Yesterday we looked at the process the FED uses to get the money "Out of Thin Air" and into the hands of people who can spend it. In other words the "how" they do this magic. Basically, that route is through special dealers and then it goes into a few select hands. Today we are not going to look at the "how" but instead we will look at "Who" gets the money and where it is likely to go from there. Because if we know where it is likely to go we can get there first and profit from the incoming cash flow. ~Tim McMahon, editor Quantitative Easing (QE2): Who Gets the Fed’s Printed Money? Part 2 of a 6 Part Video Series on Quantitative Easing: In Part 1: How the FED Prints Money, we … [Read more...]
How the FED Prints Money
Printing Money: The process of "printing" money is always a kind of mystery to most people since only about 10% of the total money supply is actually in physical currency. Technically most of the money isn't printed so the term should be "money creation" or "money supply expansion" but "printing money" is used euphemistically to include all forms of expanding the money supply. The monetary base (or money supply) is typically controlled by adjusting monetary policy. This is usually done by the central bank (in the U.S. this is the Federal Reserve Bank or FED). The FED changes the monetary base through "open market transactions" (i.e., buying and selling of government bonds). The FED also … [Read more...]
Why the Bailout Won’t Work
By Andrew Gordon The economy is now staring eyeball-to-eyeball with an activist U.S. government. It will legislate, reform, supervise, bully, give out money like cotton candy and get concessions in return. It will encourage technological development in environmental and other “future” industries. It will seek sources of energy other than the oil and gas we get from Mexico, Canada and OPEC. And it will put generous sums of money behind these initiatives. The Obama government emphatically does not want banks to sit on the money they get from the government. Nor do they want it to go to shareholders in the form of dividend payments. This is why I look for more companies to cut their … [Read more...]
