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Old 12-26-2011, 06:38 PM
badhatharry badhatharry is offline
Join Date: Jul 2009
Location: eastern sierra
Posts: 5,413
Default Re: Katherine's pants are on fire

Originally Posted by Parallax View Post
2. A good chunk of the stealth stimulus is Fed buying securities, Now Fed used to do that all the time! How else do you think Fed sets interest rates?? The new thing is that now Fed is buying longer term treasuries, MBS and agency debt something it did not do back then.
So here you are saying that the Fed bailing out the financial industry, the credit markets and housing was essentially business as usual for the Fed. They were just buying securities and therefore this money cannot be counted as stimulus. Has this ever been done on this scale before?

As far as how the Fed sets interest rates...usually this is done by buying and selling short term bonds (this affects the money supply, yes?) but when the Fed buys longer term treasuries, this is called quantitative easing, correct? and the idea behind that is that short term interest rates are so low that the Fed wants to boost the economy by buying longer term treasuries and injecting more money into the system. But you say this is different than stimulus. How so?

Or maybe the point you are making is there is a vast difference between fiscal and monetary stimulus and that Ward and CNN are incorrectly lumping the two together.
"By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Adam Smith

Last edited by badhatharry; 12-26-2011 at 11:56 PM..
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