Found this little article here, does anyone know what this means when it comes to the economy and what harm it could do?


http://www.chrismartenson.com/blog/f...-auction/23880

I gotta run to work.

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It is far easier to ignorantly control others than it is to wisely control yourself.

What happens is that the Fed is trying to curb deflation a little bit. The FOMC (Federal Open Market Committee) uses these "Open Market Operations" all the time to do small adjustments up or down similar to steering a car. There has been a deflationary trend and they are trying to fix it.

When inflation gets too high they sell treasuries (bonds) and that takes money out of the economy to shrink the monetary base and that will help to make very small changes to the inflation. Large companies are essentially tying up their money by placing it in the fed where it cannot circulate around the economy, thus not as much to go around.

Likewise when they buy the treasuries they are buying back the bonds that they have sold. This puts the money that they had already collected back into the companies that bought them in the first place which will help reduce deflation by increasing the amount of money in the system.

Even though for us that is a insane amount of money for the economy it really is not that big. They bought back those to inject some money into the system to help out the deflation that is happening now (funny how a few months ago everyone that has no clue about economics was worried about inflation with a 9% unemployment rate).

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“He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.” -Einstein

I understand the economy less than McCain. I always feel left out of these... But I just had to come to the conclusion I simply don't get it.

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Its not that bad. There is a somewhat long book, but it is very easy to follow and read, that can really help you out with it, it is called "Basic Economics" by Thomas Sowell.

They don't bother trying to teach all the graphs and formulas, but gives you a very easy to understand basics of how the economy moves.

I think that everyone should get a basic crash course of basic economics (real world applications) every year in high school so that they can have a better grasp of how everyday economics is in action.

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“He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.” -Einstein

That's not deflationary, you don't decrease inflation by buying debt. If the Federal Reserve was going to act in a deflationary way it would be selling bonds to pull cash out of circulation not purchasing bonds and pushing cash into circulation.

As far as the harm, it looks like it's just 4.7 Billion, against the trillions that have been dumped into the economy in an ill-conceived attempt to correct the problems of easy credit and easy cash by providing more easy cash and more easy credit. It's just the continuation of similar policies.

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

You're being ignored Hannimal, you're incompetent. You talk about how your economics doesn't involve politics but everytime you open your mouth to discuss economics you reveal how deeply entrenched politics is in your economic theory with ideas such as ability to pay and that kind of imbecilic socialist claptrap.

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis

O...K....

You are wrong, but w/e. Point to something in my original post that has anything to do with politics. I was telling him what a open market operation is.

The problem is that you are so fired up and ready to argue for some conspiracy, you see stuff that is not there.

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“He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.” -Einstein

It's a shell game, and a house of cards. The USD only has value if people believe it does; as long as china and the Saudis continue to buy our debt, the house won't collapse, but some day - in our life times - it will. Think $100 loaf of bread.

They've been doing this since Nixon ended the gold standard - because there isn't enough gold in the world to cover the amount of debt the government needs to create - and it will continue for as long as the world continue to believe the US is good for it's debts.

We'll be bankrupt within 10 years

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"If a law is unjust, a man is not only right to disobey it, he is obligated to do so." - Thomas Jefferson my grow

I would say it is more hide and seek. Maybe leapfrog. Definantly not ring around the rosie though.

Anything only has value if people believe it does. Gold doesn't mean anything to people unless you think it does. America's economy is much larger than chinas, and the Saudis don't even come close. They know that if one country is most likely to pay back their investments it is us. No other country has as much wealth as we do. Since the world uses the american dollar as the means to trade we always will have the ability to pay back, since we can just print the money.

But they know that we are also the least likely to flood the world with the money making such a high inflation that $100 a loaf of bread seems low and pay them back with a severely deflated dollar, thus ruining our economy with hyperinflation.

The reason why you hear about this now is that this stimulus package was insanely large to avoid he collapse of our financial system. But once they realized how it worked they passed their own stimulus packages.

We still are the best system to invest in, and that is why the stock market is above 9400 today.

That is just fear mongering. America won't be bankrupt anytime soon.

I usually don't like to just cut and paste blogs, but this seems failry accurate:
You have to be negative balance to go bankrupt. So that would mean we would have to lose around $50-$60 Trillion to go bankrupt.

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“He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.” -Einstein

You're forgetting the 60+ Trillion in unfunded future liabilities in Welfare and Social Security.

The United States is bankrupt and only surviving on credit.

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Libertas inaestimabilis res est - Liberty is a thing beyond all price. | Sic Semper Tyrannis