Bernanke first Econaught
Bernanke Defends Bond Purchases.
Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.
“It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said.
Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.”
The Federal Reserve move is suspect, this has never been done
in these quantities. $600 Billion, to compare, the health care plan
is $700 billion over 10 yrs, and the Billionaires tax break is also
But what is the Fed doing exactly?
Well one arm of the Government, the Treasury is selling Treasury bills on the
open market, and the other arm of the Government the Federal reserve isbuying $600 Billion of those same treasurys through the Central Bank.
The Right hand is selling and the left hand is buying,
no real ownership change, they just took the $600B Treasurys
off the market. With smoke and mirrors.
But this will reduce the pressure on the Dollar.
This looks bad for the Dollar.
And suggests problems with the open marketsales of Treasurys. Which doesn't instill confidence.
If this is a near one time event, the markets should
be able to understand and ride it out.
Bernanke is dancing in a mine field.
I hope this works but its unknown territory.
This gives us some idea how serious the
high US debt is.
The Republicans want to kill a few thousand
poor to help balance the Debt, rather
than inconvenience a few Billionaires.
Series 7 & 3.