Bitcoin Forum

Speaking of bubbles....

http://article.3q.org/wp-content/uploads/2013/01/9e7f8__FedBalanceSheet_0.jpg

And these money will flow into BTC market without creating new jobs  ::)

Why this is problem????? ( I know most people think this as "printing money", but what is the difference of holding cash vs. holding US Government bond, they are all US government created monetary instrument) And the only thing Fed has done is exchange private held US Government bond with private held Federal Reserve Note. The action itself almost has no impact except banks now has no interest coupon from US Government.

Fed do this because people think it is printing money, so people will act the way Fed want them to. The action itself is almost a gimmick, pretend to do sth without doing anything.

This massive balance sheet is not itself a problem so much as a billboard showing what a disastrous state the financial system is in.
Most of that money has been spent buying financial toxic waste i.e. debts owed to banks (and pretend banks - Golden Sacks) by borrowers which should be defaulting, to cleanse the system. It is only debt defaults that eliminate credit-based money and reduces the risk of systemic failure or eventual hyperinflation.

The balancesheet do show Fed is desperation to move the economy (without too much success)

As I read, about 1/3 is MBS and rest is mostly government bonds

Anyway, both banks and government are holding lots of cash now, but they have a heavy debt corresponding to those cash. Actually the central bank can just write off those debt and many problem will disappear. But they never do this, they will keep those debt and give pressure on government and banks

This is the most strange part of the current debt driven financial system: The only way for government and commercial bank to payback the debt is to borrow more and consume more

And if the government tried to reduce cost, their reduction in cost will lower the total consumption of the whole society and in turn generate less tax income, if they raise tax, it will further reduce the consumption and raise jobless rate, this is a dead end. So they finally come up with an idea to only raise the tax for rich people, but that exactly prove that in a debt driven economy, the only way to reduce the debt is eliminate savings from rich people, so finally everyone do not have any saving and always borrow to spend

and thats when we take over!