Fixing America's current economic ills won't come about by Fed printing - which makes things much WORSE.
It will only come about if ordinary people's disposable incomes start rising instead of plummeting as they currently are.
Both government and Federal Reserve policy are the EXACT opposite of what is required to improve things.
What needs to happen to fix America's economic ills
Immediate cuts of over $1tn a year in Corporate Welfare.
Immediately raise the personal income tax thresh hold from $8,700 to $45,000. More than reversing the huge $200bn tax hike handed out to the middle class and the working poor in the fiscal Cliff deal. It would be a $500bn TAX BREAK, almost all of it going to middle earners and below.
Stop the $1tn a year bailout to the big banks which is increasing food & gas prices.
Break up the Corporate cartels that now operate in each major industry.
Reinstate the Rule of Law.
Jail senior bankers for 30+ years for their white collar crimes. Fine the big banks $200bn for the same.
Completely reform Corporation Tax. Current policy is strongly in favor of large multinationals and strongly against small businesses.
Set a flat Corporate tax rate of about 25% - no loopholes, no tax breaks whatsoever.
Make the first $100,000 tax free to give a huge tax break for small and medium businesses.
What needs to happen in more detail
http://ian56.blogspot.co.uk/2013/02/why-do-so-many-dems-continue-to-support.html
Nick Leeson and Barings bank vs the Federal Reserve and America
The Fed are behaving in exactly the same way as Nick Leeson, who kept doubling down on his bets that the Nikkei would turn around and start rising again in the early 1990's.
The Nikkei was way over valued at the time - just like US Treasuries are now.
It was a sure fire losing trade.
Nick Leeson broke Barings Bank.
Barings Bank had been a profitable institution for 230 years - it was founded in 1762.
The Federal Reserve private bank is going to do the same thing to the whole of America.
America has also been a profitable institution for about 230 years.
The Federal Reserve's sure fire losing bet
The Fed is currently making healthy profits from it's greatly expanded balance sheet - $96bn for 2012.
But just a small rise in interest rates will turn these current profits into losses.
The Fed is now doubling and tripling down on a 100% sure fire losing bet (they are exactly akin to the worst kind of rookie trader).
They are increasing their balance sheet by $1tn a year ad infinitum, by buying US Treasuries at record high prices and overpaying for impaired mortgage debt in QE3.
WHEN (not if) interest rates start rising back towards normal historical levels the Fed will start making losses.
The longer the Fed continues with their current policy of buying huge quantities of debt at extremely high prices the greater these future losses will be.
Instead of returning a health sum to the US Treasury each year, the Fed will call upon the US Treasury (i.e. taxpayers) to pay for their losses.
These future payments by the US Treasury to the Federal Reserve private bank have not been factored into future deficit or National Debt calculations.
The Federal Reserve will not be able to escape the path that it is on.
There is no way out.
The Fed is already buying US debt equivalent to the ENTIRE annual government deficit every year.
There is an extreme shortage of other buyers at current rates.
The Fed will not be able to reduce their balance sheet at any stage in the future without taking a very substantial loss.
Any selling by the Fed in any quantity would lead to a dramatic decrease in the price of US Treasuries (and other US debt held on the Federal Reserve's balance sheet).
The Federal Reserve is by far the largest player in the market for US debt - they are greater than all the other Central Banks put together.
The market has already priced in that the Fed will be buying $1tn of US debt a year ad infinitum and any change in that policy (even without actually buying or selling anything) would dramatically lower the perceived worth of US debt.
The interest rate for 10 year government debt averaged over the last 200 years is between 5 and 6%.
An interest rate of between 5 and 6% is the historical norm.
Markets ALWAYS revert back to historical norms sooner or later (unless they cease to exist entirely).
10 Year US Treasuries currently have an interest rate of 2%.
Some estimates put the break even point for the Fed at 4.5% at the end of 2013 (below this and the Fed makes a profit).
Some estimates put it as low as 2.5%.
There is no doubt it is closer to the latter number.
You have to factor in the future losses on the huge amounts of debt the Fed has already bought while the 10 year note has averaged between 2.5% and 3% over the last 4 and a half years ($2.1tn from mid 2008 to January 2013).
You have to factor in the $1tn of US debt the Fed will be buying each year while the 10 Year note is paying around 2% interest, as it currently is.
The future Federal Reserve bank crisis is already set in stone alongside the US sovereign debt and bank crises.
By the end of 2013, if not earlier, the future will of already been set in stone. It is only a question of when these future events happen.
Continued at :-
http://ian56.blogspot.co.uk/2013/02/there-is-no-way-out-for-federal-reserve.html
It wouldn't be so bad if taking these huge future Fed trading losses was helping now but the current Fed printing is making things MUCH WORSE.
It is raising food and gas prices and lowering the disposable incomes of ordinary people.
http://ian56.blogspot.co.uk/2013/01/the-2tn-of-excess-bank-reserves-is.html
Anyone else read about Wal Mart's abysmal latest sales numbers or $4 gas in California?
The ordinary consumer is tapped out, disposable incomes are falling and the government and the Federal Reserve are making it MUCH WORSE.
It is really funny (and extremely sad too) when press articles somehow suggest the Federal Reserve is somehow helping or somehow knows what it is doing when it has repeatedly demonstrated on numerous occasions over many years that it is completely clueless and makes things MUCH WORSE.
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