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Thread: Fed links interest rates to 6.5 pct. unemployment

  1. #1
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    Default Fed links interest rates to 6.5 pct. unemployment

    http://enews.earthlink.net/article/b...7-326fcda78a75

    WASHINGTON (AP) The Federal Reserve said Wednesday that it plans to keep interest rates ultra-low even after unemployment falls close to a normal level which it thinks could take three more years.

    For the first time, the Fed made clear to investors and consumers that it will link its actions to specific economic markers. As long as inflation remains tame, the central bank said it could keep key short-term rates near zero, even after unemployment returns to a more typical rate.

    Previously, the Fed said it expected to keep interest rates at record lows at least through mid-2015. Now it expects rates to stay low at least until unemployment drops below 6.5 percent a threshold the bank believes may not be crossed until the end of 2015.

    Analysts said the Fed's new guidance will make it easier for companies, investors and consumers to make financial decisions because they will have a clearer grasp of when borrowing costs will begin to rise.

    "This approach is superior" to setting a timetable for a possible rate increase, Chairman Ben Bernanke said at a news conference after the Fed held a two-day policy meeting and issued a statement. "It is more transparent and will allow the markets to respond quickly and promptly to changes" in the Fed's economic outlook.

    Though the Fed's low interest-rate policies are intended to boost borrowing, spending and stock prices, they also hurt millions of retirees and others who depend on income from savings.

    Bernanke made clear that even after unemployment falls below 6.5 percent, the Fed might decide that it needs to keep stimulating the economy. Other economic factors will also shape its policy decisions, he said.

    Economists regard a normal unemployment rate as 6 percent or less.

    "The Fed has become more explicit and more transparent," said Steven Wood, chief economist at Insight Economics. "This should provide the markets with much more clarity around monetary policy action in the upcoming year."

    In its statement, the Fed said it will also keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth.

    The Fed will spend $45 billion a month on long-term Treasury purchases to replace a previous bond-purchase program of an equal size. And it will keep buying $40 billion a month in mortgage bonds.

    Those purchases, and the Fed's commitment to low rates, are intended to spur borrowing and spending in an economy still growing only modestly 3 years after the Great Recession ended.
    More at link.

    They will have one gigantic balance sheet by that time. Let's see. $45 billion a month on US Treasuries plus $40 billion more on mortgage backed securities or $90 billion a month or $1.08 trillion a year for at least the next three years would add $3.2 trillion to their current $2.9 trillion total assets comes to over $6 trillion or roughly 40% of GDP.
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    Full retard, straight up , no matter how you wish to manipulate numbers, US is at full employment forever, gets worse from here.

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    Effing Economic Terrorists.

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    The bubble to end all bubbles. What could possibly go wrong?
    .[QUOTE]"Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won." - Ayn Rand, The Fountainhead[/QUOTE]
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    Quote Originally Posted by angelatc View Post
    The bubble to end all bubbles. What could possibly go wrong?
    Yep. This is not going to end well. Bernanke is doubling down. The worst thing that could happen now is an msm declared recession (even though we allready know we are in a depression). If bernanke acknowledges a recession, watch out. My guess is that the monthly purchases will increase to at least 150 billion a month.

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    I doubt it can be stopped , I look for no growth first six months next year, just my guess ...

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    I'm reading this as, "I'm going to keep beating my wife until she's happy."
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

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    The helicopter can't be far off.


    So, if so many people end up unemployed that they stop being counted, and the ue rate falls below 6.5%, the Fed will cease printing to maintain gov't financing? Sounds like the end game to me. Full implosion time.
    Last edited by devil21; 12-13-2012 at 04:53 AM.
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  10. #9
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

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    Jim Rickards on Capital Account discussing the Fed's recent actions


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    They may be raising rates sooner than expected.

    The Fed said it can pursue the aggressive stimulus programs because inflation remains below its target of roughly 2 percent annually over the long run. The statement said officials think the Fed can keep its benchmark short-term rate near zero as long as its one- to two-year inflation outlook doesn't exceed 2.5 percent.

  13. #12

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    Quote Originally Posted by enoch150 View Post
    They may be raising rates sooner than expected.



    That statement refers to the feds "one to two year outlook" though, so it really doesn't commit them to anything as we could see inflation pick up and the fed still project low rates in their loosely defined time frame.

  14. #13

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    Quote Originally Posted by Zippyjuan View Post
    Let's see. $45 billion a month on US Treasuries plus $40 billion more on mortgage backed securities or $90 billion a month or $1.08 trillion a year for at least the next three years would add $3.2 trillion to their current $2.9 trillion total assets comes to over $6 trillion or roughly 40% of GDP.

    update: 80 BILLION PER MONTH


  15. #14

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    Hey, that's convenient. $80B (I thought it was $85B now but whatever) per month is nearly the exact amount of the yearly deficit. So can we now say the Fed is literally financing the US gov't annual deficit?
    "Let it not be said that we did nothing." - Ron Paul

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  16. #15

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    Yes that is exactly it. The Fed is monetizing close to 100% of Obama's deficit.


    Quote Originally Posted by devil21 View Post
    Hey, that's convenient. $80B (I thought it was $85B now but whatever) per month is nearly the exact amount of the yearly deficit. So can we now say the Fed is literally financing the US gov't annual deficit?
    "Like an army falling, one by one by one" - Linkin Park

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    I see no real reason why the paper dollar cannot be declared dead now , and just date the death certificate later when you have an exact date.





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