US Rate Rise in December?

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Will the FED raise rates in December?

No
8
89%
YES - 0.10%
0
No votes
YES - 0.25%
1
11%
YES - >0.25%
0
No votes
 
Total votes : 9

Re: US Rate Rise in December?

Postby Pixel8r » Mon Dec 21, 2015 10:17 pm » Safari 9.0.2 Safari 9.0.2  Mac OS X Mac OS X  Screen Resolution: 2560 x 1440 2560 x 1440

Watch on youtube.com
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Re: US Rate Rise in December?

Postby Pixel8r » Thu Dec 24, 2015 10:58 am » Safari 9.0.2 Safari 9.0.2  Mac OS X Mac OS X  Screen Resolution: 2560 x 1440 2560 x 1440

"Money is Gold, and nothing else"
(As John Pierpont Morgan once stated under oath before the USCongress and the Pujo Commission in 1912)
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Re: US Rate Rise in December?

Postby Pixel8r » Wed Dec 30, 2015 8:54 am » Safari 9.0.2 Safari 9.0.2  Mac OS X Mac OS X  Screen Resolution: 2560 x 1440 2560 x 1440

Found this article has a very good explanation as to why the fed had to raise rates in December.

Gold a safe harbor on an ocean of excess reserves

Now we know why the Fed's money printing binge never translated to inflation

It has been an enduring mystery to many why the enormous amount of money created by the Federal Reserve in the wake of the 2008 crisis never translated to a general price inflation. After all, as Milton Friedman lectured us, "inflation is always and everywhere a monetary phenomena." So why didn't the enormous amount of money created by the Fed during its quantitative easing program – some $3.5 trillion added to the bank reserve credit – launch double-digit price inflation, or worse?

The answer, as it turns out, lies in a little discussed and understood line item on the Fed's balance sheet labelled "Reserve balances with Federal Reserve Banks," or "excess reserves" as it is called in the banking trade. The line item was the result of the Emergency Economic Stabilization Act passed by Congress in 2008, also known as the Wall Street bailout. In it, the Fed was given the authority to pay interest on excess reserve deposits made by commercial banks. Those excess reserves, in turn, were created by the Fed through its quantitative easing program when it purchased massive amounts of mortgage backed securities (MBS) and Treasury paper from the banks.

Up until recently, the excess reserve mechanism operated quietly in the background with little in the way of public notice on the part of either Wall Street analysts or the mainstream financial media. Excess reserves began to get more exposure in the wake of the recent Fed announcement on raising rates. Various mainstream media sources, including the Wall Street Journal's John Carney in a Heard on the Street column, cited it as "the main tool" the Fed would use to force interest rates higher...


"Arguably most immediate risk from the Fed's policies is that banks could use those newly created excess reserves too quickly. Banks now have an additional $2.6 trillion in excess reserves, which means that they can create up to approximately $26 trillion in new money. In other words, banks now have the power to create more than twice the amount of money currently in the U.S. economy, thus heightening the risk of future inflation. As the economy improves, the Fed may have to pay higher interest rates on these reserves to keep banks from dramatically increasing their lending. Paying higher rates, all else being constant, would exacerbate any 'losses' suffered by the Fed, thus increasing [its] political problems."
"Money is Gold, and nothing else"
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