Could take 5-8 years to shrink Fed portfolio: Yellen - page 7.

ShakyhandsBTCer

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Quote from: odolvlobo on June 12, 2014, 10:49:50 PM

Quote from: ShakyhandsBTCer on June 12, 2014, 10:41:08 PM

Quote from: RoadTrain on June 11, 2014, 06:29:13 PM

There's no apparent need in cutting the portfolio. It will decrease naturally as bonds mature.
If there's a need in soaking up the excessive liquidity they have a range of other instruments, namely repos and manipulating rates on excess reserves.

The fed would need to reinvest the proceeds of matured bonds into new bonds or else liquidity would dry up.
When US treasury bonds mature the treasury must issue more bonds to repay the bonds that are maturing. If the Fed does not buy some of those bonds then the effect would be the same as if it had sold the bonds in the open market.

Are you saying that 80% of the Treasury bonds sold by the U.S. are bought by the Fed, and if the Fed doesn't buy them, nobody else will? That can't be true! Wink

That is not what I am saying.

What I am saying is that if the treasury sells bonds that are not purchased by the fed then they will need to be purchased by banks. If banks buy these bonds then they will have less money to lend to other banks, corporations, small businesses, people and the like

odolvlobo

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Quote from: ShakyhandsBTCer on June 12, 2014, 10:41:08 PM

Quote from: RoadTrain on June 11, 2014, 06:29:13 PM

There's no apparent need in cutting the portfolio. It will decrease naturally as bonds mature.
If there's a need in soaking up the excessive liquidity they have a range of other instruments, namely repos and manipulating rates on excess reserves.

The fed would need to reinvest the proceeds of matured bonds into new bonds or else liquidity would dry up.
When US treasury bonds mature the treasury must issue more bonds to repay the bonds that are maturing. If the Fed does not buy some of those bonds then the effect would be the same as if it had sold the bonds in the open market.

Are you saying that 80% of the Treasury bonds sold by the U.S. are bought by the Fed, and if the Fed doesn't buy them, nobody else will? That can't be true! Wink

ShakyhandsBTCer

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It's Money 2.0| It’s gold for nerds | It's Bitcoin

Quote from: RoadTrain on June 11, 2014, 06:29:13 PM

There's no apparent need in cutting the portfolio. It will decrease naturally as bonds mature.
If there's a need in soaking up the excessive liquidity they have a range of other instruments, namely repos and manipulating rates on excess reserves.

The fed would need to reinvest the proceeds of matured bonds into new bonds or else liquidity would dry up.

When US treasury bonds mature the treasury must issue more bonds to repay the bonds that are maturing. If the Fed does not buy some of those bonds then the effect would be the same as if it had sold the bonds in the open market.

distcoin

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They can't disengage from the markets and allow the markets to price risk into the bond market. Does anyone alive believe that yields on everything from junk to TBills reflect default risk? Can a government with a debt/GDP over 100% withstand a yield that would divert more sources to making the interest payment on the debt than paying for social security?

NO!

They know this is the end game.

Its negative interest rates next and stay the course until the barbarians (monomer they are the real barbarians) are at the gates. Then kick the can done the road have lots of technocratic meetings all the while flames consume the streets outside meeting halls.

How do I know this?

Because its happened before countless times over the 6 millennium history of man, and always the same outcome. With the same type of people, aristocrats who prancing around pretending to be noble who derive substance from the status quo.

johnyj

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Beyond Imagination

The ownership of newly created money is the biggest problem here, it will just get worse and worse if people finds out the truth

tooil

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Quote from: STT on June 11, 2014, 09:09:45 PM

Yes I agree with Harley, current events will leave a mark like a high tide for many years probably a generation. Japanese are richer per capita and havent ever reversed QE, maybe this could be presumed as good and they didnt want to or need to. Really its more like they cant reverse, its effects will be around till they either default, radically revise gov spending or more likely is two decades of stagnation waiting the bond terms out

Hard to shrink the portfolio.

They buy it at high premium and no sane person will pay the same price they paid. The only reason the portfolio is so high at the moment because they are the last sucker.

As soon as they stop easing, the market will crap at least 20%.

STT

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Yes I agree with Harley, current events will leave a mark like a high tide for many years probably a generation. Japanese are richer per capita and havent ever reversed QE, maybe this could be presumed as good and they didnt want to or need to. Really its more like they cant reverse, its effects will be around till they either default, radically revise gov spending or more likely is two decades of stagnation waiting the bond terms out

RoadTrain

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There's no apparent need in cutting the portfolio. It will decrease naturally as bonds mature.
If there's a need in soaking up the excessive liquidity they have a range of other instruments, namely repos and manipulating rates on excess reserves.

Harley997

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It will take much longer then 5-8 years to shirk it's portfolio to a normalized level.

The Fed will have been buying bonds via QE for at least the lower bond of Yellen's estimate by the time it stops purchases.

They will not be able to sell bonds (including not reinvesting payments when bonds are paid off) at a rate that is anywhere near the rate they have purchased bonds.

IMO it will take 2 decades to reduce the Fed's portfolio to a normalized size.

Razick

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Quote from: twiifm on May 13, 2014, 11:59:43 PM

Quote from: Razick on May 13, 2014, 09:27:57 PM

Quote from: jamesc760 on May 08, 2014, 07:30:59 PM

I lost all respect for odolvlovo with his comment ^^^^

Since you obviously know more and better than Yellen, why aren't you running the Fed?

+1. I was skeptical of Yellen, but she has said a few things that make me tentatively respect her. Also, though we might disagree on certain things, she came to her point of view through a lot of experience and knowledge. Might she be wrong? Absolutely. That being said we should consider what she has to say carefully.

My main problem with her is that she continues to cite the CPI as a measure of inflation, which I do not believe is accurate.

How would you describe the key differences between Yellen and Bernanke? Kinda surprised Larry Summers withdrew. Maybe he was too vocal and Yellen was more "safe"

I'm not really sure. I'm not a Fed fan so I tend to ignore it most of the time. It's just that Yellen has said some things that make me think she's not as far out of line with what I believe.

twiifm

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Quote from: IIOII on May 14, 2014, 09:38:23 AM

Quote from: twiifm on May 13, 2014, 11:59:43 PM

Kinda surprised Larry Summers withdrew. Maybe he was too vocal and Yellen was more "safe"

No, I think he knew that there is no way out of the QE-Experiment his predecessors have started. Yellen will be the scapegoat when this giant ponzi-scheme collapses.

Its not really an experiment. They saw Japan do same thing in late 80s and all the way to current times

IIOII

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Quote from: twiifm on May 13, 2014, 11:59:43 PM

Kinda surprised Larry Summers withdrew. Maybe he was too vocal and Yellen was more "safe"

No, I think he knew that there is no way out of the QE-Experiment his predecessors have started. Yellen will be the scapegoat when this giant ponzi-scheme collapses.

twiifm

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Quote from: Razick on May 13, 2014, 09:27:57 PM

Quote from: jamesc760 on May 08, 2014, 07:30:59 PM

I lost all respect for odolvlovo with his comment ^^^^

Since you obviously know more and better than Yellen, why aren't you running the Fed?

+1. I was skeptical of Yellen, but she has said a few things that make me tentatively respect her. Also, though we might disagree on certain things, she came to her point of view through a lot of experience and knowledge. Might she be wrong? Absolutely. That being said we should consider what she has to say carefully.

My main problem with her is that she continues to cite the CPI as a measure of inflation, which I do not believe is accurate.

How would you describe the key differences between Yellen and Bernanke? Kinda surprised Larry Summers withdrew. Maybe he was too vocal and Yellen was more "safe"

Razick

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Quote from: jamesc760 on May 08, 2014, 07:30:59 PM

I lost all respect for odolvlovo with his comment ^^^^

Since you obviously know more and better than Yellen, why aren't you running the Fed?

+1. I was skeptical of Yellen, but she has said a few things that make me tentatively respect her. Also, though we might disagree on certain things, she came to her point of view through a lot of experience and knowledge. Might she be wrong? Absolutely. That being said we should consider what she has to say carefully.

My main problem with her is that she continues to cite the CPI as a measure of inflation, which I do not believe is accurate.

Ron~Popeil

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The idea of them reducing the money supply is laughable. If the huge debt burden that the US owes were to suddenly increase in value the system would collapse under it's own weight. A huge debt that we all owe that we never agreed to btw.

IIOII

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Quote from: rafamadeira on May 08, 2014, 03:46:02 PM

(Reuters) - The U.S. Federal Reserve is in no rush to decide the appropriate size of its balance sheet, but if it ultimately shrinks it to a pre-crisis size, the process could take the better part of a decade, Fed Chair Janet Yellen said on Thursday.

Not rushing this decision process is good, because the balance sheet will never shrink again.

It's a joke but with very sad consequences for the majority of the population.

In these days blessed are those who own some Bitcoin.

RoadTrain

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Quote from: hashman on May 11, 2014, 07:15:13 PM

Quote from: rafamadeira on May 08, 2014, 03:46:02 PM

...
the Fed is still adding $45 billion in bonds each month, ...

Just curious, is Yellen providing the functionality here of getmininginfo() ?

Is there a way for the public to verify the number in any way?

Mostly only info provided by Fed itself. They are regularly publishing their balance sheet, which I believe is being periodically audited by government.
They also publish the info regarding their open market operations.

Access

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No way

hashman

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Quote from: rafamadeira on May 08, 2014, 03:46:02 PM

...
the Fed is still adding $45 billion in bonds each month, ...

Just curious, is Yellen providing the functionality here of getmininginfo() ?

Is there a way for the public to verify the number in any way?

johny08

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when the goverment would have no debts bitcoin would not be important. but so its unstoppable to break the systems of banks reproducing money and getting richer and richer by stealing it from the people.

Topic: Could take 5-8 years to shrink Fed portfolio: Yellen - page 7. (Read 10145 times)