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Minneapolis Fed's Narayana Kocherlakota, presumed to be uncomfortable with the direction of...

Minneapolis Fed's Narayana Kocherlakota, presumed to be uncomfortable with the direction of current central bank policy, defends the recent QE decision. The creation of more reserves through bond purchases won’t be “kindling for some future inflationary fire,” he says, because banks already have some $1T in excess reserves. Kocherlakota will have a voting role on the FOMC next year.
Comments (12)
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    really? "$1T in excess reserves"? based upon what accounting? The mark to make believe?

     

    What a load of lies.
    18 Nov 2010, 03:01 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    based on the fact. US banks are overcapped.
    19 Nov 2010, 02:14 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    really? explain.
    19 Nov 2010, 08:23 AM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    do your own work. look at the balance sheets look at the loan loss reserves - think instead of just parroting the same old tired doom and gloom crap.

     

    audit the fed. LOL

     

    audit your intelligence that is the only thing that is in question.

     

    and btw you are going to owe me that bottle of Macallan so I hope you are saving your shekels

     

    E
    19 Nov 2010, 01:29 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    I do indeed do my own research. Hence the reason I've made a bundle on my BAC short, for example. This is precisely the reason I ask you to explain your data. NO one knows the true value of these toxic banks...not even them. For you to arrogantly state "balance sheets and reserves", only proves, yet again, how detached you are from the reality of the situation as well as your enormous gullibility to what these banks report.

     

    No...in fact, the only thing I owe you is pity toward your self perceived economic prowess.
    19 Nov 2010, 01:51 PM Reply Like
  • Harry Tuttle
    , contributor
    Comments (2221) | Send Message
     
    Amazingly these guys do not seem to understand the process. In case anyone knows Mr. Kocherlakota it works like this:

     

    Fed increases liquidity -> banks and other speculators look for assets to buy [Fed hopes US stocks] -> banks and other speculators having looked around decide to buy COMMODITIES and send more money to Asian countries who buy eve more COMMODITIES [hint: speculative contracts at all time high] -> higher commodity prices means FOOD AND ENERGY inflation which the Fed ignores.

     

    This may or may not happen, but I cannot believe people are still arguing about "inflation yes" vs "inflation no" without even taking a look at the obvious.
    18 Nov 2010, 03:12 PM Reply Like
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
     
    Poor Uncle Ben is trying to revive the economy and stop it from going into a deflationary spiral with the only bullit he has left ...QE. The poor guy is sitting at the roulette table placing bets on almost all the numbers and 0 00 keeps coming out... so he reaches into his digital wallet and double downs and again 0 00. He can't believe it, spin after spin 0 00. But he understands probabilities and KNOWS that eventually the ball will land on one of his numbers.....and then he can go to all his critics and say SEE! I told you it would work....I just got paid 35 to 1 after only 15 spins. My plan is working!
    18 Nov 2010, 04:39 PM Reply Like
  • Tack
    , contributor
    Comments (14587) | Send Message
     
    Deflationary spiral?

     

    Go ahead, name some stuff that's deflating. I dare you. And, don't bring up the tired "housing" story because even there, actual deflation is imaginary, as it only applies to people who are at this moment buying new homes. Anybody paying their old mortgage is still doing so at the exact same rate, and I'll bet nobody's landlord called them up and lowered rent, either. Everything else that people buy on a recurring basis has been escalating nostop, some of it rather briskly, lately, despite the Government's camouflaged numbers.

     

    Heard Bill Isaac (FDIC head under Reagan) speak the other night, and he just confirmed what I had long observed, i.e., there's never any inflationary impact until there is, and then it's too late. All that money parked, here or there, by the banks will suddenly start to flow into more conventional financing, as the economy recovers and, especially, as rates creep up. At first, the Government will be reluctant to act, out of fear that they'll short-circuit the recovery. That will be the typical fatal mistake because, by the time they recognize the magnitude of what's going on, that parked money will be long gone into the economy, far beyond and recall by the erstwhile Government officials, who previously reassured us.

     

    Then, we'll be locked in the usual reactionary anti-inflation battle, with prices and interest rates in a race with each other.
    19 Nov 2010, 01:57 PM Reply Like
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
     
    Deflation is the eminent threat to the US economy. Retail sales are off some 25% from the highs of 2007, Commercial lease rates are down approximately 30% from 2007, contrary to your belief, landlords are working with their tenants and LOWERING their rents because it's either that or outright default. Technology spending is contracting. Read the Cisco transcript (1 billion miss on the top line) and you'll learn that governments are cutting back. Take a good look around and you'll see even more deflation. An economy can not have long term inflation without increases in wages and increases in Money supply, which are both currently contracting. The inflation in food and oil is from a weaker currency due to the fact that the fed is pumping 100 billion a month into the system. Price Commodities in EUR o YEN and you will not see the type of inflation as you do in USD. One other thing that's deflating....your purchasing power.

     

    19 Nov 2010, 03:20 PM Reply Like
  • Tack
    , contributor
    Comments (14587) | Send Message
     
    Hitesh:

     

    When you have deflation, purchasing power of the currency increases, not decreases. Go check the '30's. Whether pople have any money is another matter.
    19 Nov 2010, 03:51 PM Reply Like
  • richrf
    , contributor
    Comments (28) | Send Message
     
    We have here a situation where a very small group of unelected people who are only concerned about banks, deciding who wins (e.g, the wealthy who get free money to invest overseas) and who loses (e.g. the American household that watches helplessly as its savings are devalued). When will our representatives finally step in and do something about this??!
    19 Nov 2010, 10:58 AM Reply Like
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
     
    Never richrf, unless the people can raise something like 4b to pay for their own lobbists. That is the approximate number the industries of the US have spent on lobbist to get what they want so they can put the screws to the working class. The prostitutes....i mean politicans will never look out for the people that put them in power
    19 Nov 2010, 11:06 AM Reply Like
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