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Converted Lurker

Guys, These Odd $200bl Injections, Added To The Various £50bl Auctions

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in percentage terms how much has this inflated the money supply in a relatively short period of time? Latest U.S. M3 figure was 16% iirc. Will these massive injections have increased it past 20%, or 25%? Another question, whilst our 'deflationistas' will argue that this cash injection is to heal holes in the broken finance system and doesn't find it's way into the wider consumer economy, is this correct as the implications are that the injections are to stimulate lending. Any imput/opinion on this much appreciated.

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in percentage terms how much has this inflated the money supply in a relatively short period of time? Latest U.S. M3 figure was 16% iirc. Will these massive injections have increased it past 20%, or 25%? Another question, whilst our 'deflationistas' will argue that this cash injection is to heal holes in the broken finance system and doesn't find it's way into the wider consumer economy, is this correct as the implications are that the injections are to stimulate lending. Any imput/opinion on this much appreciated.

Are they cash injections or just loans?

Big difference I would suggest. If they are a loan, the money supply increases for the duration of the loan, once it is paid, it disappears.

I was expecting this anyway. In another three months, there will be another huge issue as LIBOR starts to soar again. Question is, how long can they keep doing this before the dollar gets well and truly trounced? Its goin to feed into oil prices in a big way if they continue doing it, and therefore imo, is unsustainable. :lol:

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The 200bn is mostly already out there. In any case the Fed simply exchanges proper AAA securities for Treasuries. Does the money in the economy increase? NO. The banks simply have MORE LIQUID securities for 28 days. Read Mish shedlocks blog as he keeps explaining, the real problem is not liquidity its solvency, the banks are going under.

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The 200bn is mostly already out there. In any case the Fed simply exchanges proper AAA securities for Treasuries. Does the money in the economy increase? NO. The banks simply have MORE LIQUID securities for 28 days. Read Mish shedlocks blog as he keeps explaining, the real problem is not liquidity its solvency, the banks are going under.

Thanks mate, I've liked Mish's blog, problem is having time to keep on top of all expert opinion is impossible for me, which is why I rely on guys such as yourself on HPC to encapsulate it for me :)

Edited by Converted Lurker

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Are they cash injections or just loans?

Big difference I would suggest. If they are a loan, the money supply increases for the duration of the loan, once it is paid, it disappears.

I was expecting this anyway. In another three months, there will be another huge issue as LIBOR starts to soar again. Question is, how long can they keep doing this before the dollar gets well and truly trounced? Its goin to feed into oil prices in a big way if they continue doing it, and therefore imo, is unsustainable. :lol:

They are loans. They fed is giving the banks money for 28 days in exchange for mortgage securities.

Its basically acting like a pawn shop. Hand in your worthless tat and collect it in 28 days time. What happens if the banks dont return to the pawn shop to collect their crap?? I guess the Fed could sell it on eBay. lol

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In any case the Fed simply exchanges proper AAA securities for Treasuries.

Can this process of exchange, and with further means, e.g. interest rate cuts, socialization of losses/debt, etc, ultimately make the banks solvent so that they can lend to each other? If so, on that basis, will the banks and hedge funds continue to ramp risk through speculation? (do they know to do anything else?)

I guess my point is can this be dragged out longer than we can expect? The point of no return appears to me, particularly vacuous, driven by technicalities, but steered by slow, measured adjustments to sentiment. Can this continue, or is there a point of no return? Perhaps its my wishful thinking that the FED appears to have a cool head when compared to the markets wailing.

Apologises if this is exasperating as I'm sure these questions have been answered already.

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More like revelations mate. Horses of the apocalypse and all that! :lol::lol:

Bit of both!

My Sunday School obviously stuck with me as this from Exodus seemed apt;

"Aaron makes a golden calf, which the people worship. God informs Moses and threatens to kill them all, but Moses intercedes for them."

Aaron = Greenspan

God = The Market (!)

Moses = Bernanke (he even has a beard!)

Not sure this version will end in the Promised Land though.

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They are loans. They fed is giving the banks money for 28 days in exchange for mortgage securities.

Its basically acting like a pawn shop. Hand in your worthless tat and collect it in 28 days time. What happens if the banks dont return to the pawn shop to collect their crap?? I guess the Fed could sell it on eBay. lol

they are not loans, they are swaps. The fed is swapping treasuries which already exist on their balance sheet for MBS. FED balance sheet is not expanding thus no money being printed. Alos, unliek a pawn broker the FED can go and sieze bank's assets should they "not return" or shold the MBS value deteriorate. At teh end of the day if this is the case, what do you think the FED will do? Sacrifice itself or sacrifice the insolvent bank?

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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