... is not that they decided to print $1.2T, it's who gets to spend that $1.2T.
Printing money inflates the currency. No new wealth was created yesterday. Instead, we all saw our dollars lose value. The value squeezed out of our dollars (consider it a wealth tax) is the $1.2T that will now be handed over to Obama and Pelosi.
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The trillion doesn't get handed over to Obama and Pelosi; it goes to the folks that used to own those long term bonds.
Since the bonds are newly minted, no one owns them except the government.
Nope. 1.2 trillion of the money goes against mortgage backed securities that are already out there.
Which is why TBT got killed yesterday? Err, not really.
Also, Fannie Mae and Freddie Mac are owned by who? The government. And Agency bonds? Those are issued by ... the government.
Fannie and Freddie buy mortgages, securitize them, and then resell them. That is where the 1.2 trillion is going, freeing up more money for more mortgages.
The money flow goes like this; Bank X issues a mortgage to joe blow who gets the cash. The bank resells that mortgage to Fannie or Freddie, they bundle it up and resell it with a block of other similar mortgages. The fed buys that instrument from Freddie, allowing Freddie to buy yet more mortgages. See how the money never gets to Obama or Pelosi?
There's $100B for Agencies and $300B for Treasuries. That's called government spending. That has nothing at all to do with mortgages.
If they wanted to give the rest to private individuals, they would have bought corporate bonds instead of Fannie and Freddie which are government entities.
"See how the money never gets to Obama or Pelosi?"
The same power-hungry people who are somehow content with a sub-$200k job?
It's not about the money being in their hands, it's about power and control. The bond money might not touch their hands, but they control who gets the favors, and who they will own in the future.
"It's not about the money being in their hands, it's about power and control. The bond money might not touch their hands, but they control who gets the favors, and who they will own in the future."
Better use a life line, guess who appointed Bernanke. This is about nothing more than trying to pump money into the housing market. The money isn't going to Pelosi and Obama and they aren't calling the shots here.
The money doesn't get handed over to Pelosi and Obama, it goes straight into the hands of the foreign investors that own the Federal Reserve. The idea is that they will then loan the new money to American businesses and individuals. But essentially what has happened is that these foreign investors have grabbed another portion of America's wealth because Congress has abdicated the responsibility of printing and regulating the value of money.
Sleeping, you make a good point. Over at Brad Setser's blog, where he follows Chinese investments, it looks like the Chinese want to get out of their Agency holdings because those are not backed by the government despite the fact that they are government bonds. The money spent here on Agency bonds will either buy new debt (there's Pelosi and Obama again) or will be used to buy bonds back from the Chinese.
"Sleeping, you make a good point."
Pfft, he really means it's controlled by foreign banks; Rothschilds in particular. Check out the link from his website.
http://www.save-a-patriot.org/files/view/whofed.html
Check out the whole wacky website:
http://www.save-a-patriot.org/
All an evil cabal between Obama, Pelosi and the Rothschilds, who knew? Wait a minute the fillings in my teeth are telling me the black helicopters cometh; I'm outa here...
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