Hey! How'd he do that???
Fed to pump another $1 trillion into U.S. economy
By Edmund L. Andrews Published: March 18, 2009
WASHINGTON: The Federal Reserve sharply stepped up its efforts to bolster the economy on Wednesday, announcing that it would pump an extra $1 trillion into the financial system by purchasing Treasury bonds and mortgage securities.
Having already reduced the key interest rate it controls nearly to zero, the central bank has increasingly turned to alternatives like buying securities as a way of getting more dollars into the economy, a tactic that amounts to creating vast new sums of money out of thin air. But the moves on Wednesday were its biggest yet, almost doubling all of the Fed's measures in the last year.
(03-19-2009 07:57 AM)MajorHoople Wrote: [ -> ]Loan from the Chinese?
No.
The Fed writes a check with nothing to back it up.
Then for each dollar that enters a bank, that bank can create another 9 dollars out of thin air.
It's called fractional reserve banking.
Neat, huh?
Banking at that level is kind of mysterious.
On the one hand, they can create their own money, to pay themselves back, for money they had that now can't be retrieved.
To an extent, one begins to wonder, what is the big deal about money anyway. Why is it so scarce and all that. Just give people what they need and get on with our lives.
If money is no longer really "anything", why do we stress so much about who has, doesn't have, get, give, whatever. Just print it up and hand it out from the back of container ships, like they did in Iraq. No big deal.
The Fed is reaching deep and spending their hard earned cash for the good of the U.S.
To a private citizen this is called kifing checks. You open checking accounts at several different banks and write checks as deposits to alternative accounts.
You never actually deposit any money, you just keep writing checks as deposit and making the action of depositing become the deposit itself. It used to work before electronic depositing and money transfer cut down the time delay moving money between banks.
The Fed does it this way-they sell treasury bonds to foreign nations to cover national budget deficits. When other nations lose confidence in America's ability to pay off on the bonds, and stop buying them, the Fed 'creates' more money by borrowing against future tax revenues and purchases the treasury bonds themselves. In essence they create more debt to pay off existing debt!!
We are in deep doo-doo as a nation, folks. Several of us have been telling you that in this forum for several years now but most of you probably dismissed us as alarmists. But here is the evidence.
Our National Debt is immense, annual deficits are way beyond our ability to finance and we're borrowing massive amounts of money from future generations just to pay them. And if they put the breaks on it the whole deck of cards will come crashing down.
Word of advice, BUY GOLD...!
(03-19-2009 08:03 AM)ESSSS Wrote: [ -> ] (03-19-2009 07:57 AM)MajorHoople Wrote: [ -> ]Loan from the Chinese?
No.
The Fed writes a check with nothing to back it up.
Then for each dollar that enters a bank, that bank can create another 9 dollars out of thin air.
It's called fractional reserve banking.
Neat, huh?
ESSSS, Your Sarcasm Recognition ability needs polishing.
It's off these days due to the seriousness of the matter.
Quote:ESSSS, Your Sarcasm Recognition ability needs polishing.
My bad (smile).
It's not easy to get to know people's intentions without a face to read.