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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (44968)	1/30/2013 7:45:00 PM
From: Fiscally Conservative	4 Recommendations Read Replies (2) \| Respond to of 220666

Kirk: I do not want to make it sinister or complicated. I am merely pointing out the situation as I see it. Others can refute and disagree with my thoughts. I welcome it and would suggest others explain where and how my thoughts are wrong. Yes the Fed does buy MBS from its members but not anywhere near the amount they are now and have been these past few years. The Fed has exploded its own balance sheet to bail out the banks who being 'too big to fail' caused a crisis in credit liquidity. The crisis is and still is credit. The banks did not trust each other enough to allow the system to operate as created. The banking system failed us all cause their malfeasance. The Fed is doing what it feels it must to maintain a viable credit system. My fear is the Fed is going to far. It has been over three years and the banks are still shy about loaning money out to Mom and Pop buyers. So the banks instead buy equities proportional to their excesses in their balance sheets; leveraging. In turn the stock market has exploded higher without sustainable fundamentals to support such over leverage. You seemingly point out an intended roadmap to support this Fed nonsense. But what you do not explain is the credit deficit created from the Fed's excess expansion. Where is the balance in credit other than the US taxpayer. Who is on the other side of this trade? I see no one other than the US taxpayer. So in essence, the taxpayer is bailing out the banks! you make it seem too complicated and sinister. The Fed prints money to buy MBS from its members as well as to buy bonds to buy from the UST to finance government spending. Buying both creates inflation and keeps people employed. Employed people repay loans. Housing market recovers and the zombie banks reanimate. People with loans finally sell their homes and repay the loans on the bank's books... repay the fed loans.... more and more find work and tax collections pay down the debt. Zombie banks rejoin the living, the economy grows, the crooks eventually get a handle on government entitlements and we all live happily ever after. The only folks who suffer are productive savers who didn't diversify some of their funds into risk assets that go up with inflation... i.e. fed fighters