Thursday, March 19, 2009

160 words from the FOMC meeting yesterday

"In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months."

Bottom Line: We as a country are going to use one credit card to pay another.

Hat tip FOFOA!


Anonymous said...

Monetizing the Debt now eh? Nice. I give us 2-4 months b4 all hell breaks loose. It's Game Over.

FOFOA said...

This morning Karl Denninger translated this FOMC statement so that we, the common man, can understand what they are really saying:

We've got over a trillion in trash on our balance sheet now, which we promised would fix the problem but it didn't do jack. That's because nobody in their right mind will borrow money when the economy is in the tank and debt levels are above sustainable maximums. The only borrowers are people who are deadbeats, and that doesn't help. Instead of clearing this out by forcing the bankrupt to take their medicine our "solution" is to attempt to devalue the currency by explicit monetization. We have little choice in this matter because the most-recent TIC data that has been published, along with what hasn't been published (yet) but which we have, shows that foreigners have given us the finger in buying any more of our agency, corporate and sovereign debt. In short, we're screwed - within months - and we know it.

We've all stuck guns in our mouths and are now threatening to blow our brains out. Oh, and each of us is holding a dead-man's switch to a thermonuclear weapon, strategically placed somewhere in the United States economy. If one goes, we all go, and so do you - this is a murder-suicide pact, and you're the potential homicide victim. Have a nice day.

Anonymous said...

It would be interesting to know what goes on inside Bernanke's head.

Remember that quote of actor Will Smith a few months back that got him into was something about "Hitler not waking up each morning thinking about who he could hurt this very day".

It's difficult to know if Bernanke truly believes he is doing best for all, or if he is a knowing proxy for the financial elite.

The effects of this QE (i.e. money printing)? That is hard to say. Somewhere between "ouch and...boing", I imagine.

Think hard assets,guns & gold to protect yourself. Considering how far off track the US Gov is, I don't look upon Gerald Celente's prediction of a coming Helter Skelter as something to be feared. Rather it's an opportunity to break thru the status quo of corporate bought Congress and push America in a desperately needed new direction.

Randy said...

"it's an opportunity to break thru the status quo of corporate bought Congress and push America in a desperately needed new direction"

Amen Brother!