Fed to scale back bond buying

(19-12-2013, 02:31 PM)Antifragility Wrote:

(19-12-2013, 02:21 PM)freedom Wrote: Mr. Bernanke is one of the greatest economists of this era. His deep understanding of the economy of United States and way of handling of financial crisis is second to none.

Normal people on the street who are challenging his intelligence are just showing pure ignorance.

Oh yes, because borrowing from the future has absolutely no consequences. And so what about putting future generations on the hook? They deserve it yes?

What borrowing from the future? Did/does the Fed borrow? Hell NO!

The Fed creates money, it does not borrow.

Please understand the Fed before judging them.

Fed creates money at the expense of its bond holders, IMO USD is overvalued in view of the numbers of notes and the value of the nation. Whether Bernanke is the greatest economists, we will see how he handle the next crisis.

USD is currency for the United States. Its value does not change. US$1 today is US$1, tomorrow it continues to be US$1.

If you are talking about overvaluation compared to other currencies, that's nothing related to the Fed, but the fault of other currencies. USD is for the United States to use as a currency. The Fed has its freedom and right to create as much as USD as it deems fit. The Fed does not direct other central banks for their monetary policies.

Quote:Current functions of the Federal Reserve System include:[12][25]

To address the problem of banking panics
To serve as the central bank for the United States
To strike a balance between private interests of banks and the centralized responsibility of government
To supervise and regulate banking institutions
To protect the credit rights of consumers
To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of
maximum employment
stable prices, including prevention of either inflation or deflation[26]
moderate long-term interest rates
To maintain the stability of the financial system and contain systemic risk in financial markets
To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
To facilitate the exchange of payments among regions
To respond to local liquidity needs
To strengthen U.S. standing in the world economy

it does not include anything related to valuation to other currencies.

I am not blaming Fed in overvalue USD, but I am suggesting that USD shouldn't worth S$1.26 now, so much monies were printed by Fed and yet no dilution? How could this explain when US economy is still fragile comparing to what we have here? While Fed may have did the right thing to save the economy by keep printing and printing, but unfortunately most of these printouts end up in stocks market, which causes booming (or rather bubbles) in US, China and everywhere in the world. If the bubbles burst, I guess some peoples will point the finger on the QE. Some experts have suggested that QE should last forever, I think, if the US want to let it run forever, the rest of the world should follow and to match up the proportion. Anyway I just don't feel comfortable with such a prolong QE with huge amount of money added every month, this 10b reduction seems to test the market only, more reduction should be expected.

So much USD were printed, yet US has no meaningful inflation. So why must there be dilution? It could just mean MAS has printed a lot of SGD. Whether USD is worth S$1.26 is up to MAS and the market, not the Fed.

I don't know who said that US economy is still fragile. But fragile is a subjective word. It really depends on who is saying it.

What evidence do you have that most of these printouts end up in stock market? Or what's wrong with that? The total market capitalization of US is not really much larger than pre-crisis. I don't think there is any evidence that most of those money ends up in the stock market. But most money will end up in some assets, very little money is in circulation. Stock could well be one of the assets that draw the money. But there is nothing wrong with it if stocks are cheap and they are not expensive.

What bubble? Before bursting, how do you define whether it is a bubble? Or what's wrong with a bubble which does not burst or every bubble must burst?

And if? If the world ends tomorrow, we all are dead. So should I worry about it?

Then unless you are a US citizen, the QE in United States does not concern you that much. You should be more concerned about your own government and central bank than the Fed.

You got the point that the bubbles and fragile stuff are subjective, but calling Bernanke as the greatest economist isn't subjective too? True that I am not a US citizen and should not judge on the US economy and Fed policies. But how can you say that the QE in US does not concern our local peoples, where US is still the biggest economy in the world? How many Singaporean gone bankrupts when the 2000 and 2008 crisis hit, how many Singaporean lost their jobs during these crisis, how many peoples affected by the structure deposits that linked to Lehman? Obviously I do not know the figure, but I can't say zero.

First I did not call Bernanke the greatest economist, but one of the greatest economists. It's not subjective as you can see from all the economy policies he implements. It works and helps the US economy from the recession. If that's not enough for one of the greatest, I don't know what makes one.

Secondly, it is easy to blame others for their own mistakes. The QE is implemented in US. If it effects other parts of the world, it is up to other parts of the world to prevent it from happening. The Fed does not have responsibilities to the rest of the world. You can blame it for all the evils, but it does not have your interest at all. As for the bankrupted Singaporeans, I can't say that it is because the QE or the US. It is up to each and everyone of them to decide their financial future, not the Fed or the US. Neither the Fed or the US forces Singaporeans to invest into structure deposits linked to Lehman Brothers. If it is a blame game, we can all blame why there is a human race.

(19-12-2013, 04:47 PM)freedom Wrote: First I did not call Bernanke the greatest economist, but one of the greatest economists. It's not subjective as you can see from all the economy policies he implements. It works and helps the US economy from the recession. If that's not enough for one of the greatest, I don't know what makes one.

Secondly, it is easy to blame others for their own mistakes. The QE is implemented in US. If it effects other parts of the world, it is up to other parts of the world to prevent it from happening. The Fed does not have responsibilities to the rest of the world. You can blame it for all the evils, but it does not have your interest at all. As for the bankrupted Singaporeans, I can't say that it is because the QE or the US. It is up to each and everyone of them to decide their financial future, not the Fed or the US. Neither the Fed or the US forces Singaporeans to invest into structure deposits linked to Lehman Brothers. If it is a blame game, we can all blame why there is a human race.

Clearly there is no reasoning that is enough for your extremist attitude, so I shall save my breath.

(19-12-2013, 04:07 PM)freedom Wrote: So much USD were printed, yet US has no meaningful inflation. So why must there be dilution? It could just mean MAS has printed a lot of SGD. Whether USD is worth S$1.26 is up to MAS and the market, not the Fed.

I don't know who said that US economy is still fragile. But fragile is a subjective word. It really depends on who is saying it.

What evidence do you have that most of these printouts end up in stock market? Or what's wrong with that? The total market capitalization of US is not really much larger than pre-crisis. I don't think there is any evidence that most of those money ends up in the stock market. But most money will end up in some assets, very little money is in circulation. Stock could well be one of the assets that draw the money. But there is nothing wrong with it if stocks are cheap and they are not expensive.

What bubble? Before bursting, how do you define whether it is a bubble? Or what's wrong with a bubble which does not burst or every bubble must burst?

And if? If the world ends tomorrow, we all are dead. So should I worry about it?

Then unless you are a US citizen, the QE in United States does not concern you that much. You should be more concerned about your own government and central bank than the Fed.

This is obviously because the entire world is going through a massive deleveraging led by the US.

If the US economy isn't fragile, why has employment participation rates fallen to the 1970s level?

If you truly think stocks are cheap, I have a unicorn for sale.

Unfortunately, the US IS the world's Central Bank. They could always just focus on their own matters - and give up Reserve Currency status.

(19-12-2013, 02:44 PM)freedom Wrote:

(19-12-2013, 02:31 PM)Antifragility Wrote:

(19-12-2013, 02:21 PM)freedom Wrote: Mr. Bernanke is one of the greatest economists of this era. His deep understanding of the economy of United States and way of handling of financial crisis is second to none.

Normal people on the street who are challenging his intelligence are just showing pure ignorance.

Oh yes, because borrowing from the future has absolutely no consequences. And so what about putting future generations on the hook? They deserve it yes?

What borrowing from the future? Did/does the Fed borrow? Hell NO!

The Fed creates money, it does not borrow.

Please understand the Fed before judging them.

If the Fed can create money seemingly without limits, why aren't all of us multi-millionaires?