Page 1 of 2 12 LastLast
Results 1 to 10 of 15

Thread: Fed Funding Virtually the Entire Deficit: Lindsey

  1. #1

    Default Fed Funding Virtually the Entire Deficit: Lindsey

    Fed Funding Virtually the Entire Deficit: Lindsey

    Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, "they are buying the entire deficit."
    Although this article does not state this, it appears that the money used to purchase Mortgaged Backed Securities from the banks is being used by the banks to purchase U.S. Treasures.

    This, coupled with the purchases of 61% to 75% of U.S. Treasuries by the Federal Reserve, suggests that directly, or indirectly, the Federal Reserve is purchasing all of the debt to fund the United States deficit.
    Legal Disclaimer: I am not a doctor, nor do I play one on TV.

    "It's tough to make predictions, especially about the future." -- Yogi Berra
    A variant of this has also been attributed to physicist Niels Bohr, and others.

    "Tis against some menís principle to pay interest, and seems against othersí interest to pay the principal." -- Benjamin Franklin

    The School of Hard Knocks is where you get the lesson after you fail the test.

    Book title: "The Best Way to Rob a Bank Is to Own One"

  2. #2

    Default

    Quote Originally Posted by WhatsUpDoc1958 View Post
    Fed Funding Virtually the Entire Deficit: Lindsey



    Although this article does not state this, it appears that the money used to purchase Mortgaged Backed Securities from the banks is being used by the banks to purchase U.S. Treasures.

    This, coupled with the purchases of 61% to 75% of U.S. Treasuries by the Federal Reserve, suggests that directly, or indirectly, the Federal Reserve is purchasing all of the debt to fund the United States deficit.
    Well, DUH! QE has never been about "the markets" or "the consumer". It's always been about funding the deficit (and why it was so easy to predict that there would be a QE3 and beyond)

  3. #3

    Default

    Quote Originally Posted by joeb328 View Post
    Well, DUH! QE has never been about "the markets" or "the consumer". It's always been about funding the deficit (and why it was so easy to predict that there would be a QE3 and beyond)
    I think there are those on this forum who believe that Quantitative Easing is about creating Excess Reserves on the banks balance sheets, and that is certainly true as well.

    However, the purchases of U.S. Treasuries by the Federal Reserve or banks allows the U.S. Government to continue spending money to the tune of an extra $1.3 trillion above tax revenues.
    Legal Disclaimer: I am not a doctor, nor do I play one on TV.

    "It's tough to make predictions, especially about the future." -- Yogi Berra
    A variant of this has also been attributed to physicist Niels Bohr, and others.

    "Tis against some menís principle to pay interest, and seems against othersí interest to pay the principal." -- Benjamin Franklin

    The School of Hard Knocks is where you get the lesson after you fail the test.

    Book title: "The Best Way to Rob a Bank Is to Own One"

  4. #4

    Default

    Quote Originally Posted by WhatsUpDoc1958 View Post
    I think there are those on this forum who believe that Quantitative Easing is about creating Excess Reserves on the banks balance sheets, and that is certainly true as well.

    However, the purchases of U.S. Treasuries by the Federal Reserve or banks allows the U.S. Government to continue spending money to the tune of an extra $1.3 trillion above tax revenues.
    Suppose the unimaginable happens and the US Government defaults and crashes. Who is liable for all those trillions of debt that is owed to the Federal Reserve? US taxpayers?

  5. #5

    Default

    Quote Originally Posted by Will Wong View Post
    Suppose the unimaginable happens and the US Government defaults and crashes. Who is liable for all those trillions of debt that is owed to the Federal Reserve? US taxpayers?
    The U.S. Taxpayers have always been liable for the debts of the United States.

    But the point of a default is that you are saying you can't pay the money back. Or you can only pay a portion of each dollar you owe.

    And when a debtor says they can't pay the money back, they don't get any new loans.

    So, either the Federal Reserve continues to print money to fund the United States debt, and inflation ensues, or...

    The Federal Reserve stops printing money to fund the United States debt, and, government programs get massive cuts, and deflation/depression occurs.
    Legal Disclaimer: I am not a doctor, nor do I play one on TV.

    "It's tough to make predictions, especially about the future." -- Yogi Berra
    A variant of this has also been attributed to physicist Niels Bohr, and others.

    "Tis against some menís principle to pay interest, and seems against othersí interest to pay the principal." -- Benjamin Franklin

    The School of Hard Knocks is where you get the lesson after you fail the test.

    Book title: "The Best Way to Rob a Bank Is to Own One"

  6. #6

    Default

    Quote Originally Posted by WhatsUpDoc1958 View Post
    So, either the Federal Reserve continues to print money to fund the United States debt, and inflation ensues, or...

    The Federal Reserve stops printing money to fund the United States debt, and, government programs get massive cuts, and deflation/depression occurs.
    But the Federal Reserve is already the largest holder of US Treasuries. And they will be buying up $40B a month of mortgage backed securities with new money that they will be printing. My question is who owns the Federal Reserve Bank? In essence, the US Taxpayers will owe the Federal Reserve Bank trillions and trillions but who are these guys? Who do they answer to?

  7. #7

    Default

    Quote Originally Posted by Will Wong View Post
    But the Federal Reserve is already the largest holder of US Treasuries. And they will be buying up $40B a month of mortgage backed securities with new money that they will be printing. My question is who owns the Federal Reserve Bank? In essence, the US Taxpayers will owe the Federal Reserve Bank trillions and trillions but who are these guys? Who do they answer to?
    So, the Federal Reserve is a banking cartel of the largest banks in the United States and the world.

    So, they will take their mortgage backed securities, and start foreclosing on properties and making money anyway they can off of these properties. Sell them to China or anyone for money that is worth something.

    I am not sure what you can do with United States Treasuries if the United States Government decides to default on the debt. Nobody will buy them.

    Perhaps you would like to explain your thinking?
    Legal Disclaimer: I am not a doctor, nor do I play one on TV.

    "It's tough to make predictions, especially about the future." -- Yogi Berra
    A variant of this has also been attributed to physicist Niels Bohr, and others.

    "Tis against some menís principle to pay interest, and seems against othersí interest to pay the principal." -- Benjamin Franklin

    The School of Hard Knocks is where you get the lesson after you fail the test.

    Book title: "The Best Way to Rob a Bank Is to Own One"

  8. #8

    Default

    If the US were to default on even one Treasury bill, the massive bond market would panic and start dumping all govt bonds from federal to municipal.

    These T-bills are held by both foreign countries and Americans alike. Everything from American Fortune 500 companies to grannies who depends on pension funds to survive have T-bills in their holding.

    Way before the US govt defaults on its T-bills however, a whole lot of gravy trains will be cut & defaulted upon. The money in SS, the govt worker "guaranteed" pension schemes, other pork barrel spending will get the axe. So watch for that as the warning sign.

    The reason SS does not hold Treasury bills but rather some other kind of worthless IOU is to enable the govt to default on it with ease should the need arise - which it soon will.

    In short, as the good Dr. Lee Warren predicted in 2007 - "All hell gone break loose".

    The only way this can play out is the way the Mises institute describes it. i.e. Of the 8500 tons of gold, the existing (outstanding) debt is made to equal 500 tons of gold. The creditors & depositors are paid out based on 500 tons divided by however many outstanding credit claims exist. They each get a morsel of that gold as full & final payment of debt.

    The rest of the (alleged) 8000 tons in reserve are used to back a new dollar. In essence, that is a partial default on creditors/savers who end up getting cheated at the expense of debtors. But that might be the only way to default without crashing the entire system.

  9. #9

    Default

    When the US defaults TPTB will usher in the new world order and new fiat currency. All your dollars belong to us.
    What's the Frequency, Kenneth?

    432Hz

  10. #10

    Default

    Quote Originally Posted by Will Wong View Post
    Suppose the unimaginable happens and the US Government defaults and crashes. Who is liable for all those trillions of debt that is owed to the Federal Reserve? US taxpayers?
    That's a question I've been rolling around in my head.

    Say a couple years down the road and almost all US Treasuries are owned by the FED. In addition to all the junk mortgages from the banks.

    How can you default against yourself? I don't see the mortgages being of much use. I think if the FED started a massive foreclosure run people would start burning down their house when they leave.
    What's the Frequency, Kenneth?

    432Hz

Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •