What would happen without the FED?

So you haven't read the Federal Reserve Act.

I thought not.

 

LMAO. Iriemon knows I've read it. We have debated several times and he has forced me to several times. What is your proof it isn't private? The fixed 6% stipend? Yeah, that is what Buffet just bought out BoA for. The non-ability to sellout of the most profitable position the world has ever known? Making a profit off the richest nation the world has ever seen, please. The fact the "president" picks who runs it? I guess all those chosen as chairman being the exact same as who the FED would pick themselves is merely a coincidence. You either are disingenuous or naive as hell.

 

It is entirely possible that market equilibrium can be achieved only at a price below zero. Sellers who must pay to have their stock hauled away because there are no buyers are not imaginary constructs, it happens all the time.

It is not impossible, given the economic ramifications of a free fall in housing prices, that the US economy could enter a death spiral if the housing market sought supply and demand equilibrium. Housing prices would collapse, banks would fail by the thousands, millions would be tossed out of work. House prices would decline further, more banks would fail, more unemployed, less money in the economy etc, etc.

it is not improbable that without government intervention the equilibrium price in the housing market would have settled at or below zero and a great majority of the national wealth would have disappeared in the process.

Is it a good idea to let a market fall to an equilibrium that precludes liquidity or is it better to maintain liquidity so the market can recover?

Economics 202.

 

The fact that you had to be forced to read a law you're opining about says a lot.

The FRA is a landmark of wise legislation, which has kept our monetary policy from being politicized (or over politicized at least) and played a large role in the stupendous increase in wealth our economy experienced since it was passed.

 

The basic indicia of ownership of an organization includes the ability to sell or transfer it, the ability to control it, and the ability to share in the profits.

The member banks that owns Fed shares are required by law to buy them in a specified amount. They cannot sell or transfer them. It gives them no ability to control the Fed or its policy making decisions. And it gives them no right to the profits. Had you read the statutes I cited you would know that.

That's not ownership by any reasonable application of the word.

 

The ability to control it. Check

The ability to profit. Check

The ability to sell it. ????

The only part in question, however, being the fact any private venture has the ability to fail, while being party of the web of the FED has zero chance of failure, I would think negates any and all perceived negative look about those who are "forced" to keep it. LOL

 

All you got are fallacies? Good.

 

Did you not read the statutes where the president appoints all members of the Fed board and FOMC, and that there has to be a certain percentage outside the banking industry, and that his appointments are approved by the Senate?

The member banks don't have control over anything. To the contrary, the Fed has control over them.

Did you not read the statutes that forbids them to share in the profit, that by law they only get 6% and no more regardless of how much money the Fed earns, or that the Fed remits its profits to the Treasury every year?

Did you not read the statutes that requires member banks by law to pay to the Fed a portion of their capital, and that they must maintain this level, and that they cannot sell or transfer their shares?

Who said it was a negative for them?

The point is the member banks don't own the Fed. No one does, maybe he American people.

 

It will "regulate" speculation in all markets. That doesn't mean there won't be any bubbles, it just means they'll be less frequent and severe.

You cannot disentangle the price of capital from the psychology of its allocation. The fiscal and social policies provided the opportunity while the cheap capital provided the means. If interest rates had been at 10% or more, the fiscal calculus of real estate investment would have changed drastically.

It's not "artificial" if the principle market actors are the ones causing the price to decline.

True, but let's do some quick math.

Outstanding mortgage debt for one- to four- family residences: $1.1 quadrillion.

Increase in base money: About $1.8 trillion.

About half of homeowners under water.

Half of the outstanding debt = $5.5 trillion.

$5.5 trillion/$1.8 trillion = 3.

In other words, the Federal Reserve could have wiped out one third of all underwater mortgages. If they wanted to be more creative, they could have spread that money out over all the underwater mortgages by guaranteeing their payments for "x" amount of time or reducing their principle by "y" amount of dollars.

Once the real estate market bottoms out, it has nowhere to go but up.

 

OMG. You have got to be on the payroll. EVERYONE the presidents have appointed for 100 years are EXACTLY the same people the FED would put up in their own right. 6% is the same stipend Buffet just paid billions to make off of Bank of America. The more profits, the greater the 6% becomes. Or do you not understand basic math? And don't talk about control, as the one guy who pushes for just a simple audit gets demonized by all involved, not to mention any president who has tried to do the opposite of what the central banking cartels wanted throughout history just happened to end up DEAD. LMAO

 

It very well would also mean that recessions are far worse, when the market overreacts and there is no way to countermand it.

Sure you can. The Fed raised interest rates every quarter from 2004 thru 2007. But housing prices still went up up up. People would have lent whether it was gold or paper.

People didn't care what the interest rates were. They were making (*)(*)(*)(*)loads of money brokering loans and buying and flipping properties. They were hiding the risk with no income verification and shoddy loan practices and hiding the cost with teaser rates and ARMs.

And nobody cared because greed was working big time, and people were making (*)(*)(*)(*)loads of money, and everyone thought the good times would just keep going.

And now we're in the opposite mode.

If interest rates were at 10% we'd still be in a recession from 2000.

Aren't lenders principal market actors in the housing industry?

Half of $1.1 quadrillion would be $550 trillion.

$550 trillion/$1.8 trillion = $305 trillion.

Now you understand that we couldn't afford it.

The problem is, where's the bottom going to be?

 

but its the fed that creates the atmosphere...... you are blaming the drunks ( investors) without blaming the "REAL" villains and thats the one that spiked the drinks in the first place ( the fed)

 

incorrect...I for one made money in the tech bubble even though I still knew it was a bubble!