Fed on brink of fifth(?) round of quantitative easing

[o_e_l_e_o]

well, i heard that even if you have fdic insurance

FDIC insurance is a somewhat different issue, but as I pointed out in an earlier post in this thread, the FDIC only has enough assets to cover about 0.5% of what they claim to insure. If a big enough bank collapses, either FDIC's assets will run out or the government will just have to print even more to cover all the losses.

i don't get how one country "owes" another country money.

As I explained above. They are buying bonds and other securities from the Treasury.

but they are printing money and there's no way you can know how much exactly. no one can. maybe on weekends or holidays they go in and print a couple billion and give it to whoever. you wouldn't know.

They print securities which are traded on the open market for money.

so then we agree that the printing presses can't be audited about how much money is coming off them?

There are more ways to create money than the Fed printing it. Every time any bank anywhere hands out a loan or a line or credit to anyone, that's brand new money entering circulation.

the government will lower the interest rates to 0 then.

Securities are sold at fixed rates for 5 years, 10 years, 20 years, and so on. Changing the interest rate today will only affect the interest on new debt issued from that change.

they might even file for bankruptcy protection so they can start the slate clean again.

File with whom? Themselves?

i'm sure there's some way they can get out of their problem. don't you?

Yes. It's called shutting down the vast majority of government spending. If we have no money to spend and no one will lend us any more, then we don't have any other choice.

no one needs to lend the us government money because they create the money in the first place.

Again, they are creating securities which must be bought. And even if you think endless printing of raw cash is the solution to this, just look at places like Zimbabwe or Venezuela where it costs $100 trillion to buy a loaf of bread.

[1714307350]

1714307350

[1714307350]

1714307350

[1714307350]

1714307350

[1714307350]

1714307350

[1714307350]

1714307350

[1714307350]

1714307350

[NotATether]

It is also called the Magic Money Tree. It's amazing when adults in jackets and ties, on whose decisions the lives of hundreds of millions of people depend, live and act on the assumption that money does not need to be earned, it can simply be spent recklessly, because it just appears out of nowhere.

What is more surprising is that various other goverments also believe they can print money out of thin air and everything will be find, copying the US. And I'm not talking about the infamous hyperinflation historical events - no, these are other first world countries with economists who actually believe its a good idea! (Even Peter Schiff for the record hates this abomination of an idea).

[Wind_FURY]

Fed on brink of fifth(?) round of quantitative easing

OP, no, the Federal Reserve cannot risk another round of Quantitative Easing while inflation is high. That's the difference between 2008 and 2023. During 2008, the Federal Reserve had some elbow-room to expand their balance sheet, and print more money. They currently don't have it. What Jerome Powell should actually be doing is, to be more aggressive in hiking rates, and to raise it more than the rate of inflation and guide it down. It will cause a recession, and the recession is what will lower demand, then therefore also lower inflation. But if Jerome Powell doesn't control inflation and lower it, inflation will cause the recession while inflation itself remains high. It will be Stagflation = Recession + High Inflation, a harder economic situation.

[larry_vw_1955]

Again, they are creating securities which must be bought. And even if you think endless printing of raw cash is the solution to this, just look at places like Zimbabwe or Venezuela where it costs $100 trillion to buy a loaf of bread.

so the national debt is somewhere around 32 trillion dollars. nobody really knows what that means or if it means anything at all. you could add a couple zeros to that and it probably has no affect. it's just an abstract number unless it's causing real world consequences. it's not something we need to pay back it's just a number. apparently.  

[cryptosize]

Again, they are creating securities which must be bought. And even if you think endless printing of raw cash is the solution to this, just look at places like Zimbabwe or Venezuela where it costs $100 trillion to buy a loaf of bread.

so the national debt is somewhere around 32 trillion dollars. nobody really knows what that means or if it means anything at all. you could add a couple zeros to that and it probably has no affect. it's just an abstract number unless it's causing real world consequences. it's not something we need to pay back it's just a number. apparently.  

This type of American arrogance is going to bring us down (the entire Western empire).

Ancient Rome was that arrogant right before it fell.

Watch this video if you're open-minded:

https://www.youtube.com/watch?v=OuOcnGAv4oo

[larry_vw_1955]

This type of American arrogance is going to bring us down (the entire Western empire).

that's how the national debt is looked at. i didn't make that up. normal consumers have a debt limit. not the us government. that's just how it is and everyone understands that. including you.

Watch this video if you're open-minded:

https://www.youtube.com/watch?v=OuOcnGAv4oo

i'll check it out but the us government can only fail if its military fails. which is not likely to happen. 

[cryptosize]

i'll check it out but the us government can only fail if its military fails. which is not likely to happen.  

With this kind of "leadership" (Biden + woke folks)?

And 2 trillion USD wasted in Afghanistan already?

Sorry, but the US army (USD backing = Proof of War) doesn't seem to be in shape anymore... the final episode will be played in Taiwan vs China (2026, next BTC bear market).

[o_e_l_e_o]

you could add a couple zeros to that and it probably has no affect.

Of course it would. Nobody is going to lend us money when it is clear they will never be repaid.

i'll check it out but the us government can only fail if its military fails. which is not likely to happen. 

The military will only survive as long as we can pay for it. If we don't raise the debt limit, or no one will lend to us, or we devalue the dollar by printing trillions more, then the government can't keep spending, and the military budget gets slashed by billions.

[larry_vw_1955]

Of course it would. Nobody is going to lend us money when it is clear they will never be repaid.

why lend to the us government in the first place? why would anyone do that? that just causes inflation because the government has to print more money so they can repay them. so people like that are actually hurting the economy.

The military will only survive as long as we can pay for it.

you don't have a choice. you HAVE to pay for it if you're a us citizen that pays taxes.

If we don't raise the debt limit, or no one will lend to us, or we devalue the dollar by printing trillions more, then the government can't keep spending, and the military budget gets slashed by billions.

do we really need 4 different armed forces? maybe one is enough. so maybe trimming the fat would be a good thing. what you don't want is the world to adopt some other currency besides the dollar to measure the price of oil in. some expert was saying how if that happens then the dollar is over and done with.  

With this kind of "leadership" (Biden + woke folks)?

biden is not to be taken seriously. he won't be coming back for a second term i guess. but his cabinet sure has come up with some bad policies to try and attack peoples' freedoms. there's a new one out there that might try and make it illegal for people in usa to use a vpn. google the RESTRICT ACT 

[o_e_l_e_o]

why lend to the us government in the first place? why would anyone do that? that just causes inflation because the government has to print more money so they can repay them. so people like that are actually hurting the economy.

Because the entities lending us money do not care about our economy. They only care about making profit for themselves.

you don't have a choice. you HAVE to pay for it if you're a us citizen that pays taxes.

I didn't mean us as in individuals, but us as in our government.

what you don't want is the world to adopt some other currency besides the dollar to measure the price of oil in.

It's already happening. Big economies like India, China, Russia, are already in talks to ditch the dollar.

[cryptosize]

It's already happening. Big economies like India, China, Russia, are already in talks to ditch the dollar.

Yeap, they even plan to introduce a commodity-based currency (kinda like IMF's SDR basket currency).

Regular people (middle class) should ditch USD (and EUR etc.) before the total collapse... The Great -Currency- Reset (aka CBDC introduction) is coming soon!

[DaveF]

well, i heard that even if you have fdic insurance

FDIC insurance is a somewhat different issue, but as I pointed out in an earlier post in this thread, the FDIC only has enough assets to cover about 0.5% of what they claim to insure. If a big enough bank collapses, either FDIC's assets will run out or the government will just have to print even more to cover all the losses.

Not accurate for several reasons.
1) You are assuming that the banks hold $0 when they go under so they FDIC has to cover everything. Most of the time the banks have MOST but not ALL of the money.

2) Even now with Signature and others that were closed, the other banks are taking over the FDIC did cover some but the new banks have enough to cover the rest. That is the point.

3) The FDIC also gets the profitable debt that they can then resell if needed.

AND also keep in mind, it's also a little like care insurance. You car is worth $30000. You hit a tree. It's going to cost $15000 to fix it. The insurance company totals and takes your car and cuts you a check for $30000 minus you deductible and then takes you wrecked car. And then proceeds to part it out to scrap yards and such for $20000.
They actually come out with more money then if they fixed your car.

This is also happening here. The banks WERE profitable. They just, at the moment had a lot of issues. There are plenty of people wiling to buy the scrap parts of the banks because they do have a lot of value.

-Dave

[larry_vw_1955]

Because the entities lending us money do not care about our economy. They only care about making profit for themselves.

so if that's the case why feel sorry for them if the dollar goes to 0?

It's already happening. Big economies like India, China, Russia, are already in talks to ditch the dollar.

well europe tried doing that with the "euro" i don't think it really had any affect on the us dollar. but we'll see 

[o_e_l_e_o]

You are assuming that the banks hold $0 when they go under so they FDIC has to cover everything. Most of the time the banks have MOST but not ALL of the money.

I don't think I made that assumption. Even if banks can cover 95% of deposits (which is a very generous estimate), FDIC insurance is still insufficient to cover the remainder. And often the money that the banks do have is prioritized for large corporations and entities, while average users (the exact ones who are holding amounts covered by the FDIC threshold) are the last in line to receive anything.

so if that's the case why feel sorry for them if the dollar goes to 0?

I don't. I care about the fact that all my family and friends who don't own bitcoin will lose everything if the dollar goes to zero.

well europe tried doing that with the "euro" i don't think it really had any affect on the us dollar. but we'll see

European countries did not tend to trade in USD prior to the euro. They generally traded in their own currencies, British pounds, or Deutsche Marks. Countries like India, China, and Russia have used the dollar for international trade for decades. It looks like that will soon end.

[DaveF]

You are assuming that the banks hold $0 when they go under so they FDIC has to cover everything. Most of the time the banks have MOST but not ALL of the money.

I don't think I made that assumption. Even if banks can cover 95% of deposits (which is a very generous estimate), FDIC insurance is still insufficient to cover the remainder. And often the money that the banks do have is prioritized for large corporations and entities, while average users (the exact ones who are holding amounts covered by the FDIC threshold) are the last in line to receive anything.

Picking on Signature the FDIC estimates it will cost them (FDIC) about $2.5 billion. That's a middle of the road number. If everything goes wrong it could cost them up to $5 billion. If everything goes perfectly they can actually come out ahead (not going to happen but the potential is there). Remember, they are selling off chunks of the bank. Some people my overbid on some things because they see a larger value then Signature did.

At the moment I really am more concerned with the smaller banks that most of us don't even know about that don't have any form of insurance. Remember, FDIC is not mandatory. And there are a lot of small banks in small town USA that are going to be in deep trouble soon. Too many people are over extended. And these were the places that loaned them money.

-Dave

[panganib999]

As much as I wanna be optimistic, the thing is that even despite the fact that US is one of the frontiers of bitcoin and are one of the biggest users of bitcoin by trade volume, I still don't believe the average American will be so accepting of using bitcoin for daily use. It took them a while to shut the fuck up about the mask situation, imagine how rowdy these people will become when the topic of using another form of currency besides the dollar comes into play. If the US government doesn't change its ways on how it manages its money, the economic crash we've all been expecting and fearing about will inevitably happen and it will take everyone with it. That's going to be for sure.

[larry_vw_1955]

I don't. I care about the fact that all my family and friends who don't own bitcoin will lose everything if the dollar goes to zero.

if the dollar goes to zero, that would pretty much mean no one has a job. who wants to work for $30 per hour when a loaf of bread costs $1000? owning bitcoin won't change any of that.

Countries like India, China, and Russia have used the dollar for international trade for decades. It looks like that will soon end.

As it probably should. The usa has bullied the rest of the world for too long.

[cryptosize]

if the dollar goes to zero, that would pretty much mean no one has a job. who wants to work for $30 per hour when a loaf of bread costs $1000? owning bitcoin won't change any of that.

You don't know what black markets are, do you?

Even in Weimar Republic, goods didn't stop existing. They just shifted to... black markets. Same for USSR.

https://www.youtube.com/watch?v=OuOcnGAv4oo

Prediction: Instagram/TikTok/OnlyFans thots will be glad to offer (real-life) sex services for the price of a... sandwich (hmmm, let's say 500 sats ).

[o_e_l_e_o]

if the dollar goes to zero, that would pretty much mean no one has a job. who wants to work for $30 per hour when a loaf of bread costs $1000? owning bitcoin won't change any of that.

Of course owning bitcoin will change that.

Take any country which has recently experienced rampant hyperinflation - Zimbabwe, Venezuela, Argentina, etc. It costs billions (or more) of their local currency to buy a loaf of bread. So what do these countries do instead? They use a different currency altogether. Maybe USD, maybe EUR, maybe something else. All the people who owned this other currency prior to the hyperinflation event are in a far better position that people who are now trying to purchase this other country at exchange rates of billions to one.

If the dollar goes to zero, and it costs a million dollars to buy a single euro (substitute with any other large currency), but I still own a bitcoin worth ~26,000 euros, then I will fare significantly better than if I owned no bitcoin.

[bittraffic]

if the dollar goes to zero, that would pretty much mean no one has a job. who wants to work for $30 per hour when a loaf of bread costs $1000? owning bitcoin won't change any of that.

Of course owning bitcoin will change that.

Take any country which has recently experienced rampant hyperinflation - Zimbabwe, Venezuela, Argentina, etc. It costs billions (or more) of their local currency to buy a loaf of bread. So what do these countries do instead? They use a different currency altogether. Maybe USD, maybe EUR, maybe something else. All the people who owned this other currency prior to the hyperinflation event are in a far better position that people who are now trying to purchase this other country at exchange rates of billions to one.

If the dollar goes to zero, and it costs a million dollars to buy a single euro (substitute with any other large currency), but I still own a bitcoin worth ~26,000 euros, then I will fare significantly better than if I owned no bitcoin.

Although many were also thinking that USD will hyperinflate like the Zimbabwe Dollar, the USD might not really go that low even if it will be debased. Looking at UK's money they were not that low after the dollar displaced them, their money is still quite high even today.

Yuan may be used widely in international trade as seem to be what is happening with BRICS nation, China knows how hard it is to keep up on top which is why they are encouraging countries to just trade with currency of every country.