RE: Federal Profit

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MrRodgers -> RE: Federal Profit (3/23/2011 1:55:54 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: DarkSteven I don't like this. If the Fed can make a profit by exceeding its charter, it's still exceeding its charter. In what way is the Fed exceeding its charter? It is likely not in violation. There is a profit accounted for in its charter. It is my understanding that 20% of the 12 fed district banks is privately owned and in fact the charter limits any distribution of profit to no more than 6% of capital. (ROI) My understanding also extends to if I am correct, that private ownership has no operational power only limited equity holdings. The govt. appoints leaders (top 14 or so)...they hire staff. Much of the practical problems with the fed is its lack political accountability, thorough audits and having bankers manage it with the treasury dept. thereby creating a apparent financial and political conflict of interest. The influx of capital (QEII and others) was not an introduction of cash into circulation but only an 'easing' of the individual bank balance sheets. It will not cause any inflation beyond that caused by a large increase in economic activity that would occur anyway if we were to say...have a sudden robust rebound in the economy and that ain't happen'n. This allows more national, retail lending which hasn't happened yet.

willbeurdaddy -> RE: Federal Profit (3/23/2011 3:24:57 PM)
quote: ORIGINAL: MrRodgers The influx of capital (QEII and others) was not an introduction of cash into circulation but only an 'easing' of the individual bank balance sheets. It will not cause any inflation beyond that caused by a large increase in economic activity that would occur anyway if we were to say...have a sudden robust rebound in the economy and that ain't happen'n. This allows more national, retail lending which hasn't happened yet. Not necessarily so. Even without additional cash in circulation, puffing up the banks balance sheets and the multiplier effect can lead to an increase in lending capabilities and therefore increases velocity even absent a major economic recovery. The lack of retail lending is the result of uncertainty...lack of consumer confidence on one side, and business uncertainty on the other side. It doesnt take much good news (or lack of bad) for the velocity of money to increase in advance of real economics =====> inflation

DomYngBlk -> RE: Federal Profit (3/24/2011 5:47:56 AM)
quote: ORIGINAL: tazzygirl I dont recall anyone caring what your fantasy opinion of the minute is, pahunk. You are thinking that "profit" is coming to taxpayers?

Edwynn -> RE: Federal Profit (3/24/2011 9:33:53 AM)
I don't see anywhere in tazzy's posts mentioning that the treasury is mailing a check to taxpayers, only that they received a larger than usual check from the fed, and other posts pointed out that (almost) all fed profits are paid to the treasury every year. Any non-income tax revenue to the government is money that income tax payers don't have to pay, theoretically. ---------------------- As to the question of some small increase in lending leading to increased velocity of money sufficient to cause inflation ... I rather doubt it this early in a recovery. For one thing there is lots of capacity and inventory sitting idle at the moment, and an increase in velocity at this point is much more likely to be counterbalanced by increase in output rather than increase in prices (MV=PY). An increase in revenue for businesses with out raising prices means they don't have to raise prices to increase revenue, and most do not raise prices in that situation even in normal times, so not likely to occur in early stage of recovery. Being that so many business are operating at a marginal revenue just above average cost but below marginal cost (i.e., just able to ride things out), an increase in sales that get's them back to or even above marginal cost with out raising prices would make most of them quite happy. As sales increase, total revenue will be much more further enhanced by re-hiring those previously laid off and increasing output than by raising prices on the present low output, the latter choice at this point quickly knocking sales right back down, were they to be that foolish. (aggregate price elasticity of demand is closer to flat at times like these, meaning that a small increase in price results in a large drop in quantity sold). Demand that is above current capacity is what brings about the "bad" inflation, and we have a ways to go yet before that happens.

willbeurdaddy -> RE: Federal Profit (3/24/2011 10:20:04 AM)
quote: ORIGINAL: Edwynn I don't see anywhere in tazzy's posts mentioning that the treasury is mailing a check to taxpayers, only that they received a larger than usual check from the fed, and other posts pointed out that (almost) all fed profits are paid to the treasury every year. Any non-income tax revenue to the government is money that income tax payers don't have to pay, theoretically. ---------------------- As to the question of some small increase in lending leading to increased velocity of money sufficient to cause inflation ... I rather doubt it this early in a recovery. For one thing there is lots of capacity and inventory sitting idle at the moment, and an increase in velocity at this point is much more likely to be counterbalanced by increase in output rather than increase in prices (MV=PY). An increase in revenue for businesses with out raising prices means they don't have to raise prices to increase revenue, and most do not raise prices in that situation even in normal times, so not likely to occur in early stage of recovery. Being that so many business are operating at a marginal revenue just above average cost but below marginal cost (i.e., just able to ride things out), an increase in sales that get's them back to or even above marginal cost with out raising prices would make most of them quite happy. As sales increase, total revenue will be much more further enhanced by re-hiring those previously laid off and increasing output than by raising prices on the present low output, the latter choice at this point quickly knocking sales right back down, were they to be that foolish. (aggregate price elasticity of demand is closer to flat at times like these, meaning that a small increase in price results in a large drop in quantity sold). Demand that that is above current capacity is what brings about the "bad" inflation, and we have a ways to go yet before that happens. the key words here are "this early in a recovery". We arent in a recovery, as much as the government statisticians would like you to think we are. Obama's theory is that when there really is a recovery the Fed can reel in M before demand increases. Unfortunately, thats a much more difficult pandora's box to close without killing whatever recovery there is. Re inventories, there are two reasons they are maintained at high levels: lack of demand or anticipation of price increases (the latter being prima facie evidence that "speculation" in oil prices hasnt raised delivered oil prices). The key statistic isnt the absolute level of inventories but the ratio of inventories to sales, and that has not grown from its very low post-2008 levels, so there isnt really that much inventory "sitting idle" in historic terms. Even small increases in demand will indeed contribute to demand-pull inflation. The hiring in response to rapidly depleted inventories will then feedback into that loop as consumer confidence leads to an increase in debt financed spending and cost-push inflation (which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals). All of this can be summarized in the growth of money supply vs growth in real GDP, and M has outpaced Y as the Fed attempt to spur Y with low interest rates.

mnottertail -> RE: Federal Profit (3/24/2011 10:23:18 AM)
Re inventories, there are two reasons they are maintained at high levels: lack of demand or anticipation of price increases (the latter being prima facie evidence that "speculation" in oil prices hasnt raised delivered oil prices). Also without foundation, since even idiot savants could see there is a rise at the pump.

rulemylife -> RE: Federal Profit (3/24/2011 11:39:49 AM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: Edwynn What tazzy touches on is definitely true also, i.e we spent and spent and kept accepting all the card limit increases the banks threw at us, and in the aggregate net private savings have been negative for a long time. Even when the government had a budget surplus for a couple of years in the late nineties, national savings (private + government savings -the government surplus in this case) were negative because individuals and businesses spent so much as to easily negate the budget surplus. Sigghhh, once again there was no surplus. Government spending exceeded government revenues in every year. The minor factual error doesnt negate a suprisingly accurate post from you though. Must be cut and paste. Sigghhh, once again you have no idea what you are talking about. I don't know how many times I have posted you CBO and OBM verification of the surpluses but you have such an over-inflated sense of your own supposed financial knowledge that you believe you know more than official government sources.

Edwynn -> RE: Federal Profit (3/24/2011 11:59:46 AM)
The off-hand and, as it turns out, unfortunate mention of inventories when the much larger issue is output capacity has again set your attention to the less pertinent and far less impactful influence. Here's the standard monetary theorists' formula once again: (M)oney supply * (V)elocity= (P)rice*(Y)(total output). What you stated previously regarding velocity is sometimes (not in every case) true during normal economic times, more likely if nearing a point of peak output. Hint; we are not in normal economic times and, arguably, not approaching peak output at present. Any increase in V on the left side will cause (on the right side) Y to increase far more than P for a good while to come. At least that is the understanding of both micro- and macroeconomists when Y is far below capacity. I use the term "in recovery" based on the fact that there has been slight increase in output the last few quarters. Unlike standard economists' definitions, I do not myself think that we are not still in a recession when unemployment is this high, but as I and any economist understand the term, "in recovery" means just that, which you are obviously equating with "recovered" in evidence of your comment "We arent in a recovery, as much as the government statisticians would like you to think we are." By your particular and peculiar understanding of things a patient who's temperature has dropped from 104F to 102F is not in recovery because his temp. is 102F. My use of the term "in recovery" is closer to what either doctors or economists intend by the term. "Obama's theory is that when there really is a recovery the Fed can reel in M before demand increases." That is not 'Obama's theory', that is the understanding on which every fed chief and board of governors and their team of Phd number crunchers have been acting upon for decades, and never have any of them made claims as to ability for perfect timing in any of it. Obama is a freakin' lawer, quite unlikely to have any economic theories of any sort on his own. "Even small increases in demand will indeed contribute to demand-pull inflation." As I pointed out, true only when output is far above what it is currently. There was increase in demand all through the '50's and 60's and at later times also, not all of it small, accompanied by small increase in inflation. "The hiring in response to rapidly depleted inventories will then feedback into that loop as consumer confidence leads to an increase in debt financed spending and cost-push inflation." For the 50th time, true when output is high, not when output is well below capacity. Another thing; even when spending is high, debt financing provides the smaller portion of it. In times of recovery (as much as you hate that word) the proportion of debt to spending is certainly lower, even in the US, and people are likely to be a bit slow in getting back to the older habits this time around. " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Your perfect understanding of Mises/Austrian school economics noted. All western central banks understand that not all inflation causes such "spirals" since each and every one of their mandates include some stipulation for "low inflation" or "stable inflation" or some combination. By your understanding, inflation of any sort causes a "spiral" by its very existence (why don't you just skip that step and call it a spiral from the start, since the two are inextricably linked and locked in your mind). In any case putting all that you are saying here together: even though and even when we are not in a recovery, the least little increase in spending will cause inflation, which will very soon become an "inflation spiral"; the hiring response to depleted inventories will lead to inflation, which will very soon become ... ; all inflation is bad inflation, because, contrary to history, small inflation leads to a "spiral" in every case, even when at near bottom economic times. By all this, one can easily conclude that in an economic downturn serious enough to be shuttering thousands of schools, people spending or companies hiring would be be easily the worst thing that could happen to us.

Termyn8or -> RE: Federal Profit (3/24/2011 12:09:14 PM)
Willy thrives on negativity, take that into account and he ain't all that bad. T^T

willbeurdaddy -> RE: Federal Profit (3/24/2011 2:14:11 PM)
quote: ORIGINAL: rulemylife quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: Edwynn What tazzy touches on is definitely true also, i.e we spent and spent and kept accepting all the card limit increases the banks threw at us, and in the aggregate net private savings have been negative for a long time. Even when the government had a budget surplus for a couple of years in the late nineties, national savings (private + government savings -the government surplus in this case) were negative because individuals and businesses spent so much as to easily negate the budget surplus. Sigghhh, once again there was no surplus. Government spending exceeded government revenues in every year. The minor factual error doesnt negate a suprisingly accurate post from you though. Must be cut and paste. Sigghhh, once again you have no idea what you are talking about. I don't know how many times I have posted you CBO and OBM verification of the surpluses but you have such an over-inflated sense of your own supposed financial knowledge that you believe you know more than official government sources. You have repeatedly posted bullshit that ignores inter-governmental borrowing. That is specifically why I specified spending vs income. Government sources support what I have said, you just choose to ignore those that show the complete picture.

mnottertail -> RE: Federal Profit (3/24/2011 2:16:19 PM)
Well, then lets examine intergovenmental AND off book. Then we level it.

willbeurdaddy -> RE: Federal Profit (3/24/2011 2:24:00 PM)
quote: ORIGINAL: Edwynn The off-hand and, as it turns out, unfortunate mention of inventories when the much larger issue is output capacity has again set your attention to the less pertinent and far less impactful influence. Here's the standard monetary theorists' formula once again: (M)oney supply * (V)elocity= (P)rice*(Y)(total output). What you stated previously regarding velocity is sometimes (not in every case) true during normal economic times, more likely if nearing a point of peak output. Hint; we are not in normal economic times and, arguably, not approaching peak output at present. Any increase in V on the left side will cause (on the right side) Y to increase far more than P for a good while to come. At least that is the understanding of both micro- and macroeconomists when Y is far below capacity. I use the term "in recovery" based on the fact that there has been slight increase in output the last few quarters. Unlike standard economists' definitions, I do not myself think that we are not still in a recession when unemployment is this high, but as I and any economist understand the term, "in recovery" means just that, which you are obviously equating with "recovered" in evidence of your comment "We arent in a recovery, as much as the government statisticians would like you to think we are." By your particular and peculiar understanding of things a patient who's temperature has dropped from 104F to 102F is not in recovery because his temp. is 102F. My use of the term "in recovery" is closer to what either doctors or economists intend by the term. "Obama's theory is that when there really is a recovery the Fed can reel in M before demand increases." That is not 'Obama's theory', that is the understanding on which every fed chief and board of governors and their team of Phd number crunchers have been acting upon for decades, and never have any of them made claims as to ability for perfect timing in any of it. Obama is a freakin' lawer, quite unlikely to have any economic theories of any sort on his own. which is exactly why he should never have been elected. No business experience, no leadership experience, no foreign policy experience. "Even small increases in demand will indeed contribute to demand-pull inflation." As I pointed out, true only when output is far above what it is currently. There was increase in demand all through the '50's and 60's and at later times also, not all of it small, accompanied by small increase in inflation. No youre just back to your argumentative, asshole self. The economic environment of the 50s and 60s is totally different than it is today, and the comparison is irrelevant....and you know it "The hiring in response to rapidly depleted inventories will then feedback into that loop as consumer confidence leads to an increase in debt financed spending and cost-push inflation." For the 50th time, true when output is high, not when output is well below capacity.No, it is true regardless of output/capacity in the short term. Cost-push inflation during the ramping up period still exists. Another thing; even when spending is high, debt financing provides the smaller portion of it. In times of recovery (as much as you hate that word) the proportion of debt to spending is certainly lower, even in the US, and people are likely to be a bit slow in getting back to the older habits this time around. " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Your perfect understanding of Mises/Austrian school economics noted. All western central banks understand that not all inflation causes such "spirals" since each and every one of their mandates include some stipulation for "low inflation" or "stable inflation" or some combination. and I never said it did By your understanding, inflation of any sort causes a "spiral" by its very existence (why don't you just skip that step and call it a spiral from the start, since the two are inextricably linked and locked in your mind).no, it doesnt and not they arent, and dont put words in my mouth. In any case putting all that you are saying here together: even though and even when we are not in a recovery, the least little increase in spending will cause inflation, which will very soon become an "inflation spiral"; the hiring response to depleted inventories will lead to inflation, which will very soon become ... ; all inflation is bad inflation, because, contrary to history, small inflation leads to a "spiral" in every case, even when at near bottom economic times. wrong again. all of my comments are in the context of the current adminstrations policies, not "every case" By all this, one can easily conclude that in an economic downturn serious enough to be shuttering thousands of schools, people spending or companies hiring would be be easily the worst thing that could happen to us. maybe someone responding as irrationally as you are might conclude that

tazzygirl -> RE: Federal Profit (3/24/2011 3:10:15 PM)
quote: ORIGINAL: DomYngBlk quote: ORIGINAL: tazzygirl I dont recall anyone caring what your fantasy opinion of the minute is, pahunk. You are thinking that "profit" is coming to taxpayers? Hardly. Remind me where I mentioned that.

rulemylife -> RE: Federal Profit (3/24/2011 3:24:18 PM)
quote: ORIGINAL: willbeurdaddy You have repeatedly posted bullshit that ignores inter-governmental borrowing. That is specifically why I specified spending vs income. Government sources support what I have said, you just choose to ignore those that show the complete picture. Would that be anything similar to the inter-governmental borrowing that allowed Bush to finance two wars outside of the claimed budget?

willbeurdaddy -> RE: Federal Profit (3/24/2011 4:03:01 PM)
Quotes like Bernanke's “It’s interest that the Treasury didn’t have to pay the Chinese,” don't help either. First, the bonds that the Fed bought and held in order to increase the money supply weren't bought from the Chinese, they are bought on the open market and China only owns 7-10% of the outstanding debt. Second, the bonds are paid for by increasing the paper balances of the institutions it is bought from, not with cash. That isn't free, it eventually has a cost.

willbeurdaddy -> RE: Federal Profit (3/24/2011 4:06:48 PM)
quote: ORIGINAL: rulemylife quote: ORIGINAL: willbeurdaddy You have repeatedly posted bullshit that ignores inter-governmental borrowing. That is specifically why I specified spending vs income. Government sources support what I have said, you just choose to ignore those that show the complete picture. Would that be anything similar to the inter-governmental borrowing that allowed Bush to finance two wars outside of the claimed budget? All borrowing is "similar". You can't identify a particular source of borrowed funds as applying to any particular spending. But at least you finally admit that it was ignoring inter-governmental borrowing that is the basis of the fallacy of claiming there was a surplus when spending exceeded revenues.

pahunkboy -> RE: Federal Profit (3/24/2011 4:11:34 PM)
FR Ok- then- everything is coming up roses! Happy days are here again. Take me to Disneyland!

Edwynn -> RE: Federal Profit (3/24/2011 4:18:35 PM)
"No, it is true regardless of output/capacity in the short term. Cost-push inflation during the ramping up period still exists." Which is easily countered by the increase in output as pointed out in several ways previously, all of which escape your understanding no matter how simply explained. Supply/demand means that when price goes up, two things happen; people buy less, and suppliers supply more, both factors pulling the price back to equilibrium, sometimes below it. If one can't wrap their head around what's explained in week one of any econ class, one can only go down hill from there. Yes there will be some small price increases here and there. I certainly hope so, as that will induce companies to start hiring again. But the overall price level will be increasing rather slowly, unless coming out of this particular downturn displays some brand new behavior as compared to any others. In any case the increased output (the "supply" part of that supply/demand) will counter increased demand (the "demand" part of that supply/demand) so as to keep equilibrium price steady or increasing rather slowly. You've proven beyond doubt that all that is well over your head, I am only stating it again in coherent form for sake of the general audience here so as to undo the complete jumble you keep attempting to make of things. quote: " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Your perfect understanding of Mises/Austrian school economics noted. All western central banks understand that not all inflation causes such "spirals" since each and every one of their mandates include some stipulation for "low inflation" or "stable inflation" or some combination." " and I never said it did " Will: quote: " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Ed: quote: All western central banks understand that not all inflation causes such "spirals" ... Will: quote: " and I never said it did " Let's just throw the above into infinite loop and save the bandwidth, as I know from experience you are going to keep doing something so dumb as to use a quote of what you said as evidence of denial that you ever said it.

willbeurdaddy -> RE: Federal Profit (3/24/2011 4:23:50 PM)
quote: ORIGINAL: Edwynn "No, it is true regardless of output/capacity in the short term. Cost-push inflation during the ramping up period still exists." Which is easily countered by the increase in output as pointed out in several ways previously, all of which escape your understanding no matter how simply explained. Supply/demand means that when price goes up, two things happen; people buy less, and suppliers supply more, both factors pulling the price back to equilibrium, sometimes below it. If one can't wrap their head around what's explained in week one of any econ class, one can only go down hill from there. Yes there will be some small price increases here and there. I certainly hope so, as that will induce companies to start hiring again. But the overall price level will be increasing rather slowly, unless coming out of this particular downturn displays some brand new behavior as compared to any others. In any case the increased output (the "supply" part of that supply/demand curve) will counter increased demand (the "demand" part of that supply/demand curve) so as to keep equilibrium price steady or increasing rather slowly. You've proven beyond doubt that all that is well over your head, I am only stating it again in coherent form for sake of the general audience here so as to undo the complete jumble you keep attempting to make of things. quote: " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Your perfect understanding of Mises/Austrian school economics noted. All western central banks understand that not all inflation causes such "spirals" since each and every one of their mandates include some stipulation for "low inflation" or "stable inflation" or some combination." " and I never said it did " Will: quote: " ... which, contrary to your exclusion, is also "bad inflation"... they both contribute to inflationary spirals." Ed: quote: All western central banks understand that not all inflation causes such "spirals" ... Will: quote: " and I never said it did " Let's just throw the above into infinite loop and save the bandwidth, as I know from experience you are going to keep doing something so dumb as to use a quote of what you said as evidence of denial that you ever said it. Uh uh, not getting away with that nonsense. Where did I EVER say "ALL inflation causes such spirals". Apparently you graduated from the DomKen school of bold-faced liars.

LanceHughes -> RE: Federal Profit (3/24/2011 4:27:13 PM)
quote: ORIGINAL: Termyn8or <snipped> That said, this is a very small step, but it is in the right direction. You have to think of big numbers in a different way. A trillion is a thousand billion. In perspective, if you need a thousand bucks, you get eighty bucks, that is good. Perspective. (I am not a financial expert, but I can understand big numbers because of electronics/physics, pico, nano, milli, centi, deci, deca, kilo, mega, giga, tera. Yes they seem to have skipped hundreds on the plus side) There is still a loooooooooooong way to go. T^T "hecto" corresponds to "centi" - as in "hectacre."

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