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RaysGoodLiquor
| Favorite team: | LSU  |
| Location: | Deep Dark Dirty |
| Biography: | |
| Interests: | |
| Occupation: | |
| Number of Posts: | 297 |
| Registered on: | 8/16/2010 |
| Online Status: |
Recent Posts
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re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/18/10 at 2:15 am to foshizzle
quote:
The Fed is earning interest from mortgage securities and from Treasuries both. Liabilities are mostly currency and bank deposits.
And they pay their light bill out of the interest they earn, right? They don't just create new money, they have to get it from their earnings, right?
0
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 8:34 pm to foshizzle
quote:
The Federal Reserve doesn't have to have any "hard" assets backing anything, nor does it need to given its mission.
So why do they (until recently maybe?) predominantly buy treasuries? If the value of the asset after they purchase it is not relevant, why not buy ... anything? Trading cards, cabbage patch dolls, collector plates, antiques ... ? I believe what you are saying I just don't understand why they would predominantly buy low risk securities if the fate of that security after they purchase it doesn't matter.
EDIT: My bad, by "hard" assets did you mean things that aren't paper?
All I'm asking is - every year, the fed rebates its profit after dividends to Congress, right? What happens if they instead post a loss?
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 8:08 pm to LSURussian
quote:
The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill.
I thought the fed's operating expenses were paid for by the interest it received from its assets.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 8:06 pm to foshizzle
quote:
Ray, no disrespect intended but a bunch of us actually have professional experience in this field. Based on your questions you don't. There's nothing wrong with that, I don't understand a lot of other professions myself but I don't pretend that I do and am willing to sit back and learn in those cases rather than lecture those who actually do know something.
That's great. what's your point?
quote:
Yes - and belief in the ability to reliably collect gobs of tax money is an asset and they perform this transaction all the time. The federal government does not really have to sell anything else, at least not yet.
I'm referring to the balance sheets of the federal reserve banks, not the balance sheet of the U.S. Government.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 7:03 pm to RaysGoodLiquor
The fed remits its net profits after paying dividends to the U.S. Government - does that mean if they had net losses the U.S. Government would pay for it?
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 6:58 pm to TROLA
quote:
Who's balance sheet? Be specific
The balance sheet of the federal reserve bank which bought the asset.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 6:33 pm to LSURussian
quote::rotflmao:
The word "issue" as you used it in earlier posts in this thread is totally different from the way the word is used in the link you provided.
:rotflmao:
OKaay!!!!
Care to show me where in the law it states that the Treasury "issues dollars" as you claim?
quote:
Most of the money supply is created through the fractional reserve process. And no way am I going to try and explain that to you....
You don't have to genius, I understand it quite well, its just not that complicated. And its good for you, too, because you're probably not even capable of explaining it, at least not without letting on that you are superior to everyone.
quote:
Good luck to you in your quest to expand your financial knowledge.
Good luck to you in your quest to impress everyone!
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 6:06 pm to RaysGoodLiquor
Here's some more improper terminology being used by the law which creates the fed:
LINK
And more:
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
quote:
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized.
LINK
And more:
quote:
In order to furnish suitable notes for circulation as Federal reserve notes, the Secretary of the Treasury shall cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent alterations, and shall have printed therefrom and numbered such quantities of such notes of the denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000 as may be required to supply the Federal Reserve banks. Such notes shall be in form and tenor as directed by the Secretary of the Treasury under the provisions of this chapter and shall bear the distinctive numbers of the several Federal reserve banks through which they are issued.
LINK
Looks to me like the LAW says the treasury PRINTS it and the fed ISSUES is, but I guess you know more about the proper terminology than the actual law by which the fed derives its authority.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 5:59 pm to LSURussian
quote:
No, it isn't. The Fed does not have to sell an asset in order to pay for something. It creates "money" every time it pays for anything, including the light bill.
The money it creates goes down as a liability on their balance sheet. To remove that liability they have to exchange an asset for it.
quote:
The Fed does not "issue" dollars.
It expands the money supply. It "creates" money.
The Treasury Department "issues" dollars by printing them. I don't think you understand that your your terminology is improper.
The treasury department doesn't issue any dollars, they print currency. It doesn't turn into actual money till the fed puts it into circulation. Try reading a dollar bill, it says "Federal Reserve Note". I think you've got your terminology wrong.
BTW, you might want to inform U.S. Code that its using the wrong terminology:
quote:
Such application shall be accompanied with a tender to the local Federal Reserve agent of collateral in amount equal to the sum of the Federal Reserve notes thus applied for and issued pursuant to such application.
LINK
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 5:38 pm to LSURussian
quote:
Ummmmmm.....I'll have to go with 'snob' on that one.
You can be both.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 5:06 pm to LSURussian
quote:
And you say I WASTED YOUR TIME?!?
Yes. All you've done is make sure everyone knows how smart you must be without providing anything of actual value to the conversation. That sort of behavior is consistent with snobs and bullshite artists alike, which are you?
quote:
The Fed does not pay its liabilities with its assets ....
Federal reserve notes and deposits are liabilities of the fed. Treasuries are assets of the fed. When it sells those securities back onto the market, it is paying a liability with an asset.
I'm beginning to think you're probably more of a bullshite artist than a snob. I should have figured it out when you falsely accused me of saying that the fed "printed" the money just so you could show the world how smart you are for knowing that the treasury prints currency.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 4:39 pm to LSURussian
Thanks for wasting my time.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 4:36 pm to LSURussian
quote:
Wrong about what? The Fed doesn't print "newly issued dollars."
I never said the fed printed anything.
quote:
" That is a function of the Treasury Department.
Oh really? The treasury prints currency? Wow, I didn't know that. Obviously only someone as brilliant as yourself could possibly comprehend it. What a genius you are!
quote:
Maybe you also need to research the meaning of money supply so that you can ask questions using the appropriate terminology.
Maybe you should read things before you reply to them, because I never said the fed printed anything.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 4:11 pm to LSURussian
quote:
quote:
All of the treasury obligations, mortgages, etc. that the Fed buys in exchange for newly issued dollars.
This doesn't happen. You really need to read up on how the Fed works.
Done.
quote:
Open market operations--purchases and sales of U.S. Treasury and federal agency securities--are the Federal Reserve's principal tool for implementing monetary policy.
LINK
Looks like you were wrong.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 4:08 pm to LSURussian
quote:
Sorry, but I'm wasting my time and yours trying to explain the Fed to you when you don't understand basic monetary economics or how implementation of monetary policy works in the U.S.
But you have yet to try to explain anything. All you've done is issue snotty remarks to make sure the world knows how smart you are.
You can't even explain what the fed uses to buy mortgage securities with. Must be dizzy way up there!
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 3:45 pm to LSURussian
quote:
I can explain it to you, but I can't understand it for you.
Then please explain it to me. What is the fed using to buy the mortgage securities it is obtaining?
ME
quote:
All of the treasury obligations, mortgages, etc. that the Fed buys in exchange for newly issued dollars.
YOU
quote:
This doesn't happen.
What doesn't happen?
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 3:05 pm to LSURussian
quote:
quote:
Let's say they buy $1,000,000,000,000 worth of home mortgages and they turn out to be worth $1,000,000,000 instead. How do they make up the difference?
They don't.
So what incentive does the fed have to buy safe assets? Why don't they just buy up junk bonds instead?
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 3:04 pm to LSURussian
quote:
Think about what you're saying: the dollar is backed by dollars. That is really what you're saying.
The dollar is backed by promises to pay a debt in dollars. Yes.
quote:
U.S. government debt issued by the Treasury Department are dollar investments which pay interest. If the Fed buys government debt, they are buying dollar instruments.
Those instruments don't "back" the dollar. They are dollars. If it was the way you think it is, it would be one giant circle revolving off into infinity.......and beyond!
How "are" they dollars? The dollar bill in my pocket doesn't pay interest. What about all the things the fed buys that aren't treasuries?
quote:If the fed doesn't issue dollars in exchange for all the mortgage debt they are buying, what do they issue? Lollipops?
You really need to read up on how the Fed works.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 1:31 pm to Interception
quote:
You have not explained why they are in the red?
Let's say they buy $1,000,000,000,000 worth of home mortgages and they turn out to be worth $1,000,000,000 instead. How do they make up the difference?
re: Airfare: How does this make sense?
Posted by RaysGoodLiquor on 8/17/10 at 11:45 am to Tigris
quote:
It is a mistake to ascribe "sense" to airline prices. The best thing is simply to look for the loopholes and exploit them.
If more people actually did that, the prices would probably start to make more sense in response.
re: Fed balance sheet - a question
Posted by RaysGoodLiquor on 8/17/10 at 11:20 am to foshizzle
quote:
If the bonds that were purchased (mortgages) don't bring in enough dollars to offset the interest on the new Treasury debt, the result is simply a reduction in money supply.
What new Treasury debt? How does the purchasing of mortgages by the fed cause the treasury to issue more bills and bonds?
So its just a coincidence the total value of their assets including treasury bonds, mortgages, gold, etc. happens to slightly exceed the total value of their liabilities, including issued federal reserve notes and deposits?
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