Federal Reserve has abandoned monetary policy according to critics

January 5, 2009 by · Leave a Comment
Filed under: Opinion 

I agree, I don’t think we can call quantitative easing as a real monetary policy, more like a last ditch effort if you ask me.  Feels more like desperation in the face of a dire situation that in the end will take its course no matter what.  What I would like to find out is how the Fed got authorization to expand its balance-sheet past its normal $800 billion?  No body without congressional support and oversight should be able to run monetary operations like this that will in the end, saddle us with much public debt.

News:

The Federal Reserve has embarked on a campaign of unsupervised industrial policy to end the country’s financial crisis, a move that could undermine its independence, a former top U.S. official said on Saturday.

John Taylor, who was under secretary of treasury for international affairs from 2001 to 2005, said the explosive growth of the Fed’s balance sheet since September was “unbelievable.”

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With quantitative easing under way, where is M3?

December 1, 2008 by · 1 Comment
Filed under: Opinion 

Well it would be nice to see what this number would be at if they still published it?  Many other people has reconstructed data sets that try and emulate the old statistic.  From all they I have read, the M3 measure of the money supply would be in double digits.  That does not say much for inflation when the business cycle picks up again.  At the time of this writing, the Dow Jones Industrial Index lost 7.7% today alone.  

I believe people are losing confidence in the system and the information they keep being told.  We are bailing out bad institutions with good money and in turn, reducing the confidence in our currency with their bad assets which should of never been made whole.  Why do I have to accept $24,000+ in debt to people who got greedy and wanted to raise their relative advantage higher?  

Why are we saving a system that has created more wealth disparity than wealth itself?  I thought we are suppose to have life, liberty and the pursuit of happiness protected and not oppressed?  You can see it in all the currently writings by our press and government.  It is all about getting the credit (debt) flowing and not actually address the problem of deficit spending, incentification of profit over job creation & raising of living standard which is what drives consumption in the first place.  We actually encourage companies to send job overseas to make products for consumption in the U.S.  

Who are we actually benefiting in that situation, I would say the shareholders to the determent of our people.  I am not advocating stepping away from free markets with prudent regulation at all, but I am saying that we should take into effect what the costs and benefits are by focusing on consumption and not production.  We need to address the real problems and make a system that give equal opportunity to all its people.  From their a person can and will choose their path in life.

News:

With quantitative easing under way, money supply is going to become an increasingly important gauge.

Morgan Stanley notes the measure will be a key indicator of when ‘QE’ actually starts to kick in. Before adopting QE, all excess reserves created by the Fed were being hoarded by banks. Rather than increasing, the so-called money multiplier (the link between the Fed’s balance sheet and the money supply) had actually plummeted. The only other time this has happened is during the Great Depression, say Morgan Stanley. But there is reason to be optimistic.

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Bank of Canada not joining Fed to increase global liquidity

July 30, 2008 by · Leave a Comment
Filed under: Industry News 

The Bank of Canada said on Wednesday it is not coordinating with the U.S. Federal Reserve and other central banks in operations to boost market liquidity.

“The Bank of Canada is not participating in this,” said Jeremy Harrison, a spokesman for the Canadian central bank. The Fed said on Wednesday it would extend a loan program it began in March after the near collapse of Bear Stearns.

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