about "under control," we have had worse in our day.

Can you be more specific on that last part? I must have missed something.

[Kathianne]

No sense in arguing too much more about "under control," we have had worse in our day.

Can you be more specific on that last part? I must have missed something.

http://articles.marketwatch.com/2012-09-14/markets/33836819_1_downgrades-qe3-interest-rates


SAN FRANCISCO (MarketWatch) -- Egan-Jones Ratings Co. said Friday it downgraded its U.S. sovereign rating to AA- from AA on concerns that the Fed's new round of quantitative easing, or QE3, will hurt the U.S. economy. The ratings agency said the Fed's plan of buying $40 billion in mortgage-backed securities a month and keeping interest rates near zero does little to raise GDP, reduces the value of the dollar, and raises the price of commodities. "From 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%," Egan-Jones said in a note. "In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%."

[fj1200]

A better question you might ask yourself would be..."Is he talking about me...again?"

:facepalm99: Whatever dude.

[fj1200]

http://articles.marketwatch.com/2012-09-14/markets/33836819_1_downgrades-qe3-interest-rates

Gotcha. I think they stretched the link from the Fed's actions to the government's ability to pay its debts a little far though.

[Kathianne]

Gotcha. I think they stretched the link from the Fed's actions to the government's ability to pay its debts a little far though.

Fair enough to disagree, but that doesn't change the reading. I guess the proof will come with other credit services agreeing or holding. I doubt any will be upgrading. Do you think so?

[fj1200]

Fair enough to disagree, but that doesn't change the reading. I guess the proof will come with other credit services agreeing or holding. I doubt any will be upgrading. Do you think so?

:laugh: No chance. I guess I'm just leary of a second-tier rating agency being an outlier here. Have they always been ahead of the curve or are they trying to make some news? I just don't see QE3 as being the trigger for the downgrade.

[red states rule]

:laugh: No chance. I guess I'm just leary of a second-tier rating agency being an outlier here. Have they always been ahead of the curve or are they trying to make some news? I just don't see QE3 as being the trigger for the downgrade.

Well if you could tell us where the $40 billion per month will come from, and how it will not add to the debt, perhaps they will reverse their credit downgrade

[Kathianne]

:laugh: No chance. I guess I'm just leary of a second-tier rating agency being an outlier here. Have they always been ahead of the curve or are they trying to make some news? I just don't see QE3 as being the trigger for the downgrade.

Well crap. I was hoping in the absence of Toro, I might learn some econ tips from you. Dang.

[fj1200]

Well if you could tell us where the $40 billion per month will come from, and how it will not add to the debt, perhaps they will reverse their credit downgrade

psst, the Fed creates money supply.


Well crap. I was hoping in the absence of Toro, I might learn some econ tips from you. Dang.

Are you hatin' on me too? :)