Two sure bets Fed fails and we have inflation..

the 1.2 tril and growing deficit didnt give it away?

http://www.c-spanvideo.org/program/id/217674

The Federal Reserve Banks (there are 12 in the USA) are owned by several PRIVATE SECRET BANKS/ENTITIES/WEALTHY FAMILIES....WHO KNOWS.... WORLDWIDE!!

The Federal Reserve Banks have never been audited nor do they paY taxes.

The only time I have EVER heard this mentioned is at a recent hearing....a Congresswoman questioning Geithner (former Pres. of the NY Fed Reserve Bank) mentioned SEVERAL TIMES that he had worked for PRIVATE BANKS. He never responded to that point.

Do some research on how the Federal Reserve System was first established....incredible!!!!

Prada, ever notice the Federal Reserve banks are .og's and only the Fed in washington is a .gov.

prada you really are an idiot. TG said sevral times that his former employer is a matter of public record..everyone knows he worked at GS/ go back to sleep and dream up some more comspiracies

http://www.nytimes.com/2010/01/06/business/economy/06leonhardt.html

If only we’d had more power, we could have kept the financial crisis from getting so bad.
That has been the position of Ben Bernanke, the Federal Reserve chairman, and other regulators. It explains why Mr. Bernanke and the Obama administration are pushing Congress to give the Fed more authority over financial firms.

So let’s consider what an empowered Fed might have done during the housing bubble, based on the words of the people who were running it.

In 2004, Alan Greenspan, then the chairman, said the rise in home values was “not enough in our judgment to raise major concerns.” In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.”

The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?

http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=729bdf90-bb15-4717-844e-3c1a300b9af8

During the Latin American debt crisis, the Federal Reserve acted to hide the failures and losses at money center banks by arranging with the IMF to pay the interest on Latin debt to those banks. This served to increase the debt that the governments owed, but it kept the banks from reporting portfolio losses and prolonged the debt crisis. The crisis ended after one of the New York banks decided to write off the debt and take the loss. Others followed. Later, the Treasury offered the Brady plans. The Federal Reserve did nothing.
In the dot-com crisis of the late 1990s, we know the Federal Reserve was aware of the growing problem, but it did not act until after the crisis occurred. Later, Chairman Greenspan recognized that it was difficult to detect systemic failures in advance. He explained that the Federal Reserve believed it should act after the crisis, not before. Intervention to control soaring asset prices would impose large social costs of unemployment, so the Federal Reserve, as systemic risk regulator would be unwise to act.
We all know that the Federal Reserve did nothing to prevent the current credit crisis. Before the crisis it kept interest rates low during part of the period and did not police the use that financial markets made of the reserves it supplied. The Board has admitted that it did not do enough to prevent the crisis. It has not recognized that its actions promoted moral hazard and encouraged incentives to take risk. Many bankers talked openly about a “Greenspan put,” their belief that the Federal Reserve would prevent or absorb major losses.

marco, Geithner never worked at Goldman. He had worked for Rubin, and had ex-Goldman employees on his staff, but he never actually worked there. I'm not defending him, just saying.

you are right. i was listening to the hearings and for some reason i was under the impression he was ex GS. my bad.

I understand the confusion, after all he was their Consigliere.

marco_m.....no name calling...shows what type of person you really are.

I am not an idiot, I am well informed!! Do your own research!!

Obviously you are so well informed, you didn't even know where Geithner previously worked (if you had read my previous message....it was clearly stated). I must have really annoyed you with my posting :)

you did annoy me..but i do stand corrected

the fed can always drain reserves by selling assets to primary dealers and money center banks via POMO at the NY Fed desk.

but that is years away. Those reserves wont be lent because they will be needed to absorb future loan losses and to rebuild capital ratios as Im sure regulation is coming to banking sector, one of which will be to toughen capital requirements and tier 1 capital ratios

i just dont see that money being lent out and multiplied by our fractional reserve banking system to any great degree. this has been why hyperinflationists have been wrong for past 18 months as excess reserves started to surge in late 2008 - and they claimed hyperinflation to be just around the corner. now its a year and a half later, and deflation is still the main story..how can they be so wrong?

the fed can always drain reserves by selling assets to primary dealers and money center banks via POMO at the NY Fed desk.

My understanding is the Fed over-paid for many questionable assets. If the fed has any accounting, they will not want to recognize the loss.

well, that is entirely different and interesting point!

i just dont see that money being lent out and multiplied by our fractional reserve banking system to any great degree. this has been why hyperinflationists have been wrong for past 18 months as excess reserves started to surge in late 2008 - and they claimed hyperinflation to be just around the corner. now its a year and a half later, and deflation is still the main story..how can they be so wrong?

The counter-argument is that the banks have not been lending.

the counter-counter argument is that it doesn't seem as though they will begin in earnest again anytime soon.

"The counter-argument is that the banks have not been lending."

Ive been saying that all along, against the hyperinflationists argument. And that is the one thing the banks got right! Why should they aggressively increase lending in an environment that sees consumer credit deteriorating and rising unemployment??? banks should get prudent and cutback lending, but its not the American thing to do...we tried the American way and look where it got us. Everybody loved it, it became a politically correct thing to fight for and vote for, and look where that brought us. Now the idiots out there scream at the unintended consequences of constrained credit and lending as a result of massive debt deflation after the boom. Banks SHOULD be cutting back in lending considering what we went through and where we came from...Innocent victims are bound to be affected too by all this..my credit card company, after 10 years of history and never missing a payment and seeing my line of credit rise from $2K to 52K over that time, cut my credit limit from 52K to 12K because I was 3 days late on one payment 5 months ago! ITs a citi card. Now honestly, is it because I was 3 days late or because we are seeing a contraction in credit, cutback in limits, and restriction of HELOC lines because of this massive debt deflation episode? I think its the latter

Big banks have shown a preference to allocating their funds to trading over lending(more profitable), In the past they over-lent to the consumer sector. My feeling is this mis-allocation was partly driven by regulators who assigned lower risk weightings to mortgage assets. Small banks right now are not lending in part because the regulators are all over them and they are afraid to(it's not all due to lack of demand)

ttp://seekingalpha.com/article/186051-risk-weighting-the-achilles-heel-of-financial-regulation

These are the basic formulas (you can make it more complicated than this but I’m talking Big Picture here):

1. Capital Adequacy Ratio (CAR) ≥ 10% ((say)) = Capital ÷ Risk
2. Capital = (value of) Assets – Liabilities (i.e. for a bank, debts).
3. Risk = (value of) Assets x Risk Weighting

So:

* According to equation (3), if your assets are all AAA Subprime RMBS then the risk weighting on those things (in USA) is 20%. So if you own $100 of them, then your risk is $20.
* That means that your capital needs to be at least $2.0 if the threshold set by the regulator is 10% (Equation (1)).
* That means your liabilities can be as much as $98 (Equation (2)).
* So (QED) your liabilities ($98) can be 49 times your capital ($2).

i just dont see that money being lent out and multiplied by our fractional reserve banking system to any great degree. this has been why hyperinflationists have been wrong for past 18 months as excess reserves started to surge in late 2008 - and they claimed hyperinflation to be just around the corner. now its a year and a half later, and deflation is still the main story..how can they be so wrong?

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they are so wrong cause of the over simplification of the inflationary process that even extends to the definitions used. most likely there will be a continued asset deflation (real estate among them) coexisting with food and energy inflation. these are totally different processes, responding to very different dynamics but they still get to be called the same. simply inflation/deflation. there's much more to it than that. there's not even a clear understanding of what hyperinflation is, ask most people talking about it, and they'll tell you... 20%, which is high inflation but obviously hyper nothing.