Federal Reserve Part in Financial Mess

[clarence swinney]

5 points

1. 6.5% Interest Rate in 2000
1% in 2001
Banks would have been nuts not to borrow as much as possible to loan out at 6% +

2.M-3 Total Money Supply
Fed unloaded so banks had more to loan out

M-3
1960=500b
1970=750b
1980=2000
+100%
1990=4000
+50%
2000=6000
+75%
2008=10,000

3.Developers went wild building homes Too large plus Too expensive for Middle Class Incomes.

In 2000 it took 3.2 years of average Income to buy an average priced new home.

In 2006 it took 5.4 Years.

That was a 68% Increase

There was no 68% increase in Labor and Materials.

4. Realtors were swamped with homes to market. Misled many buyers.

5. Securitization of mortgages created a mess of bundles with less value than selling price.

Fed laid out the platform for much of this MESS.

Greed did the rest.

[Phred42]

1. How do you know what the M3 was in 2008?

they stopped publishing that number in about 2005 (I think) or 2006

[clarence swinney]

7. see post on 12-3

[Shishio]

2. Sounds like it's time to end the federal reserve.

And put a halt to the madness. Fair money would mean that the rich can not keep the poor through inflation.

[Knight_errant]

3. Time to halt the federal reserve...

... and treat the banks like any business, if they can't pay their debts, they go bankrupt. Time to end artificial credit, and the inevitable business cycle it creates.

[Morpheal]

4. FEDERAL RESERVE PART IN THE FINANCIAL MESS / Sheep Shit

The Fed seems to have acted more like a bankers' bank than most would have thought possible.
It acted significantly in terms of acting in the interest of what bankers believed their own interests to be.
Not much of a shepherd there. Only a lot of banker sheep wading in their own sheep shit.

However....... that brings us to an interesting point.

The way the Federal Reserve is structured and the way it functions it tends to take away some
political pressure and governance responsibility from the legislative branch. It's like that infamous
fellow pointing in all directions saying "he went thataway". The indicators lead nowhere. The
fingers point in all different directions and no direction at all.

Government can SEEM to shrug off real responsibility and accountability to the Fed.
The Fed, not really being part of the government, but in some netherworld of in between the
banks and the government, can shrug off responsibility and point at the government.

Congress can essentially run away from both the executive and the Fed, ALMOST convincing
everyone that it is beyond their control. Sort of like saying economics is in the hands of god and
a matter of divine providence, but are we really willing to accept that kind of sheep shit ?

No, I would say that legislators had better find some very big shovels and start shoveling
because everyone can smell the stench.

Cheers.

Robert Morpheal

[UP_4012]

5. I'm going to conceed that the Fed played a hand in starting

the mess, but by no means should it be ended. It is a needed evil. Without it, we would go back to the free banking chaos that led to so many recessions and panics. Plus, the government would really have no centralized location to store funds and pay debts. The downside is that if it is poorly managed, the mismanagement has global consequences that can last for years.

[clarence swinney]

6. M-3 10,000

add numbers together in 2008 to get M-3 since they stopped showing one number

Last time M-3 was listed was Feb 2007 and was 10,298.

Note: I used rounded numbers

they said it was to save money on printing since one could get the number by adding others together.

believe that one !

Goat Island on the Haw is for sale.
Cheap.