The talf is the perfect “honey trap” to suck all you dummies in.

I think you proceed from the false notion that anyone over 250K a year is not going to be hammered by Obamatime. We are all socialists now.

http://www.youtube.com/watch?v=pOqyOeFn0EE

Don’t Forget what that fish dude said in Star Wars “It’s a trap” – Video below will give you very cinematic version of what you are walking into Warren – don’t be dumb, greed is not good.

http://www.youtube.com/watch?v=mNLuq0lW50k

this will drop the term structure of risk free rates to something approaching 0.

they should then encourage tsy to increase the deficit to make up for the fiscal drag from the interest income they have taken away from the non govt sectors as tsy secs will immediately yeild near 0.

if they want to reduce the risk on specific non gov securities the fed should offer to sell default insurance rather than fool with talf like arrangements

Regarding the TALF present: Obama may be a false prophet for the likes of greenbergs and moslers that think this populist gubbment is about to transfer to them a lot of wealth. I see an aassault on the white males of this world from all quarters of our society. Beware gifts that may have hidden surprises inside. It seems to me all these gung ho types feasting over the carcass they are about to consume like vultures still haven’t learned thier lesson about RISK. 90% tax rates may just be the beginning.

“time short, but interest farming following loans won’t create the demand needed for the currency to have the value needed for it to be useful.”

I mostly agree (unless the evolution of private security firms continues).

The thought experiment is to show how the Fed could ‘strengthen’ the monetary tool not replace, just balance the fiscal tool. At the same time it could improve the economic system by removing the huge privatized gains/socialized losses from the shadow banking sector.

I prefer direct Fed purchases of MBS to the TALF given its current setup. I’m still optomistic this Fed transformation is an evolutionary process for the better, especially since it would be difficult to make it any worse.

Corporate and muncipal bonds etc. are in the Z1 where only part of ‘nonbank money’ is in M2, like traveler’s checks which even these could be bank money depending upon how they are created.

“Karl is telling the masses to beware of ben. He is going to kill the ability of government to deficit spend.”

The Fed does seem to be taking a step in that direction which is not necessarily a bad thing to take a small step. From my perspective there should be a balance and if that balance is achieved by removing leverage from the ‘shadow banking’ sector so much the better.

Given the Fed now has the ability to offer interest on reserves, which is kind of like a ‘Fed issued treasury security’, inflation could be contained quite easily.

Karl is telling the masses to beware of ben. He is going to kill the ability of government to deficit spend.

http://market-ticker.denninger.net/archives/878-Caution-On-Quantitative-Easing-QE.html

“The natural rate of interest would be zero as government spending/taxation would be replaced with government loans/interest collections.”

How does the insurance lobby feel about ZIRP?

“Interest farming would replace tax farming and the government would replace the shadow banks.”

Geithner can’t even find a deputy to help offload some work, how is he going to micromanage what used to be done by tens of thousands of market participants?

The Dec 2008 M2 number is 8,275.4
http://www.federalreserve.gov/releases/h6/current/h6.htm

The Dec 2008 Total Debt Outstanding is 33,517.9 (nonfinancial) + 17,216.5 (financial) = about 50 trillion.
http://www.federalreserve.gov/releases/z1/Current/z1.pdf (page 8, pdf file page 15)

How can outstanding debt be that much larger than M2? I thought that debt outstanding is part of M2.

Something is going on in the stock market the past few days too. “Something Shady!?”