Fed Pushes Into ‘Uncharted Territory’ With Record Assets
By Joshua Zumbrun & Jeff Kearns | January 25, 2013
Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8 percent unemployment.
The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month.
The Fed believes it has to shovel $85 billion dollars into the financial markets every month to prop up our economy. And this is barely being reported by our news media.
Meanwhile, lest we forget, that Obama’s tax increase on ‘the rich,’ that was going to solve all of our problems, only raised a measly $60 billion dollars a year.
“We’re in uncharted territory,” said Julia Coronado, chief economist for North America at BNP Paribas SA in New York, and a former Fed economist. Even as “the easy money will flow through financial markets and into the real economy at some point and lift us to a better growth trajectory,” the U.S. faces “a lot of risks,” she said…
It’s not that completely uncharted territory. The Japanese have been trying to jump start their economy by doing things like this for years. It hasn’t worked.
“You’re hard pressed to find another example in history where the Fed pulled out all the stops to help a recovery along,” said Michael Hanson, senior U.S. economist at Bank of America Corp. in New York, and a former Fed economist…
What recovery? Our GDP is probably lower than the real inflation rate.
Fed officials have said their $85 billion pace of purchases will continue until the labor market improves “substantially.” Still, they disagree on how long they should press on with the buying…
“We’re going to boldly go where no central bank has gone before,” said Brian Jacobsen, who helps oversee $210 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. “So it’s full speed ahead.” …
Remember, we’re constantly told that the recession was caused by the financial markets making bone-headed decisions. And that we had to make sure such a thing will never happen again.
Meanwhile, we also have more boring ‘high information’ news, via CNS News:
Fed’s Holdings of U.S. Gov’t Debt Hit Record $1,696,691,000,000; Up 257% Under Obama
By Terence P. Jeffrey | January 24, 2013
(CNSNews.com) – In data released Thursday afternoon, the Federal Reserve revealed that its holdings of U.S. government debt had increased to an all-time record of $1,696,691,000,000 as of the close of business on Wednesday.
Gee, what a coincidence. That is also the size of our annual debt.
The Fed’s holdings of U.S. government debt have increased by 257 percent since President Barack Obama was first inaugurated on Jan. 20, 2009, and the Fed is currently the single largest holder of U.S. government debt.
As of the end of November, according to the U.S. Treasury, entities in Mainland China owned about $1,170,100,000,000 in U.S. government debt, making China the largest foreign holder of U.S. government debt.
Some people might say we would be better off owing all this money to the Chinese rather than the Federal Reserve.
When Obama was inaugurated in 2009, the Fed owned $475.322 billion in U.S. government debt. As of the close of business on Wednesday, Jan. 23, the Fed owned $1.696691 trillion in U.S. government debt, up $1.221369 trillion during Obama’s first term.
So what? What difference does it make?
Did Beyoncé really lip synch or not?