Under Attack, Fed Officials Defend Buying of Bonds

[alp227]

Source: The New York Times

With the Federal Reserve under attack at home and abroad, it is making an unusual public bid to keep itself away from the political crossfire.

After a barrage of criticism over the last week — including from foreign leaders, Congressional officials, economists and Alan Greenspan, the former Fed chairman — the Fed came out to explain its efforts to inject $600 billion more into the sagging economy.

One worry of Fed watchers as well as its defenders is that some of the domestic criticism may have the subtext of challenging the Fed’s traditional independence in deciding monetary policy without political interference.

In a rare on-the-record interview, William C. Dudley, president of the Federal Reserve Bank of New York, said that the Fed’s move was not intended to affect the value of the dollar, but rather to encourage a faster, stronger recovery that will also assist international growth.

Read more: http://www.nytimes.com/2010/11/16/business/economy/16fed.html

[Rex]

1. So Alan Greenspan is no longer an economist?

The NYT finally did some actual reporting for once! Good job kids! Who wants a lolly pop! :rofl:

[fasttense]

2. Yeah, MR. Greenspan does not have his Ph.D., so many real economist

consider him a politician and NOT an economist.

My guess, it's not that he is lacking a Ph.D. so much as he is lacking common sense.

[fasttense]

3. The problem with what the Fed is doing is that it is NOT helping the economy.

They are helping the banksters. Pumping more money into a gambler's pocket will not feed his children, it will only increase his gambling.

[Yavin4]

4. What They're Trying to do Is Re-Inflate the Credit Bubble

by making money cheaper, but it won't work. Banks are not lending because of high under/unemployment and housing prices are in decline. Also, consumers are cutting back on their spending.

This is what happens when you send jobs overseas and deregulate the financial markets which collapsed the housing market.

[obxhead]

5. Exactly. They killed the golden goose as they say.

By destroying the value of the middle and lower class they have put an end to our economy. Their short term extreme gains will eventually destroy them as well though. Unfortunately we will be a 3rd world country by that point with violence and strife over food being the way of life.

[Gin]

6. I seem to recall being told the banks are flush with cash and are not

willing to lend....why give another 600 billion on top of what they already got from us?

[obxhead]

7. yes and no.

The banks are flush with cash. A huge problem for many banks is what they have on their books as stated assets. They have avoided foreclosures to falsify their numbers and if the houses they were not supposed to foreclose on where appraised again they would find themselves bankrupt.

There are a great many other issues as well and I know for a fact others here could describe it to you in much more detail.

The banks have money, but at the same time have absolutely no value if that makes any sense.

[BeFree]

10. Fractional Reserve Banking

A bank may have a million bucks on hand.
But they may have on the books as much as ten times that amount out on loans for houses.

Lets say it is ten million loaned out for mortgages on houses.
But the houses are only worth 5 million.
Net loss if the books were squared away is at 5 million dollars.

[obxhead]

12. I knew there were other that could explain it better.

Thank you.

[truthisfreedom]

8. For those of us who hate NYT because of the signup necessity... here's a Yahoo article.

Same deal.

http://finance.yahoo.com/news/Under-Attack-Fed-Officials-nytimes-1531081883.html?x=0&sec=topStories&pos=2&asset=&ccode=

[smiley_glad_hands]

9. Current fed policy is meant put pressure on china to decouple their currency faster.

Amongst other reasons.

[defendandprotect]

11. K&R ... Economists told Obama original stimulus was only 1/4 of what was needed ...!!!

You can see the effects have now been dying out -- !!

And unfortunately most of the billions in stimulus went to corporations!!!

We need government to create jobs -- and NOT thru corporations!!!


Fed's independence? We need Congress to control our Treasury and decide economic

policy and job creation!!

Not some private bank which we don't elect and can't unelect!!