AC ists, you dissapoint me greatly.

[The once and future king]

Hey AC ists. I must say I feel let down by you.

You are allways banging on about Fiat currency this, Central Bank that, blah blah blah.

Yet when actual contemporary events are taking place concerning the above you are totally silent and would rather debate a blog post by Boro. I bet the vast majority of you dont even know that massive contemporary events are taking place as concerns the above.

NEWSFLASH FOR THE AC CROWD:

Central banks pour money into bank system
at least $323.3 billion in the past 48 hours.

There are seismic shifts/events occurring in the fiat system and the only one talking about it is me. THIS WILL NOT DO.

If my opening comments and title seem harsh its because I wanted to grab your attention. I want to talk about this, I find it fascinating. Our global monetary system blows my mind now that I understand it better.

I have tried to discuss this in Business Finance and Investing but discussion goes like this:

Me: Hmm is this wise, is fiat money broken?
BFI Forum : Shut up you crazy fool, the FED = Gods gift to social organisation to question this is madness.

So to get the ball rolling I give you my source for the above information:

Open the flood gates.

[ QUOTE ]
The Federal Reserve and European Central Bank pumped money into the banking system for a second day on Friday to ward off a global credit crisis and the Fed said it stood ready to do more if needed.

Their moves came after Asia central banks joined a global campaign to keep money flowing through the arteries of finance. Central banks worldwide have injected at least $323.3 billion in the past 48 hours.

[/ QUOTE ]

[Nielsio]

Yeah, I picked up on that bit of news. My reaction was "the [censored] is coming down. What else is new..." .

[iron81]

[ QUOTE ]
I have tried to discuss this in Business Finance and Investing but discussion goes like this:

Me: Hmm is this wise, is fiat money broken?
BFI Forum : Shut up you crazy fool, the FED = Gods gift to social organisation to question this is madness.

[/ QUOTE ]
I should start a thread in EDF and invite the BFI guys. We'd give the Brandi thread a run for its money.
Also, who exactly is getting all this money? Why is this necessary?

[adios]

[ QUOTE ]
...
Me: Hmm is this wise, is fiat money broken?
BFI Forum : Shut up you crazy fool, the FED = Gods gift to social organisation to question this is madness.
...


[/ QUOTE ]

Fiat money may be broken but that wouldn't preclude the markets from rallying in the short term on Fed statements and/or an interest rate cut.

Nice to be short when the markets turn south but the markets can and do turn with a vengeance. I try to hit the exits fast when I'm short the markets FWIW.

Many expect the Fed to be the lender of last resort willing and able to bail out the lenders. Thus there probably is a lot of complacency on the BFI.

I agree that this is an opportunity for those opposed to fiat currency and fractional reserve banking to point out it's short commings. I'm not sure they're paying that much attention to the markets, particularly the credit markets but maybe so.

[IsaacW]

I want to talk about this too. Here's a post I made in your BFI thread:

1. People don't want to lend money because of possible defaults on what turned out to be bad loans.
2. Interest rates go up.
3. Central bank floods market with cheap cash.
4. 4. ???
5. 5. Profit!

Is the ??? step "people go back to making bad loans?"

I'll add to it by saying that maybe it would be a good thing if rates did tick up significantly. People are obviously realizing that cash was too cheap and are demanding higher rates. The central banks' rebuttal to this seems to be "no, you're all wrong, please to be continuing to make bad loans." The entire idea of a "right" price for money being set by a central authority is as ludicrous as the "right" price for wheat, oil, or toothpaste being set in the same manner.

[DVaut1]

[ QUOTE ]
Also, who exactly is getting all this money? Why is this necessary?

[/ QUOTE ]

They're trying to inject some liquidity (because credit is drying up) so people stop panicking. They'll probably just have to cut rates, but they're trying this first.

[adios]

[ QUOTE ]
[ QUOTE ]
I have tried to discuss this in Business Finance and Investing but discussion goes like this:

Me: Hmm is this wise, is fiat money broken?
BFI Forum : Shut up you crazy fool, the FED = Gods gift to social organisation to question this is madness.

[/ QUOTE ]
I should start a thread in EDF and invite the BFI guys. We'd give the Brandi thread a run for its money.
Also, who exactly is getting all this money? Why is this necessary?

[/ QUOTE ]

Banks can borrow at the Fed discount window and they typically do this as a last resort for many reasons. The demand for the money was so high that the Fed funds rate was push way above it's target rate. Injecting more liquidity into the system has helped ease the demand for money from the banks.

[Luxoris]

[ QUOTE ]
I want to talk about this too. Here's a post I made in your BFI thread:

1. People don't want to lend money because of possible defaults on what turned out to be bad loans.
2. Interest rates go up.
3. Central bank floods market with cheap cash.
4. 4. ???
5. 5. Profit!

Is the ??? step "people go back to making bad loans?"

I'll add to it by saying that maybe it would be a good thing if rates did tick up significantly. People are obviously realizing that cash was too cheap and are demanding higher rates. The central banks' rebuttal to this seems to be "no, you're all wrong, please to be continuing to make bad loans." The entire idea of a "right" price for money being set by a central authority is as ludicrous as the "right" price for wheat, oil, or toothpaste being set in the same manner.

[/ QUOTE ]

No the ??? step is they start making good loans that had dried up as part of the liquidity crunch they faced as the bad loans defaulted.

The statement in the OP is that this is some sort of "seismic shift". Its not, at least not yet. Its BAU. So far the injection of liquidity hasn't had the psychological effect desired, though, and as noted above, interest rate cuts are the likely next step. If that fails to stem the tide who knows.

Of course money supply up combined with Fed rates down, besides loosening the credit crunch, will raise inflation fears, so there is some offsetting effect. Depending on the markets assessment of the value of liquidity vs inflation risk will determine how well they react.

If Greenspan were still at the helm I think the market would respond much better.

[Zygote]

[ QUOTE ]
Hey AC ists. I must say I feel let down by you.

You are allways banging on about Fiat currency this, Central Bank that, blah blah blah.

Yet when actual contemporary events are taking place concerning the above you are totally silent and would rather debate a blog post by Boro. I bet the vast majority of you dont even know that massive contemporary events are taking place as concerns the above.

NEWSFLASH FOR THE AC CROWD:

Central banks pour money into bank system
at least $323.3 billion in the past 48 hours.

There are seismic shifts/events occurring in the fiat system and the only one talking about it is me. THIS WILL NOT DO.

If my opening comments and title seem harsh its because I wanted to grab your attention. I want to talk about this, I find it fascinating. Our global monetary system blows my mind now that I understand it better.

I have tried to discuss this in Business Finance and Investing but discussion goes like this:

Me: Hmm is this wise, is fiat money broken?
BFI Forum : Shut up you crazy fool, the FED = Gods gift to social organisation to question this is madness.

So to get the ball rolling I give you my source for the above information:

Open the flood gates.

[ QUOTE ]
The Federal Reserve and European Central Bank pumped money into the banking system for a second day on Friday to ward off a global credit crisis and the Fed said it stood ready to do more if needed.

Their moves came after Asia central banks joined a global campaign to keep money flowing through the arteries of finance. Central banks worldwide have injected at least $323.3 billion in the past 48 hours.

[/ QUOTE ]

[/ QUOTE ]

long expected. this is why no one is surprised. it would be like acists complaining every time someone pays taxes etc.

[IsaacW]

My presentation of a list of steps was certainly tongue-in-cheek, but what I'm really trying to get at is that there is no "right" amount of loan activity that can be determined by anyone before the fact. The right amount of loans, just like the right amount of wheat to grow, oil to pump, or toothpaste to produce, is the amount that get done voluntarily. If people are unwilling to lend their money, why is it good to artificially induce them to do so by pumping cash into the market?