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Jim Myrtle

Jim Myrtle
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  • The Fed Should Stimulate Lending [View article]
    in 1971, the government gave itself the unlimited ability to pay any bill of any size — without taxes or borrowing — in fact, without having income of any kind. So who pays for federal spending. The answer: Nobody pays for federal spending. It’s the ultimate free lunch.

    The government pays its bills by sending instructions to banks to mark up creditors’ checking accounts. No taxes necessary. No borrowing necessary. Just instructions. Taxpayers don’t pay for federal salaries. Taxpayers didn’t pay for the GSA’s infamous Las Vegas trip. Taxpayers didn’t pay for the Secret Service hookers. Taxpayers didn’t pay for military cost overruns. Federal taxpayers simply do not pay for anything. Period.

    The next time you read an article telling you how taxpayers’ money is being spend on any federal project, know this: The author of that article is clueless about Monetary Sovereignty, the basis for all economics. Now repeat after me: Taxpayers do not pay for federal spending.

    So why does the federal government require us to pay federal taxes? They have not yet figured out the differences between a Monetarily Sovereign nation and one that is monetarily non-sovereign.

    Wow, this guy is funny.
    Aug 19, 2012. 03:48 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "So, if you're right and the MSM & reporting by 'informed sources' is wrong - and thanks for the info"

    You're welcome. And if you think the typical MSM reporting is even in the same zip code as an informed source, you're mistaken.
    Aug 19, 2012. 01:55 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "There is $1 billion more cash out there with no corresponding assets at the Federal Reserve"

    So what?
    Aug 19, 2012. 01:54 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "If They tried to sell them tomorrow the marker would be swamped and the price for a securities would tank"

    You're the one who wants them to sell tomorrow. LOL!

    "But the government must keep stoking the fires of inflation if for no other reason then to pump up the price of these mortgage securities"

    Why? The Fed has no need or desire to sell them. They can simply allow them to run off into cash.
    Aug 19, 2012. 01:53 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "If they they pay 5 billion and Sell for 4 billion that's 1 billion extra dollars out there"

    And yet, 4 billion less than was out there before they sold.

    "What if the government tried to sell the securities tomorrow?"

    They're trading well above par. They'd realize a huge profit.

    "Think they will get a trillion dollars for the trillion they paid out?"

    They only have $857 billion left. You know when rates fall, people refinance, don't you?

    "These securities were written when folks we're taking out HELOCs and buying fancy cars taking fancy vacations etc. etc. against their houses"

    No, they were buying new issues. After the crisis. Not that it would matter for guaranteed bonds.

    "I can't believe the government got anything close to a good deal on assets"

    And you won't let the facts convince you otherwise.
    Aug 18, 2012. 09:46 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "Prove that these securities are worth anything like what the Federal Reserve paid for them"

    What were mortgage rates 3.5 years ago when they started buying these MBS? What are current mortgage rates? Don't bonds increase in value when rates decline?

    "But I understand many of the details are still Hidden"

    Or you need to look here......
    http://1.usa.gov/NbYHoL
    You might notice that these securities are trading higher now.

    "And if the Federal Reserve takes a loss this is inflationary because they paid for these securities. So now there is more money in the banking system without assets at the Federal Reserve"

    They buy $5 billion in securities. Increases the money supply.
    Could be considered inflationary.
    Now they sell them for $4 billion. Decreases the money supply.
    Could be considered deflationary. So they lost $1 billion, the money supply is still smaller than it was before they sold.
    Aug 18, 2012. 09:23 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "And we can agree that if the Federal Reserve makes a profit on its so-called investments this is deflationary"

    Why?

    "if the Federal Reserve takes a loss this is inflationary"

    Why?

    "And we can be sure that the Federal Reserve overpaid for its mortgage-backed securities"

    We can't be sure based on just your feelings.

    "Politically the Federal Reserve Will not want to realize a loss on these securities"

    They have huge unrealized gains. They're making tens of billion in profits on these MBS, annually.

    "The only way out for the Federal Reserve is inflation"

    The only way out of what?
    Aug 18, 2012. 08:09 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "The "Treasury" doesn't spend money. The government spends it"

    They spend it after the Treasury sells a bond. Or collects taxes. Or gets a chunk of the Fed earnings.

    "There is no monetary consequence to the .10 more "in" the Treasury, but there is one to the .10 less being on the street"

    Less on the street? The Treasury now borrows .10 less from the street. The amount on the street remains the same.
    Aug 18, 2012. 06:56 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "My recollection is the number is > 60%. "

    Your recollection of what?
    Aug 18, 2012. 05:47 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "So why did the Fed buy such assets?"

    To help the housing market and to increase the money supply.

    "If they were 100% guaranteed by the Government, then what was, if any, the issue with the banks continuing to hold those assets on their balance sheets"

    I'm pretty sure there's a smaller haircut on cash than on agency MBS.

    "It wasn't to increase liquidity, because the banks just put the assets (treasuries) back to the Fed"

    Cash, the banks got cash. They can pay their bills with cash, with MBS, not so much.
    Aug 18, 2012. 05:47 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "but the market that sold the bond to the Fed for .90 and paid the Fed $1 to redeem it has .10 less in it"

    And the Treasury has .10 more.
    Aug 18, 2012. 05:43 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "Which is .10 less that the Fed must "lend" the Treasury later"

    There is no set amount the Fed "must" lend to the Treasury later.
    It is .10 less than the Treasury has to borrow now.

    " It's .10 less money "out there." "

    Well, it's exactly the same amount of money out there.
    Aug 18, 2012. 01:46 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "You agree then?"

    I'm pretty sure the "market" knows what the Fed really bought, so if you want to short the banks, because you're just finding out today, good luck!
    Aug 18, 2012. 11:06 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "The Fed never actually "makes" money; it just removes it from circulation. If the Fed pays .90 for a dollar of mortgage principal, and it gets $1.00, that's .10 less money in circulation"

    And then they give the .10 to the Treasury.
    Aug 18, 2012. 10:28 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "If no toxic assets on the Fed's sheet, the TBTF's are in worse shape than the market has them priced"

    If you say so.

    "Please provide some references indicating what the Fed actually bought"

    http://1.usa.gov/Kk75Xj

    At the above link,
    Mortgage-backed securities (4) 856,997

    That's $856.997 billion. The footnote refers to the following.

    4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the
    remaining principal balance of the underlying mortgages.

    " but dnp's links are typical of what we've been told about what the Fed bought"

    Yeah, lots of bad info floating around.
    Aug 18, 2012. 10:19 AM | 2 Likes Like |Link to Comment
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