該來的總會來 March 19, 2017Posted by hslu in Debt and deficit, Economics, Trump.
Tags: Fed Balance sheet, MBS, QE, Yellen
add a comment
不過，這是 Goldman Sachs 的推測，不一定會實現。我倒覺得 Yellen 大媽不會貿然行事，最多她也不過是做個樣子，賣個幾十億，開個頭，讓後來的人收拾這個爛攤子。反正 The Fed 欠這麽多錢，也不是她的錯，她勇敢的開始減少QE的行動，也可以沾點光。
再說， Trump 是絕對不會把她留下來的。她明年年初是一定會收到 “You are fired” 的粉紅小單。反正她也風光夠了，下台收政府的退休金，日子好過的很。她在位的這幾年，兢兢業業，守著她從教科書上學到的理論，一步一步慢慢的走，蕭規曹隨，錯不到那裏。黑暗隧道的那一邊已經有光亮出來了。只要熬過這幾個月，成功身退，歷史留名，有什麽不好。搞個大動作，不是 Yellen 大媽的作風。
套一句 Yellen 大媽和 Bernanke 大叔最喜歡說的話來結尾吧：”預知後事如何，請聽下回分解。”
MyRA is your money’s graveyard February 9, 2014Posted by hslu in Congress, Economics, Obama, Retirement.
Tags: Bonds, Fed Balance sheet, MyRA, Obama, the Fed
add a comment
Bernanke kept the Fed’s funds rate at near zero level since Great Recession started in 2008-2009. He also bought trillions of long term US Treasury Bonds and mortgage backed securities in order to bring their rates down as well.
He did it because he wanted to force investors to riskier assets: stocks, real estates, commodities, currencies and derivatives. Bernanke wanted trickle down effects from the riches to kick start the sagging US economy.
S&P 500 made 175+% since 2009. Housing prices in many cities recovered nicely. Many investors and hedge funds also made lots of money in carry trades and they have no one but Benanke to thank for. As expected, the rich got richer while the poor got stuck with food stamps and unemployment benefits. Trickle down from the riches got the economy growing at ～2.2% for years.
Now that the Fed has trillions of Bonds on its balance sheet and Bernanke didn’t know what to do with them. Selling them will raise the interest rates which will increase US government’s interest payments on its $17+ trillion national debt. Hihger rates will slow down the still fragile economy.
Someone came up with the MyRA idea and the do-whatever-I-want Obama said he can do it without the Congress: why not sell the bonds to American citizens? The boomers are retiring in thousands everyday. They can use a steady income. Seniors have been making 0.01% on their CDs from the banks. Let them have those bonds and everyone is happy.
The Fed can unload the Bonds off their balance sheet and the boomers and seniors can keep the bonds.
Sounds like a good idea.
Yes, a good idea for the government, that is. But it is a lousy deal to people who buy these type of bonds.
Bonds on Fed’s balance sheet have a low coupon rate because Bernanke made it so when he bought them on the open market.
With economic growth expecting to rise, inflation will return once banks start to lend and interest rates will rise.
Long term interest rates have been going up since Bernanke uttered the ‘t’ word in May 2013. If the boomers and seniors exchange their CDs with the bonds, they will see the principles of their bonds shrink as inflation picks up. They might as well bury their money in graves because they won’t see some of them as 10 year rates go up from ~2.7% now to 5 to 6% in a few years.
Here is my advise if you are thinking about MyRA: