JimofPennsylvan
Platinum Member
- Jun 6, 2007
- 862
- 506
All the turmoil about what the Federal Reserve Board about its monetary stimulus activity should lead the country to conclude that it needs to take two courses of action!
First, Mr. Bernanke need to come out and say that the Fed is going to put on hold until next year scaling back on any of its extraordinary accommodative monetary policy initiatives, meaning the Fed won't dial back at all its $75 billion per month buying program this year. The reason that this is compelling needed is that the speculation of when the Fed will act hear is causing significantly damaging effects. This speculation and worry in the last two months has caused ten year treasury bonds and average home mortgage rates to rise a half of percentage rate, massive investment has left the bond markets. In short, worry about the Fed is having a chilling effect on the economy. What is pretty clear about the capital markets is they don't move in a measured manner there is always this bearish or bullish factor. So when the Fed starts scaling back its bond buying program its definitely foreseeable that over the course of a year this could raise the ten year Treasury interest rate one and a half percent, considering that it is already a half a percent there this certainly will dramatically hurt the economy it is common knowledge that various interest rates essentially move in lock-step with the ten year treasury for instance the average 30 year home mortgage rate. History shows clearly that if home mortgage rates rise one and a half percent or greater this will significantly hurt home sales and therefore the employment connected with that industry will be significantly hurt. This increase in the ten year Treasury also means car loan interest rates and other consumer interest rates will rise causing a big hit to employment and wages. America doesn't need this material and hurtful economic fallout from the Fed scaling back its bond buying program, it needs to get this issue off the table for six months. All the countervailing reasons to begin the scale back don't trump this broad concern. The inflating of stocks, the inflating of home prices, the fact that the Fed will be buying an ever larger percentage of new issues of Treasuries (85% in 2013) which will make this new issue market ever more dependent on the Fed as buyer which when the Fed actually does exit this program will put more pressure on Treasury bond rates to rise.
What the America people have learned is that the capital markets are super sensitive to what the Federal Reserve will do on its monetary stimulus activity. This is in part because economies throughout the world are not strong, Europe has unemployment, debt and banking problems and Asia has a problem of two much capacity in manufacturing (china), too much dependency on export and excessive use of credit problem (China). World economies aren't providing the economic activity in the U.S. to out weigh the actions of the Fed so the Fed's activities get this huge influence. This underscores why the Fed has to turn-off this issue of what it will do about its monetary stimulus program for at least six months. Hopefully in that time Europe will have gotten economically stronger and the U.S. domestic economy will have gotten stronger so it can dwarf and drown out the economic effects of roll backs of any Fed Program.
Second, the American people and its leaders need to advocate and lobby for Mr. Ben Bernanke to get another term as chairmen of the Federal Reserve System. Look at what has been transpiring in the country over the last two months; wide swings in the equity markets, investors bailing out of bonds like it was the end of 2008 again, leaders inside and outside the financial industry obsessed with what the Fed will do. This is not the time to put someone in the Chairmen's job which raises questions about his or her values and character related to Fed activity, doing so could cause catastrophic consequences. Mr. Bernanke is a known entity the American people have seen what he is all about as Chairmen from A to Z over the last eight years. It is crystal clear he will use outstandingly aggressive monetary policy to solve very serious employment problems, avoid recessions and avoid deflation. He is also sensitive to inflation, asset bubbles and low interest rate effects on retirement and pension savings. He also makes extraordinary efforts (press conferences, timely disclosures of Fed meetings) to give no surprises to investors and executives about what the Fed is and will be doing, he runs an outstandingly transparent operation. Even if one disagrees with his policies one has to at least admit that the way he carries out his job brings outstanding stability to the economy and such a person has to agree the policy is already set the money supply has already been hugely increased so the person that sits in the Chairperson's seat is not going to have the option to side step this problem they are only going to have the option of how to extricate America from this huge monetary easing state! Mr. Bernanke is a known entity that one can guarantee will extricate America out of this situation in at least in a general sense as best a manner that is humanly possible. Lastly, if the White House is thinking lets dump Mr. Bernanke and replace him with Janet Yellen who has a reputation of being more likely to use and more aggressive at using monetary expansion to increase employment and wages that seems really foolish. Ms. Yellen would have to be confirmed by the Senate. If such a candidate was submitted for confirmation, one is going to see the pension lobby, the senior lobby and the banking lobby likely be against it because such a candidate,s policies mean low interest rates which hurt these people plus considering the turmoil and upheaval the country is experiencing right now trying to extricate itself from this monetary stimulus program do you really think Senators want to face the criticism of putting a candidate considered a Bernanke on steroids in the job?
First, Mr. Bernanke need to come out and say that the Fed is going to put on hold until next year scaling back on any of its extraordinary accommodative monetary policy initiatives, meaning the Fed won't dial back at all its $75 billion per month buying program this year. The reason that this is compelling needed is that the speculation of when the Fed will act hear is causing significantly damaging effects. This speculation and worry in the last two months has caused ten year treasury bonds and average home mortgage rates to rise a half of percentage rate, massive investment has left the bond markets. In short, worry about the Fed is having a chilling effect on the economy. What is pretty clear about the capital markets is they don't move in a measured manner there is always this bearish or bullish factor. So when the Fed starts scaling back its bond buying program its definitely foreseeable that over the course of a year this could raise the ten year Treasury interest rate one and a half percent, considering that it is already a half a percent there this certainly will dramatically hurt the economy it is common knowledge that various interest rates essentially move in lock-step with the ten year treasury for instance the average 30 year home mortgage rate. History shows clearly that if home mortgage rates rise one and a half percent or greater this will significantly hurt home sales and therefore the employment connected with that industry will be significantly hurt. This increase in the ten year Treasury also means car loan interest rates and other consumer interest rates will rise causing a big hit to employment and wages. America doesn't need this material and hurtful economic fallout from the Fed scaling back its bond buying program, it needs to get this issue off the table for six months. All the countervailing reasons to begin the scale back don't trump this broad concern. The inflating of stocks, the inflating of home prices, the fact that the Fed will be buying an ever larger percentage of new issues of Treasuries (85% in 2013) which will make this new issue market ever more dependent on the Fed as buyer which when the Fed actually does exit this program will put more pressure on Treasury bond rates to rise.
What the America people have learned is that the capital markets are super sensitive to what the Federal Reserve will do on its monetary stimulus activity. This is in part because economies throughout the world are not strong, Europe has unemployment, debt and banking problems and Asia has a problem of two much capacity in manufacturing (china), too much dependency on export and excessive use of credit problem (China). World economies aren't providing the economic activity in the U.S. to out weigh the actions of the Fed so the Fed's activities get this huge influence. This underscores why the Fed has to turn-off this issue of what it will do about its monetary stimulus program for at least six months. Hopefully in that time Europe will have gotten economically stronger and the U.S. domestic economy will have gotten stronger so it can dwarf and drown out the economic effects of roll backs of any Fed Program.
Second, the American people and its leaders need to advocate and lobby for Mr. Ben Bernanke to get another term as chairmen of the Federal Reserve System. Look at what has been transpiring in the country over the last two months; wide swings in the equity markets, investors bailing out of bonds like it was the end of 2008 again, leaders inside and outside the financial industry obsessed with what the Fed will do. This is not the time to put someone in the Chairmen's job which raises questions about his or her values and character related to Fed activity, doing so could cause catastrophic consequences. Mr. Bernanke is a known entity the American people have seen what he is all about as Chairmen from A to Z over the last eight years. It is crystal clear he will use outstandingly aggressive monetary policy to solve very serious employment problems, avoid recessions and avoid deflation. He is also sensitive to inflation, asset bubbles and low interest rate effects on retirement and pension savings. He also makes extraordinary efforts (press conferences, timely disclosures of Fed meetings) to give no surprises to investors and executives about what the Fed is and will be doing, he runs an outstandingly transparent operation. Even if one disagrees with his policies one has to at least admit that the way he carries out his job brings outstanding stability to the economy and such a person has to agree the policy is already set the money supply has already been hugely increased so the person that sits in the Chairperson's seat is not going to have the option to side step this problem they are only going to have the option of how to extricate America from this huge monetary easing state! Mr. Bernanke is a known entity that one can guarantee will extricate America out of this situation in at least in a general sense as best a manner that is humanly possible. Lastly, if the White House is thinking lets dump Mr. Bernanke and replace him with Janet Yellen who has a reputation of being more likely to use and more aggressive at using monetary expansion to increase employment and wages that seems really foolish. Ms. Yellen would have to be confirmed by the Senate. If such a candidate was submitted for confirmation, one is going to see the pension lobby, the senior lobby and the banking lobby likely be against it because such a candidate,s policies mean low interest rates which hurt these people plus considering the turmoil and upheaval the country is experiencing right now trying to extricate itself from this monetary stimulus program do you really think Senators want to face the criticism of putting a candidate considered a Bernanke on steroids in the job?
