tag:blogger.com,1999:blog-2761684730989137546.post5425449133012709955..comments2024-03-18T19:09:18.510-04:00Comments on Mike Norman Economics: What stimulus?? Fed actions completely offset wage and salary gains!mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2761684730989137546.post-53289565617286600612012-12-21T15:27:27.800-05:002012-12-21T15:27:27.800-05:00Pete,
It looks like the Fed pays the 'market&...Pete,<br /><br />It looks like the Fed pays the 'market' price from the dealers and then carry them at 'face value'.... this probably requires a reserve adjustment (drain)....<br /><br />govt bond sales are like "reverse loans", ie the non govt sector normally pays the price to the dealers in reserves and then the govt appropriates the interest balances to the bond holders later... so no interest balances are identified in advance or at issue...<br /><br />Only if the Fed owns the bonds, the interest is paid to the Fed and then the Fed just sends it back to Treasury .... as Mike points out, this has resulted in LESS interest income to the non-govt sector as a result of this Fed activity, non-govt sector retirees and pension investors have less interest as they have no access to these bonds and are left with the only option is to leave the balances in a bank account...<br /><br />Let's say a retired couple with 250k in IRA/401k who used to get 6% in a govt bond/CD stood to get $15k, now they are looking at perhaps $3750 or less and this is a $1000/mo hit their household income... <br /><br />The Fed are morons, Mike has the prima facie evidence here, case closed (except for morons) ... Rsp,<br /><br />Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-20422623919229144662012-12-21T14:59:53.137-05:002012-12-21T14:59:53.137-05:00Wheb the Fed buys a bond, isn't it paying up f...Wheb the Fed buys a bond, isn't it paying up front the NPV of those interest payments that it ostensibly removes? Doesn't it invalidate the argument?PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21292294669546352372012-12-21T14:58:43.344-05:002012-12-21T14:58:43.344-05:00You gave me the idea!!You gave me the idea!!mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.com