chad17 Wrote: ------------------------------------------------------- > my thoughts exactly. but in reality, banks are > going to have to borrow from the Fed to increase > the supply of money in the economy through loans, > aren’t they? so how’s the Fed going to respond to > this? print more dollars? take on more debt by > selling treasuries abroad? Lowering the Fed funds rate to 0 means that the Fed will provide unlimited liquidity in repo markets.
purealpha Wrote: ------------------------------------------------------- > comp_sci_kid Wrote: > -------------------------------------------------- > ----- > > I am already carrying US dollar like there is > no > > tommorow > > > > In my pockets that is > > Me too, how much do you carry around in your > pockets? I usually carry around $300, especially > fond of 100bills. I just like the feeling of > having cash, know you like, just in case or > whatever. I actually had to buy a bigger wallet > when I was in China because 21 of those big a$$ > 100RMB bills is a hefty mass. I have $42 in my wallet right now. I feel comfortable. There are 2137 ATM/sq. mile in Fairfield county. There are no ATM’s in China I trust.
What if the power drops like on the Day the Earth Stood Still, $42 is nothing man. There are tons of ATM’s in Shanghai but they are hit and miss…as far as actually having cash in them. You’ll see some guy making a half dozen transactions, he’s thrilled cause he finally found one with cash, and he’s getting as much as possible while he can.
Plenty of ATMs in China. I was on a long bus ride yesterday and finished of Paul Krugman’s “Return of Depression Economics.”. Man, he wrote that fast. I bought it in early December and it has references to events in late October. His main point is that monetary policy has for various reasons lost traction (mostly because the problem is centered on banking services that weren’t provided by regulated banks and therefore fed monetary policy doesn’t connect to the organizations that need it). Thus we are left with fiscal policy as our main hope to restart things. (it’s more complex than that, but that’s the gist of it). His hope (and mine) is that these measures can be implemented fast enough to avoid the Japanese fate, and although it’s likely to work, it’s not guaranteed. The reason it’s called the return of depression economics isn’t beacause we’re necessarily in for Great Depression II, but because economists had basically felt that they’d solved handling the business cycle with monetary policy and that fiscal stimulus and demand generation was no longer a major area for macroeconomic research. Now it will be again. The fed has shot all it’s traditional bullets, but there is still money gift possibilities from helicopters, and it’s possible that lowering reserve requirements along with some kind of federal insurance for the difference could keep expanding the money supply. Personally, I am for fiscal policy because it can be better targeted to the country’s long term development needs, but there are definite risks of crowding out effects.
bchadwick Wrote: ------------------------------------------------------- > Plenty of ATMs in China. > I don’t trust them. The sequence {Taiping Rebellion, Boxer Rebellion, Cultural Revolution, Tianamen Square, Joey using his ATM card in China} just doesn’t work for me.
TheAliMan Wrote: ------------------------------------------------------- > > Not only that, it’s supposed to increase > investment by companies. The Fed wants businesses > to take out cheap loans to fund expenditures and > spur growth. lol, growth from what? the consumer? who is underwater on his mortgage that he barely pays with his stagnant wage job that he’s about to lose? or the boomer who just had his wealth cut in half, 3 years from retirement? if i were these consumers, i would sell, sell, sell every rally and try to regain some of my money - which i would then sock away in treasuries and munis until i turn 90.
two things which is making me seriosly concerned: 1. Does the fed know something, we don’t know? they for sure don’t cut the rate to 0% without serious, serious, serious, serious,… concerns. 2. As they now also buy corporate loans, they don’t have any weapon left. If this doesn’t work now, than I hope, there’s really a god which will help us
> Lowering the Fed funds rate to 0 means that the Fed will provide unlimited liquidity in repo markets." Interesting thougt! I am not sure what would really happen if the FFR was set to zero (i.e., real zero, not 0-0.25% as they put it). The Fed wil try to increase bank reserves to the point where banks lend to each other at extremely low rates, but if the rate really drops to zero, I can’t see what would motivate banks to lend at that rate. Sure, the Fed can make it exteremely cheap to borrow by buying securities all day, but banks with excess reserves don’t have to lend at 0%.
You guys might find this interesting: http://www.dallasfed.org/research/indepth/2003/id0304.pdf The idea that the Fed could tax cash holdings or adding other type of securities to their allowed list are reallyinteresting. If they start taxing cash holding at banks, that would be a big incentive for them to start lending. Also if the Fed could start buying corporated bonds would defrost the credit markets. Both scenarios, however, are very unlikely.
This doesn’t really matter…Fed Funds have been trading
in japan, it seems it was impossible to make good loans for a decade or something, so the loan officers would make deposits at the competitor bank offering the highest deposit rate, and back, and forth, and back. that sounds like a job worth having.
JoeyDVivre Wrote: ------------------------------------------------------- > That’s it - Fed has definitely shot all their > bullets… Not yet. They can lend money directly to businesses.
JoeyDVivre Wrote: ------------------------------------------------------- > That’s it - Fed has definitely shot all their > bullets… are you kidding me, this is where the fun starts. the pistols and bullets have been shot. now we get to see the RPGs and bazookas. money money money. we want to be swimming in a sea of cash. a whole mugabillion of it. ben, there’s these 213 shares of the zzzbestco i still have - will ya, please?
The Asian market is not buying into the hype…
Well, you’re right, Ben can still, as announced, get into the helicopter and throw out money over the cities 
Well done, Helicopter Ben
“I was on a long bus ride yesterday and finished of Paul Krugman’s “Return of Depression Economics.”. Man, he wrote that fast.” Or he wrote the book in 2000 and just updated it recently with a new section about current events…
I can’t believe that I need to read that book. I dont want to read that book. Why can’t I just spend X-mas reading graphic novels?
rohufish Wrote: ------------------------------------------------------- > TheAliMan Wrote: > -------------------------------------------------- > ----- > > > > Not only that, it’s supposed to increase > > investment by companies. The Fed wants > businesses > > to take out cheap loans to fund expenditures > and > > spur growth. > > > lol, growth from what? > > the consumer? who is underwater on his mortgage > that he barely pays with his stagnant wage job > that he’s about to lose? or the boomer who just > had his wealth cut in half, 3 years from > retirement? if i were these consumers, i would > sell, sell, sell every rally and try to regain > some of my money - which i would then sock away in > treasuries and munis until i turn 90. yeah, wouldn’t shorting the market be the ultimate hedge should your job depend on it. stop buying, start diversifying.
not to mention that these poor unsophisticated folk will probably hold treasuries way too long, and get hit by that truck too in 2-3 years. its really sad, we have a duty really to help as many of these folk as we can.
From now on, saving is more or less like collecting dust… What’s the point to hoard the cash if the underlying currency is declining? Gov. stimulus tool is not stimulating the economy, it stifles. What the hell we follow Japan’s path?