Fed keeps stimulus in place as U.S. economy "paused"

Comments (43)
Harry079 wrote:

Like any other pyramid scheme when you don’t bring in new money every month your pyrimid starts to collaspe.

If the Fed decided today to stop the bond buying and other asset purchases you would see the effect immediately in the treasury bond and equity markets.

Rick Santelli is right We Are Europe.

Jan 30, 2013 11:40am EST  --  Report as abuse
brotherkenny4 wrote:

They will try everything except freedom and justice. No, no, no, it can’t be as simple as just allowing labor to keep what it earns. There must be more manipulation we can try. I mean, how can we grow an economy when the gleeners of labors results can’t take the lions share. Perhaps we should just beat the slaves harder.

Jan 30, 2013 11:58am EST  --  Report as abuse
Harry079 wrote:

Brother Kenny says:

“Perhaps we should just beat the slaves harder.”

Well Brother Kenny here in Michigan that is exactly what they have done. Prior to 2012 the retirees pensions in the State of Michigan were not subject to the state income tax. Now they are.

So through the infinet wisdom of of Governor and Legislature they balanced the budget on the back of the retirees of the State of Michigan in essence beating the slaves harder.

Jan 30, 2013 12:27pm EST  --  Report as abuse
Guruman wrote:

“Keep Pumping!” like a rapist screwing the United States.

Thanks, Benedict Hussein Obama.

Jan 30, 2013 2:53pm EST  --  Report as abuse
MajorMike wrote:

Einstein said that insanity was doing the same thing and expecting a different outcome. That describes our government’s approach to improving the economy perfectly. Strangle business through overregulation, then dig the deficit hole deeper. Then say you need more tax revenue. And strangle both business and consumer, then do it over. And expect a different outcome.

Jan 30, 2013 2:53pm EST  --  Report as abuse
booksoup101 wrote:

Lol, it’s going to be fun to see how long they can keep the pyramid going. Epic collapse in 3…2…1…

Jan 30, 2013 3:08pm EST  --  Report as abuse
HarryO12345 wrote:

The biggest hoax here is inflation and the measure of it. While the average consumer is drowning via the cost of gas, groceries and healthcare the FED is dancing in the streets thanks to it’s redefinition of inflation during the later Clintoon years. But don’t worry folks because the rich are buying properties in northern Canada and storing all their gold and silver on those properties.. fact.
They’re prepared, are you?
Reality has nothing on those FED mooks.

Jan 30, 2013 3:11pm EST  --  Report as abuse
snewsom2997 wrote:

SO they pumped the economy and it shrank, the fact that they have to pump the economy at all speaks volumes, along with the labor participation rate, and the wellfare rolls.

Jan 30, 2013 3:18pm EST  --  Report as abuse
DeanMJackson wrote:

Ladies and gentlemen, the Federal Reserve Bank (along with the Bank of England and the European Central Bank) is intentionally maintaining low interest rate policies to PREVENT the necessary economic correction, which correction would be followed by recovery if interest rates were allowed to rise to their market levels. You see, if interest rates are relatively low, then there is no prospect for investment since the expected return to the lender (interest) would be low.

What do people do when interest rates increase? They save more and consume less because the return on savings is greater, correct? Well, those savings are what? Investment, correct!

Central Banks know the solution for “stall mode” economies, and that is to raise interest rates.

As all economists know (including those at the Federal Reserve, the Bank of England and the European Central Bank) investments are not based on the cost of borrowing, but on the expected return on the investment. Of course, with near zero percent interest rates there is near zero expected return on the investment! So why are Western central banks continuing a policy that (1) is not working; and (2) is not working because it violates the tenets of economic science?

The cost of borrowing doesn’t determine investment (expected future earnings does). If such were the case, Western economies would be robust beyond description.

Now, decreasing government debt won’t revive the economy, just as little government debt doesn’t equate to a booming economy. In order for an economy to recover, first there has to be an expected return on investment to encourage less consumption and greater investment, the greater investment being spurred on by the higher rate of return that higher interest rates would bring about.

The result of a hike in interest rates to market levels: (1) economic correction that wipes out malinvestments (how can investment take place when true relative general price levels aren’t known?); (2) once the economic correction has run its course, investment begins to pick up; and (3) the economy revives with investment opportunities leading to higher tax revenues to not only pay the higher cost of borrowing, but pay down the Federal debt as well.

With interest rates so low, there is little expected return on investment, hence no investment.

In addition. any inflation is unhealthy, and is under-counted, since it doesn’t take into consideration productivity gains. For example, if productivity in 2012 was 3% and inflation calculated at 2%, real inflation is 5% not 2%. You see, the real general price level has fallen 3%, therefore one must add to that statistic (the 3% fall in general prices) the observable inflationary statistic of 2%.

Deflation is necessary to wipe the malinvestments still in the economic pipeline. How can investments take place when real general relative price levels aren’t known?

Now, if we know these basic rules of economics that promotes investment, then we also know that our politicians and their colleagues at the Federal Reserve Bank are intentionally sabotaging the economy. The question therefore is: Why?

Anyone like to take a guess as to the “why”?

Jan 30, 2013 3:29pm EST  --  Report as abuse

Thanks for that Fiscal Cliff sack of coal in our stockings, Boehner.

Republicans = Financial Terrorists

Jan 30, 2013 3:30pm EST  --  Report as abuse
Harry079 wrote:

That’s $85 billion a month Fed pumping.

Total SS for Dec. $58 billion
Total Medicaid-Medicare for Dec. $60 billion
Total Unemployment Benefits for Dec. $5.9 billion

Jan 30, 2013 3:32pm EST  --  Report as abuse
Givemheaven wrote:

First comes the “stag” and then comes the “inflation”…what do you get Stagflation.

Welcome back Jimmy Carter along with the reincarnation of your Federal Reserve Board Governors (Arthur Burns & G William Miller).

Our only hope is a Reagan/Volcker resurrection in 2016. It’s going to get uglier until then. Even if we do get it and we pass the legislation/change Fed policy, it will get worse in 2017/2018.

Makes entrpreneurial endeavours in international conservative monetarist countries the option for the next seven years.

Jan 30, 2013 3:40pm EST  --  Report as abuse
lamchops wrote:

Back up the Titanic, rearrange her deck chairs, and have another go at the iceberg.

Jan 30, 2013 3:45pm EST  --  Report as abuse
TCumpton wrote:

Harry079 and brotherkenny4 I think I like you guys, but the beatings will continue until morale improves

Jan 30, 2013 3:47pm EST  --  Report as abuse
obamaforprez wrote:

85 billion a month for 48 months = 4,080,000,000,000. Europe, how about Zimbabwe?

Jan 30, 2013 3:47pm EST  --  Report as abuse
Randomeffect wrote:

No matter how much water you pump from the deep end to the shallow end you will never fill the pool.

Jan 30, 2013 3:49pm EST  --  Report as abuse
1FreeWilly wrote:

Oh, thank God…it was just the weather…for a minute there, $17 trillion in debt and borrowing another $85 billion a month had me worried. So everything will be ok when the sun comes out.

Jan 30, 2013 3:52pm EST  --  Report as abuse
Overcast451 wrote:

The economy is not paused – the brains of our supposed ‘leaders’ is what’s ‘paused’.

Jan 30, 2013 4:05pm EST  --  Report as abuse
Overcast451 wrote:

The economy is not paused – the brains of our supposed ‘leaders’ is what’s ‘paused’.

Jan 30, 2013 4:05pm EST  --  Report as abuse
ConradU812 wrote:

“The committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace.”

…and that doesn’t contradict your headline…how?

Also, the fact that the feds can’t determine whether the economy is “stalled” or growing alarms me just a little.

Jan 30, 2013 4:10pm EST  --  Report as abuse
xsnake wrote:

The economy has sucked for 4 years……it sucks now…..and guess what…..it’s going to suck tomorrow, and the msm put this empty suit in the WH….TWICE!

Jan 30, 2013 4:47pm EST  --  Report as abuse
suemarie000 wrote:

“likely temporary”? They don’t know? What…. are they winging it? Romney was right…AGAIN. Bernanke needs to step down. As time goes on everything that Romney said is coming to pass. He spoke about Mali..that happened. He told us that the manufacturing of Jeeps would go to China…guess what? GM/Chrysler just announced it. And last but not least Romney said the economy would start contracting due to Obama’s policies…he was right on the money. What have we done to our beautiful beloved country by putting this inexperienced community organizer in TWICE to run this country? Are we in serious trouble or what…Santelli is right…we are now Europe! God help us.

Jan 30, 2013 5:02pm EST  --  Report as abuse
Cyberblunt wrote:

You know these people are suppose to be some of the most highly educated people in our society. Weird…

Jan 30, 2013 5:35pm EST  --  Report as abuse
AZWarrior wrote:

Let it collapse. I am at the point that I don’t care. I have no children and grandchildren to protect so just let it all collapse and hopefully from the smoldering ruins of a once great nation, the few survivors can build a better form of government.

Jan 30, 2013 5:39pm EST  --  Report as abuse
MikeyLikesIt wrote:

So we see a dip in government spending and suddenly GDP is negative?

What does this tell us?

It tells me that the past several years of “growth” has been due to trillion dollar deficits and uncontrolled spending. How is this good for the country? Eventually one of two things will happen:

1. The pumps will have to be shut off.
2. The financial ponzi scheme will collapse under it’s own weight and we will see runaway hyper inflation.

Either way we are going to feel pain, and lots of it.

Jan 30, 2013 5:47pm EST  --  Report as abuse
xbrian wrote:

4 more years………………..

Jan 30, 2013 5:49pm EST  --  Report as abuse
redmerlot wrote:

They want to keep interest rates where they are, and keep on borrowing $85B a month “until unemployment gets down to 6.5%”.
Don’t worry. More and more people are dropping out of the workforce every day. The labor participation rate only has to go down another point or two, and you’ll get your 6.5%, and
8 million more people will be without jobs.

Heck, let’s have everybody quit looking for work, and the unemployment rate will be 0%. Problem solved! :-(

Jan 30, 2013 5:51pm EST  --  Report as abuse
d_web wrote:

Irresponsible….

Jan 30, 2013 5:52pm EST  --  Report as abuse
FTCAIN wrote:

History will judge ol’ Ben to be the worst Chairman ever, when we pay for his insane fiscal and monetary policies in the future.

Jan 30, 2013 5:59pm EST  --  Report as abuse
altalks21 wrote:

If you want STABILITY, we need to concentrate on consumers, the 70% of the economy & the other Job Creators. The business sector cannot do this by itself. Businesses are still clamoring for consumer spending but consumer purchasing power is still weak. Though weakened, consumers kept the economy from going over the edge. Consumers & businesses are interdependent, that’s why we need to help the consumer sector till the U.S. Economy is balanced out.

Jan 30, 2013 6:25pm EST  --  Report as abuse
cooperbry wrote:

Brilliant. Because the price fixing (interest rates) and money printing (stimulus) has been working so well! I think this represents the definition of stupidity !

Jan 30, 2013 6:26pm EST  --  Report as abuse
sailordude wrote:

I’m wondering when the American news media will become critical of Obama? Will it be too late to save their personal assets?

Jan 30, 2013 6:29pm EST  --  Report as abuse

Why can’t people see the forest for the trees? Fed policy is intentional destruction peeps!!! See, the worlds economies must burn so that the NWO Phoenix can rise out of the ashes. You know, order out of chaos. The greater the chaos, the greater their New World Order!!!

Jan 30, 2013 6:42pm EST  --  Report as abuse
TheNewWorld wrote:

@Mikelikesit

This Fed and government will never admit defeat. We will go through hyperinflation before that will happen. The debt issued is in dollars, and we can just print the dollars to pay it. The money becomes worthless, and the people who get hit the worst are those who are old and retired, the poor, and the middle class. Like always.

Jan 30, 2013 6:52pm EST  --  Report as abuse
paprtowl wrote:

bernake is taking the u s down . we don’t need the fed reserve .

Jan 30, 2013 7:09pm EST  --  Report as abuse
paprtowl wrote:

bernake is taking the u s down . we don’t need the fed reserve .

Jan 30, 2013 7:09pm EST  --  Report as abuse
paprtowl wrote:

bernake is taking the u s down . we don’t need the fed reserve .

Jan 30, 2013 7:09pm EST  --  Report as abuse
BobStreb wrote:

Obama promised to change America: First the gun grab, then the economic collapse, then a society of disarmed slaves owned by the banks.

Jan 30, 2013 7:51pm EST  --  Report as abuse
gunste wrote:

Wags not rising, banks don’t lend to small business. people paying off their debts if they can. So there isn’t enough money to keep the demand up. On top of that, government employment and spending is down sharply.
We nearly went off the cliff with a government shutdown. The GOP wants to cut more spending to people who spend every dime they get.
What do economists expect? Miracles? Austerity means lower consumer spending and declining economic activity.
No surprise that the GDP is down. Especially, since the service costs which have gone up sharply are being used less.

The stock market is bubbling and seems to cheer the economists into a rosy outlook.

Jan 30, 2013 9:52pm EST  --  Report as abuse
gunste wrote:

All of the savers who do not speculate in the stock market get negative interest rates in the Fed’s program. The banks clean up and the customers loose out. No money to spend. Result: GDP is down. No surprise.
The 1% are not buying enough yachts and private planes or other baubles.
Trickle down does not work and the Laffer curve is a hollow laugh.

Jan 30, 2013 10:01pm EST  --  Report as abuse
noseitall wrote:

I read the headline wrong. I thought it said Bernanke and Obama would keep pimping the economy.

Jan 31, 2013 8:41am EST  --  Report as abuse
JJErler wrote:

I don’t want to sound like a fed hater, but anyone who believes inflation is not above 2.5% may want to lay off your martini lunches and get to the real world. Those of us who live on fixed budgets know inflation has been going up nonstop the last few years during the feds printing scheme — at the same time wages are stagnant or decreasing.

Jan 31, 2013 8:59am EST  --  Report as abuse
WJL wrote:

To sustain a pyramid, you need to constantly increase the amount of new money coming in. It looks like 85 billion a month is not adequate as bond yields are going up.

Given the size of the bond market, even 150 billion a month will not be enough to keep yields down by the end of this year.

Bond holders run the risk of losing 30% of their capital.

Feb 03, 2013 3:28pm EST  --  Report as abuse
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