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Old August 04, 2019, 00:55   #1
Exit308
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The Fed......

has supposedly been shrinking its balance sheet in what they have called Quantitative Tightening.

We know that the fractional reserve system is basically a 'Ponzi' scheme that requires an ever expanding base to cover the principal and interest.

We also know that the numbers in the debt market are becoming exponential in a world of finite resources and productivity.

Do they really expect us to believe that they are allowing their balance sheet to shrink?

And since I don't believe this, where are they hiding the FRNs(digits)?

Please discuss.
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Old August 04, 2019, 10:23   #2
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I am not smart enough to give you the answer you seek but I will voice an opinion. Numbers and accountability for numbers just don't seem to matter anymore. Congress never makes out a real budget and puts us trillions in debt. The Fed established the cost to borrow money printed up from nothing and the world runs on that money because there is nowhere else to go.
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Old August 04, 2019, 16:23   #3
bubbagump
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Quote:
Originally Posted by Exit308 View Post
has supposedly been shrinking its balance sheet in what they have called Quantitative Tightening.

We know that the fractional reserve system is basically a 'Ponzi' scheme that requires an ever expanding base to cover the principal and interest.

We also know that the numbers in the debt market are becoming exponential in a world of finite resources and productivity.

Do they really expect us to believe that they are allowing their balance sheet to shrink?

And since I don't believe this, where are they hiding the FRNs(digits)?

Please discuss.
Quantitative tightening is simply the flip side of quantitative easing, which is a wooly way of saying low interest rates. It's no secret that the Fed has been raising rates, now they've conceded that they probably raised them too much/too early and want to add more money into the system. It's what central banks do, they are supposed to adjust the money supply. It's one of the tools they have, possibly the most important one to adjust for the ups and downs of the economy.

Whether they're right or wrong in this is hard to say, I've seen good arguments on both sides of this question.

Fractional reserve lending is a key component of the FedRes model certainly. Not sure if there's a question here.

As to whether their balance sheet is shrinking, well almost certainly not. But higher interest rates would presumably result in it not growing at a rate that lower interest rates would support. In any case, impossible to say as there are no audits of their books.

As to the FRNs and where are they hiding 'em? Why, all around you. Or did I misunderstand the question? Are you asking where the digital money is?

Quote:
Originally Posted by Bawana jim View Post
I am not smart enough to give you the answer you seek but I will voice an opinion. Numbers and accountability for numbers just don't seem to matter anymore. Congress never makes out a real budget and puts us trillions in debt. The Fed established the cost to borrow money printed up from nothing and the world runs on that money because there is nowhere else to go.
Well there ARE plenty of other places to go. The thing is you don't really believe they are all that and a bag of chips either. Very likely because they aren't, regardless of what the hucksters would have you believe.
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Old August 04, 2019, 16:45   #4
Exit308
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[QUOTE=bubbagump;4768993] Are you asking where the digital money is?



I'll rephrase, hopefully more clearly.

In the QE phases, they were creating digital currency and buying debt instruments.
This expanded the Fed balance sheet by orders of magnitude.
This is inflationary.
In the QT phase, they have supposedly been allowing x amount of debt instruments to mature and retire without rolling them forward, thus eliminating that digital currency.
This is deflationary.
Since the Fed has a stated goal of 2% inflation, QT seems to be the opposite of the goal stated above.
Therefore I find it difficult to believe they would voluntarily engage in a deflationary event.
What am I missing?

And with that, I will leave these here. They take about an hour and 10 minutes to watch both, but IMHO, there is some very interesting info offered by Catherine Austin Fitts, as well as what she labels 'high octane speculation' about the Clinton Foundation and Jeffrey Epstein.


Part 1



Part 2
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Old August 05, 2019, 05:42   #5
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I'll watch later on today if I'm able.

QT is deflationary because it, theoretically anyway, shrinks the money supply. Higher rates, less borrowing, therefore less money.

Whether that's how it really works, or how it's working today is an entirely different question. It's very probable there are some out there who look at the cost of money the way an airline looks at jet fuel. Gotta have it, doesn't matter what it costs, pass the cost on to the consumer or customer. We saw this in the 1970s, they called it 'stagflation'.
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Old August 11, 2019, 20:00   #6
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Many think that the Fed makes their money on individual's and nation's debt. If interest is 0% then the Independent Federal Bank, which is not part of the US Government nor controlled by the US Government will not make any money. Control is wielded by constantly bashing the Fed in the MSM. This existing monetary system was invented by the World combined Feds and called the Petro Dollar System, which replaced the Gold Standard Dollar in 1960's.

Maybe time for precious metals supported dollar again. China does not have an Independent central Bank...run by Communist Party. They set the value of the Yuan where it benefits China...cheap Yuan...cheap exports. Trump is using tariffs to balance the Yuan manipulation. All trading countries are tied financially so they must play ball with the buyers of their goods or layoff workers. If Trump is re-elected then Fed must be reformed.

I used to worry about the US debt but not now as the current debtor system will fail of it's own weight. Just ponder the Federal Debt, Student Loan Debt, Credit Card Debt and Junk Mortgage Debt. It will never be paid back.
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Old August 12, 2019, 08:23   #7
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Well,

With their dual mandate of stable prices and full employment they know they have blown a huge bubble and unemployment is the lowest its ever been for those seeking employment.

They currently want some deflation, as inflation was far above the stated 2% if you included food and energy costs. The Fed is trying to tighten the money supply.

Havent heard a peep out of the Fed reserve member banks as they are busy off loading houses (toxic debt) in a booming employment economy.

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Old August 12, 2019, 09:45   #8
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Quote:
Originally Posted by Thorack View Post
Well,

With their dual mandate of stable prices and full employment they know they have blown a huge bubble and employment is the lowest its ever been for those seeking employment.

They currently want some deflation, as inflation was far above the stated 2% if you included food and energy costs. The Fed is trying to tighten the money supply.

Havent heard a peep out of the Fed reserve member banks as they are busy off loading houses (toxic debt) in a booming employment economy.

Thorack
And in other news, your savings will now be worthless. Yeah, I know, it's from Yahoo news.

https://finance.yahoo.com/news/depos...040000314.html

Depositors Are Next as Nordic Banks Buckle Under Negative Rates
(Bloomberg) -- Ever since negative interest rates became a thing, banks have been too afraid to pass them on to retail depositors. That may be about to change.

In Scandinavia, where sub-zero rates have been the norm longer than most other places, the finance industry has undergone several drastic adjustments to survive the regime. Banks have relied more on asset management and other services that generate fees, and less on the traditional business of lending and holding deposits. But with no end to negative rates in sight, those changes may not be enough.

The director of the the Danish Bankers’ Association, Ulrik Nodgaard, says shielding retail depositors from negative rates means that “banks are selling their products below cost price.” And that is clearly “a challenge.”

Jesper Berg, the head of the Danish Financial Supervisory Authority in Copenhagen, says that so far banks haven’t passed negative rates on to private customers for “political reasons.” But if they finally do, “it will be interesting to see whether customers would accept that, or vote with their feet” and withdraw their savings.

Banks have so far balked at the idea. The first lender to charge depositors risks losing them, and any industry agreement to coordinate a move would expose banks to cartel charges. At Danske Bank A/S, spokesman Claes Lautrup Cunliffe recently underscored the sentiment, saying it does “not plan to introduce negative rates to private customers, even wealth customers.”

Investors Weigh In

But key investors may not accept that approach much longer. Sampo Oyj, the Finnish holding company that owns about 20% of Nordea Bank Abp, says it’s high time attitudes change on the subject. Kari Stadigh, the chief executive officer of Sampo, says the European Central Bank, which oversees Nordea and other euro-zone banks, needs to stop shirking the issue.

“I don’t think it would necessarily destroy retail banking at all,” Stadigh said in an interview in Helsinki. “People would actually then have to pay for their deposits, so actually it could even bring stability to the banking sector.”

Stadigh says that only when the finance industry acknowledges this will the ECB’s efforts to pump stimulus into the economy really work.

“I don’t think the ECB will reach their goals with the present thinking that they have on monetary policy unless they are able to enforce a framework where all banks would have negative interest rates on their deposits,” he said. “The theory works only when fully implemented, and a full implementation of quantitative easing requires negative deposit interest rates, so that people start to invest and consume, also in the private sector.”

Berg at the Danish FSA says the there’s now a “higher risk” that retail customers would walk out on any bank that forces them to share the cost of negative rates.

But some European banks are already biting the bullet. In Switzerland, UBS Group AG recently decided to charge wealthy clients on deposits that exceed 500,000 euros ($560,000), in addition to introducing negative rates for clients holding large Swiss franc balances. Credit Suisse has said it will impose a fee on customers holding more than 1 million euros.

In Denmark, some smaller banks are also showing signs they’re ready to start passing negative rates on to private customers. Both Ringkjobing Landbobank and Sparekassen Sjaelland-Fyn have signaled they may consider the measure for wealthy clients, according to FinansWatch.

The Danish FSA has warned that low rates increase banks’ incentive to advise customers to move their money from deposit accounts to investment products that come with high fees. The watchdog has made clear it won’t tolerate excessively high fees after Danske was caught overcharging clients.

Berg says it’s clear that development was fueled by the negative-rate environment, as banks look for ways to mitigate the pain.

In the past, banks would “make money from getting cheaper [deposit] funding than market funding," Berg said in July. "That channel throughout Europe is dead.” They would also profit from taking short-term duration risks, “but the yield curve is flat right now, or in that neighborhood, so they don’t get that 1% or 2% which they historically got on doing that sort of business.” And now, “the fee channel is also threatened.”

According to Stadigh, “the thing that’s missing here” is that the ECB isn’t forcing banks to pass negative rates on “fully into society. They do it only where it’s easy.”
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Old August 12, 2019, 16:11   #9
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It's been a long time since saving money in a bank has been a smart move. That is, if it ever was.
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Old August 13, 2019, 15:30   #10
Exit308
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For anyone interested in a good overall primer on the FED and has an hour and a half to spend watching it, I happened upon this video which I will leave here to share.


https://youtu.be/U5IyUFqUN88
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"Barbarism is the natural state of mankind. Civilization is unnatural. It is a whim of circumstance. And barbarism must always ultimately triumph." Robert E. Howard


The truth does not require your belief.

"Fracking involves a two-phase combustion process: the first phase burns borrowed money to produce oil and gas; the second burns the oil and the gas." Dmitri Orlov

Last edited by Exit308; August 13, 2019 at 17:48.
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