Bernanke assaults the dollar

[The Indomitable DrugS]

Obama comes out two weeks ago and starts talking about what great long-term buys stocks are even though they'd been tanking every single day. Followed right up by that douche Larry Summers raving about how smart it is to go long on stocks now. Geniuses they are .. comments sounded totally irresponsible and curious to me at the time.. but hey, stocks are up almost 20% just like that - and it feels like a rigged game .. but I know nothing about that... and thank god.

This dingleberry Bernanke is trying to turn the US dollar into toilet paper .. printing up over $1 trillion more .. in an instant .. TLT soars way up, Gold takes a massive reversal today, was down 3.5% at one point during the day - and is up signficantly now. The dollar just got totally plunger raped.

The $812 profit I made with my first bet today on Tampa race #1 still has me a clear-cut overall loser for the day when adjusted for inflation .. because Bernanke and his pwecious wittle economy.

[wiphan]

Buying Mortgage backed securities is not printing $ and ultimately will be profitable for the government. Especially if they buy some of the higher rate securities they can make a quick profit on their $. Financials and the stock market are rallying due to Mark to Market fixes and the fact that things eventually hit a bottom and had to go up. This is not like most government programs this will make the Gov't $ unlike every other program/stimulus that is just government spending....

[randallscott35]

Originally Posted by wiphan

Buying Mortgage backed securities is not printing $ and ultimately will be profitable for the government. Especially if they buy some of the higher rate securities they can make a quick profit on their $. Financials and the stock market are rallying due to Mark to Market fixes and the fact that things eventually hit a bottom and had to go up. This is not like most government programs this will make the Gov't $ unlike every other program/stimulus that is just government spending....

Bzzzzzzzzzz. They are now buying treasuries. That is printing money and is incredibly inflationary. Infation does not make you wealthier. It steals wealth. The market went down today in real terms. And buying treasuries is a sure way to end in Weimar Germany like situation, aka government changing.

[wiphan]

Originally Posted by randallscott35

Bzzzzzzzzzz. They are now buying treasuries. That is printing money and is incredibly inflationary. Infation does not make you wealthier. It steals wealth. The market went down today in real terms. And buying treasuries is a sure way to end in Weimar Germany like situation, aka government changing.

They are buying $300 billion of long term treasuries. The majority of the $ they are talking about is buying Mortgage backed securities in an effort to keep mortgage rates low to allow people to refinance their current mortgages into lower rates and or help stimulate the purchase of new homes. The Fed has already purchased $250 billion approximately of MBS and they will buy another $1 trillion in MBS which will make $ for the government. I agree that inflation scares the living crap out of me, but I don't think it is as bad as people think.

[ArlJim78]

in addition to buying the Treasuries, they did say this;

"The Fed also said it will buy more mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help that battered market. The central bank will buy an additional $750 billion, bringing its total purchases of these securities to $1.25 trillion. It also will boost its purchase of Fannie and Freddie debt to $200 billion"

I know the claim is that they will make money doing this, but isn't the problem that you can't determine what the correct price should be for these securities? so there is the risk is that they'll pay too much.

[hi_im_god]

i'm still struck by all the posts about inflation when the immediate threat is deflation.

if the government did this in a growing economy it would be inflationary. but the economy isn't growing. in all likelihood the world economy will shrink in 2009 for the 1st time since ww2.

i don't know of more than a small minority of economists that isn't behind this approach. they've cut the fed funds rate as low as they can. this is the next logical step.

i saw today that core inflation in february was 0.2%. that's after fed fund rates were cut as close to zero as possible 6 months ago (something that would be hugely inflationary in a growing economy).

stop worrying about water damage. we need to put the fire out.