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Author Topic: Is the Fed broke?  (Read 1206 times)
cypherdoc
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July 11, 2011, 03:26:37 PM
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http://www.hussmanfunds.com/wmc/wmc110711.htm

"The accounts for achieving this are on the liability side of the Fed's balance sheet. As of Wednesday, there was $67.3 billion in the Treasury general account (which is the account where the Fed books interest earnings on its Treasury portfolio, which is normally repaid to the Treasury for public use). Per recent accounting changes at the Fed, losses on its portfolio of Treasury securities are treated as a negative entry in that account, essentially covering the losses with funds that would normally go back to the Treasury. The "Treasury supplementary financing account" has another $5 billion in liabilities to the Treasury. This is the account set up at the Fed's request where the Treasury issues a "special" series of Treasury bills outside of its normal funding requirements, and deposits those funds with the Fed. Given that the Fed cannot afford the embarrassment of a transparent balance sheet, the liability items to the Treasury presently amount to a $72.3 billion cushion that can be used to cover portfolio losses for the Fed. The concern here is not so much the risk of Fed insolvency per se, but the fact that the public is quietly being used as a backstop for what we continue to view as reckless Fed policy. "
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Yankee (BitInstant)
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July 11, 2011, 03:38:01 PM
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The Fed is so unnecessary. Read this book, http://www.amazon.com/Creature-Jekyll-Island-Edward-Griffin/dp/091298645X/ref=sr_1_1?ie=UTF8&qid=1310398663&sr=8-1

btw- congrats on your 1,000 posts Smiley 

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evoorhees
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July 11, 2011, 03:47:44 PM
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Nobody with a printing press is ever really broke  Wink
cypherdoc
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July 11, 2011, 03:48:20 PM
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The Fed is so unnecessary. Read this book, http://www.amazon.com/Creature-Jekyll-Island-Edward-Griffin/dp/091298645X/ref=sr_1_1?ie=UTF8&qid=1310398663&sr=8-1

btw- congrats on your 1,000 posts Smiley 

LOL, where has all the time gone!

Yes, i read that book in 2007?  helped me navigate the 2007-present financial crisis.  its a classic and so prescient that everyone should read.
cypherdoc
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July 11, 2011, 03:49:58 PM
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Nobody with a printing press is ever really broke  Wink

unless and until the USD crashes...
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July 11, 2011, 03:51:06 PM
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This has nothing to do with bitcoins. Admin please move this thread.

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TraderTimm
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July 11, 2011, 03:52:04 PM
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Spain is going to roll over, Greece as well. Euro is currently hitting the bricks at 1.40, dipping to 1.39859. The 'great experiment' of green toilet paper isn't going so well.

All I see is circumstances where interest rates rise, they won't be able to service the interest payments, much less the primary balance of debt - and then we get to see a "Restructuring Event" that robs most government programs and pensions.

Wish I was kidding, but that is the track we're on. (And no, it doesn't matter who is in the hot seat, we're too far along to really give a crap about politics at this point.)

fortitudinem multis - catenum regit omnia
GeniuSxBoY
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July 11, 2011, 03:52:20 PM
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The is good news for the bitcoin community.
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July 11, 2011, 03:53:09 PM
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This has nothing to do with bitcoins. Admin please move this thread.
Yea, move to politics or economics.

The Fed is not broke so long as they have ink, paper and the 14'th amendment!

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July 11, 2011, 04:00:00 PM
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This has nothing to do with bitcoins. Admin please move this thread.

It has everything to do with bitcoins. I'd love to ask the exchange operators what percentage of their redemptions are in dollars versus euro, etc..

I'll think you find that the primary monetary flow is into dollars. I'd call that associated and relevant, wouldn't you?

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grndzero
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July 11, 2011, 04:55:16 PM
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It has everything to do with bitcoins. I'd love to ask the exchange operators what percentage of their redemptions are in dollars versus euro, etc..
You can ask, I doubt you will get an answer though.


I'll think you find that the primary monetary flow is into dollars. I'd call that associated and relevant, wouldn't you?

The majority of the coins traded are traded in USD.

And no, it's not relevant. Bitcoin exchanges aren't worried about the falling Dollar or Euro, nor do they care about countries going bankrupt except as a punchline.

This stuff needs to go to Economics or Politics

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Melbustus
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July 11, 2011, 05:02:26 PM
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Spain is going to roll over, Greece as well. Euro is currently hitting the bricks at 1.40, dipping to 1.39859. The 'great experiment' of green toilet paper isn't going so well.

All I see is circumstances where interest rates rise, they won't be able to service the interest payments, much less the primary balance of debt - and then we get to see a "Restructuring Event" that robs most government programs and pensions.

Wish I was kidding, but that is the track we're on. (And no, it doesn't matter who is in the hot seat, we're too far along to really give a crap about politics at this point.)



I pretty much agree with this. There is no getting around the inevitable global fiat-fiscal crises, triggered primarily by destruction of the dollar. However, it could *still* take decades. Just because the writing on the wall is obvious and nearly irrefutable doesn't mean it's going to happen tomorrow. There's incredible status-quo inertia with the dollar as the world's reserve, etc. People have been crying fiscal disaster for decades. They're right that it will happen, but we could very well muck along with moderate inflation for decades until we finally get to the straw that breaks the camel's back (which I personally suspect would have something to do with China's GDP getting large enough relative to the US's that they wouldn't care so much about a tanking dollar).

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
cypherdoc
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July 11, 2011, 06:05:12 PM
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this has everything to do with fiat currency and the USD.  why do u think Satoshi put that quote in the code?
Yankee (BitInstant)
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Charlie 'Van Bitcoin' Shrem


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July 11, 2011, 06:09:13 PM
 #14

The Fed is so unnecessary. Read this book, http://www.amazon.com/Creature-Jekyll-Island-Edward-Griffin/dp/091298645X/ref=sr_1_1?ie=UTF8&qid=1310398663&sr=8-1

btw- congrats on your 1,000 posts Smiley 

LOL, where has all the time gone!

Yes, i read that book in 2007?  helped me navigate the 2007-present financial crisis.  its a classic and so prescient that everyone should read.

+1

Ya, great book!

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

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GideonGono
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Long Live The FED


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July 11, 2011, 07:11:42 PM
 #15

Spain is going to roll over, Greece as well. Euro is currently hitting the bricks at 1.40, dipping to 1.39859. The 'great experiment' of green toilet paper isn't going so well.

All I see is circumstances where interest rates rise, they won't be able to service the interest payments, much less the primary balance of debt - and then we get to see a "Restructuring Event" that robs most government programs and pensions.

Wish I was kidding, but that is the track we're on. (And no, it doesn't matter who is in the hot seat, we're too far along to really give a crap about politics at this point.)



I pretty much agree with this. There is no getting around the inevitable global fiat-fiscal crises, triggered primarily by destruction of the dollar. However, it could *still* take decades. Just because the writing on the wall is obvious and nearly irrefutable doesn't mean it's going to happen tomorrow. There's incredible status-quo inertia with the dollar as the world's reserve, etc. People have been crying fiscal disaster for decades. They're right that it will happen, but we could very well muck along with moderate inflation for decades until we finally get to the straw that breaks the camel's back (which I personally suspect would have something to do with China's GDP getting large enough relative to the US's that they wouldn't care so much about a tanking dollar).

I agree. It is really hard to totally destroy an economy, even if you try really hard. I am from Zimbabwe and I'd been predicting total collapse of our currency since 2001 but it wasn't until 2009 that inflation got so bad that the currency became so unusable that Mugabe begrudgingly allowed dollarization. And this was with him putting in maximum effort to screw the economy. But then again there are so many other factor that no one can really know when the bubble will burst. I just hope it's not anytime soon because I don't have enough gold, silver and btc yet  Cheesy

joulesbeef
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July 11, 2011, 07:41:36 PM
 #16

the fed doesnt have printing presses, the treasury does. (there is some much twaddle out there about the fed that it is nearly impossible to discuss.

The Dollar isnt going anywhere. Most countries increased their money supply in a bid to lower the value of their currency so that they could increase their exports. Which is why the IMF keeps going on about currency wars.

WE really arent expanding our money supply that much, while the m1 is exploding the m3 has actually come down.
the m2 growth right now is at 5.8%  and it normally averages 6% so even we really are near average with that. In 2001 it shot up 12%

here is the current M2


you also know that china has a larger money base than we do and yet their GDP is 5.8 trillion where ours is 14 trillion, and they arent even a reserve currency and their money supply expanded by 26% last year

india was similar to china in money growth.

yeah times are tough, we have a larger debt than we should be holding(but nothing really that extreme compared to japan, greece, italy and many other countries), but times arent as tough as some people are making it out to be.

And last know that the dollar will tend to fall against any country whose standard of living are increasing. As countries want to join the american style of living, our dollar will fall versus their currency, and it has nothing to do with anything we did, or our country falling or anything. It has to do when you go to a developing nation our money is like gold and makes us feel like kings, once they are developed, things rise in price til they are nearly equal with our own. it is nothing but standards of living.(not trying to claim this is the sole cause of the dollar drop, but it is a good bit of it)

the "sky is falling" people tend to have an agenda. WE are in rough waters, but the sky isnt falling, and we are still the worlds most powerful single nation economy.

mooo for rent
indio007
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July 11, 2011, 11:11:16 PM
 #17

None of any of this matters. Regardless of what people want to believe the FED's only legal obligation to pay anything is on it's circulating notes. There aren't that many in circulation compared to the electronic $$$. The only guaranteed electronic $$$ is what is considered a deposit in an FDIC insured account. All else is just junk. Sure sue in court, now you suing under a contract as opposed to it being a straight up promise to pay. Things get quite muddy in those circumstances.
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