Comments on: The Fed’s Balance Sheet http://taxesandbudget-blog.ncpa.org/the-fed%e2%80%99s-balance-sheet/ Insights on Taxes, Economic Policy, Federal Budget | NCPA Fri, 12 Mar 2010 17:57:23 -0600 http://wordpress.org/?v=2.8.4 hourly 1 By: Winslow R. http://taxesandbudget-blog.ncpa.org/the-fed%e2%80%99s-balance-sheet/comment-page-1/#comment-11078 Winslow R. Thu, 15 Oct 2009 17:50:10 +0000 http://taxesandbudget-blog.ncpa.org/?p=1241#comment-11078 "One easy example to illustrate the point that not all asset expansions are equally insidious, are central bank swaps, where we borrow foreign currencies and lend an equivalent amount of dollars to foreign central banks and agree to exchange back at the same rate some time in the future. Those transactions expand both the assets and the liabilities on The Fed's balance sheet without affecting monetary liabilities, and they can be reversed without affecting monetary liabilities." The Fed is conducting planned short-term foreign policy and potentially unplanned long-term foreign policy. The Fed is also conducting planned short-term fiscal policy and potentially unplanned long-term fiscal policy. The idea the Fed can conduct unbiased monetary policy, as directed by the U.S. Congress, solely through purchases of treasury securities has it's limitations. It is a broken transmission mechanism as it requires sufficient fiscal policy to generate sufficient treasury securities. Certain purchases of MBS, those issued by GSE's, could be added to the mix if approved by congress. Certain loans, in particular citizen student loans, could be added to the mix if approved by congress. A true neutral would come from an across the board citizen access. Foreign currency swaps just don't meet the criteria the Fed maintain a neutral fiscal position. The Fed is meddling in foreign and domestic politics. The Fed risks losing it's independence through it's own actions. The risk is not just from default but also through the effect of its actions on the stability of foreign governments. “One easy example to illustrate the point that not all asset expansions are equally insidious, are central bank swaps, where we borrow foreign currencies and lend an equivalent amount of dollars to foreign central banks and agree to exchange back at the same rate some time in the future. Those transactions expand both the assets and the liabilities on The Fed’s balance sheet without affecting monetary liabilities, and they can be reversed without affecting monetary liabilities.”

The Fed is conducting planned short-term foreign policy and potentially unplanned long-term foreign policy.

The Fed is also conducting planned short-term fiscal policy and potentially unplanned long-term fiscal policy.

The idea the Fed can conduct unbiased monetary policy, as directed by the U.S. Congress, solely through purchases of treasury securities has it’s limitations. It is a broken transmission mechanism as it requires sufficient fiscal policy to generate sufficient treasury securities.

Certain purchases of MBS, those issued by GSE’s, could be added to the mix if approved by congress.

Certain loans, in particular citizen student loans, could be added to the mix if approved by congress. A true neutral would come from an across the board citizen access.

Foreign currency swaps just don’t meet the criteria the Fed maintain a neutral fiscal position. The Fed is meddling in foreign and domestic politics.

The Fed risks losing it’s independence through it’s own actions. The risk is not just from default but also through the effect of its actions on the stability of foreign governments.

]]> By: S M Anderson http://taxesandbudget-blog.ncpa.org/the-fed%e2%80%99s-balance-sheet/comment-page-1/#comment-10698 S M Anderson Wed, 09 Sep 2009 11:35:25 +0000 http://taxesandbudget-blog.ncpa.org/?p=1241#comment-10698 Florida Exodus is not always based upon property taxes. After living in Greater Miami for over 50 years, we moved to Ocala for reasons related to elevation of land and historically minimal hurricane event pattern, central location in the state which is helpful to my business, AND a local utility cooperative which takes care of its grid and essential to my business for protracted losses of electricity in the aftermath of hurricanes typically came during annual legal deadlines which generate new business for my company. This year, our property taxes for custom designed and built residence, with half acre of land, and office building are about $1100. The other incentive for moving north was about taking our profit in South Florida before the bubble burst. And getting away from everyone in local government, although the rest of the state is no more educated or ethical. Florida Exodus is not always based upon property taxes. After living in Greater Miami for over 50 years, we moved to Ocala for reasons related to elevation of land and historically minimal hurricane event pattern, central location in the state which is helpful to my business, AND a local utility cooperative which takes care of its grid and essential to my business for protracted losses of electricity in the aftermath of hurricanes typically came during annual legal deadlines which generate new business for my company. This year, our property taxes for custom designed and built residence, with half acre of land, and office building are about $1100. The other incentive for moving north was about taking our profit in South Florida before the bubble burst. And getting away from everyone in local government, although the rest of the state is no more educated or ethical.

]]> By: Harry http://taxesandbudget-blog.ncpa.org/the-fed%e2%80%99s-balance-sheet/comment-page-1/#comment-10691 Harry Tue, 08 Sep 2009 14:08:49 +0000 http://taxesandbudget-blog.ncpa.org/?p=1241#comment-10691 And where do we look to find and track monetary liabilities? And where do we look to find and track monetary liabilities?

]]> By: Don the libertarian Democrat http://taxesandbudget-blog.ncpa.org/the-fed%e2%80%99s-balance-sheet/comment-page-1/#comment-10686 Don the libertarian Democrat Mon, 07 Sep 2009 21:11:02 +0000 http://taxesandbudget-blog.ncpa.org/?p=1241#comment-10686 You make this sound so easy. Nice post. You make this sound so easy. Nice post.

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