{"id":9698,"date":"2015-07-04T07:52:34","date_gmt":"2015-07-04T12:52:34","guid":{"rendered":"http:\/\/olduvai.ca\/?p=9698"},"modified":"2015-07-04T07:52:34","modified_gmt":"2015-07-04T12:52:34","slug":"who-enables-the-man","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=9698","title":{"rendered":"Who Enables the Man?"},"content":{"rendered":"

Who Enables the Man?<\/a><\/h3>\n

\u201cThe Man\u201d is Playing with Fire\u00a0<\/b><\/p>\n

 <\/p>\n

\"businessman_cigar_money\"<\/p>\n

Photo credit: Keystone<\/p>\n

What is \u201cthe man\u201d doing?<\/strong><\/p>\n

1 \u00a0 Printing money\u2026\u00a0literally. Paused\u2026 for now. Still reinvesting principal\/proceeds from maturing securities to maintain $4.5 trn. balance sheet size.<\/p>\n

2 \u00a0 With that freshly printed money [of which there were never any quantitative limits] \u201cThe Man\u201d is buying government debt [treasury notes and bonds] to purposely lower interest rates since 0% just is not low enough to adequately stimulate final demand.<\/p>\n

3 \u00a0 As the largest purchaser of U.S. federal debt [30% of all new issues] \u201cThe Man\u201d is purposely\u00a0increasing<\/i>\u00a0the price of that debt [making it more expensive for you to acquire] in order to disincentivize you from purchasing \u201crisk free\u201d assets. The idea is to direct you toward investing in riskier assets [i.e., equities] because \u201cThe Man\u201d knows what\u2019s best for you and the general economy.<\/p>\n

4 \u00a0 \u201cThe Man\u201d receives interest payments from \u201cThe Man\u2019s Father\u201d [federal government]. \u201cThe Man\u201d then automatically returns that interest income to his \u201cFather\u201d. So basically\u2026\u201dFather\u201d pays\u00a0zero\u00a0<\/i>interest on his IOU\u2019s\u2026which\u2026as a reminder\u2026were purchased with newly printed [un-earned and non-productive] dollars.<\/p>\n

BTW\u2026 it is against the law [not that \u201cThe Man\u201d really cares about the law] for \u201cThe Man\u201d to directly purchase debt from \u201cFather\u201d\u2026 so he simply acquires it in the secondary market in order to maximize market price impact. \u201cThe Man\u201d also allows Wall Street investment banks to \u201cfront run\u201d its purchases to assure trading profits.<\/p>\n

 <\/p>\n

\"taper\"<\/a><\/p>\n

Assets held by the Federal Reserve, via Saint Louis Federal Reserve Research, click to enlarge.<\/p>\n

 <\/p>\n

5 \u00a0 \u201cThe Man\u201d then prints more money to buy your mortgage [35% of the U.S. residential real estate market] in order to free up capital on the banks\u2019 balance sheets. That \u201cfreed up\u201d capital is then channeled back to \u201cFather\u201d in the form of aggressive fines, since 2009, currently totaling over $128B and counting.<\/p>\n

The fines are a result of, according to \u201cFather\u201d, bank malfeasance leading up to the 2008-9 residential real estate\/national economic crash. That malfeasance initially escaped the purview of \u201cThe Man\u201d and many other regulators but, apparently, they finally \u201cfigured it out\u201d. In the meantime, the taxpayers handsomely compensated the regulators for failing to properly execute their jobs in the many years predating the housing crisis.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Who Enables the Man? \u201cThe Man\u201d is Playing with Fire\u00a0   Photo credit: Keystone What is \u201cthe man\u201d doing? 1 \u00a0 Printing money\u2026\u00a0literally. Paused\u2026 for now. Still reinvesting principal\/proceeds from maturing securities to maintain $4.5 trn. balance sheet size. 2 \u00a0 With that freshly printed money [of which there were never any quantitative limits] \u201cThe […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,195,303,305,538,661],"class_list":["post-9698","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-debt","tag-fed","tag-federal-reserve","tag-money-printing","tag-qe"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9698","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9698"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9698\/revisions"}],"predecessor-version":[{"id":9699,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/9698\/revisions\/9699"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}