Internet Anthropologist Think Tank: OK the #Bernacke is a Genius.

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    Wednesday, April 27, 2011

    OK the #Bernacke is a Genius.

    I don't like it either.

    I've been ragging on the Bernacke, about QE2.

    I was right about what they were doing,
    but missed what was going on.

    The Bernacke knew what had to be done,
    saw the Republicans were trying to get into
    a pissing match with the Democrats,
    and would get NO quick resolution on the
    deficit problem.

    He fixed it.
    mea culpa
    mea culpa

    During this recession/depression the
    economy needed low interest rates
    to provide liquidity and nutriment, lots
    of cash, for economic growth.
    Flood the Banks with money,
    Fed Window lends to them at just
    under 1%, unlimited borrowing.

    Congress and President were not
    going to get deficit fixed.
    That would have kept interest rates
    low. Lowered risk/lower yield.

    So the Bernacke kept the interest rates
    low by buying up US Treasury Bonds,
    Debt, Federal Reserve is now bigger
    holder of US Bonds than China.

    If he bought the bonds they would not
    have to raise interest rates higher in order
    to other countries buy those T Bonds.

    The Bernacke did what he knew the politicians
    and elected officials would screw up.
    He kept interest rates low during a Recession.
    Federal Reserve is going to get hurt,
    losses from these purchases,
    but I thank you for helping during a
    heavy economic decline with one
    thing that really made a difference.
    Kept Interest rates LOW.

    mea Maxia culpa.

    Series 7 , 13


    Anonymous Anonymous said...

    IIRC Goldman Sachs was the agent that bought bonds for the FED. How much money do you think they made acting as the middle man?

    4:55 AM  

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