U.S. Fed Carries An Elephant

[errolanderson]

Here's a little math to contemplate
after Big Ben's speech this aft.

Currently, the U.S. Fed carries 18% of
the American GDP on its books. With the
unleashing of QE3, by the end of 2013,
the Fed will carry 24% of GDP.

In 2013, the Fed's balance sheet will
skyrocket $85 billion per month between
purchasing mortgage-backed securities
plus Operation Twist. The Fed balance
sheet over the next year with jump from
$2.8 trillion to $4 trillion by 2013
end.

I'm no mathematication, but today's
decision may be a huge favor to the big
banks and may have air-of-panic by the
Fed.

What happens when the Fed begins to
eventually unwind its books?? IMO, the
U.S. Fed decision has ensured at best, a
very long and drawn-out global recession
with minimal employment creation.

Errol

[ALLFARMER]

I have read that something like half the people in
Detroit can't read. What do you do with these
people? How do you find jobs for people so
uneducated? Obama had asked Steve Jobs at a
big meeting how do we get I phones produced in
America? Steve mumbled something like "those
jobs are gone."

[cottonpicken]

There is not enough money in the world to buy the
debt,let alone at the yields being offered.

It was always mathematically impossible for this not
to occur.

Jobs will be created,by the government,funded
through inflation aka money printing which is a
tax,via the fed.

God knows on their timing,i was wrong because it
looked like all they asset classes where stable enough
without an announcement of qe
today.Stocks,bonds,commodities and even housing
seemed ok.

Farmers have a natural insulation to what is
happening,people working for a wage do not.

I seen a chilling interview with one of canadas
premeiur billionaires commenting on savers and fixed
incomers "they will be wiped out"was the quote.

[SASKFARMER3]

Cotton so let me guess what the guy was saying,
friends in Regina with say 200000 RRSPs or old
pensioners will be all wiped out. Homes will
deflate from 750000 to 120000. Then Canada will
have a CMHC meltdown.

[cottonpicken]

In a nut shell yes.

Some rrsp's and hopefully western canadian housing
will not crash,but big if.....

Most mutual funds and rrsp instruments along with
pension plans are screwed,you simply need to look at
what they own,(i looked up some family members
pension stuff and decided not to give them the bad
news,seeing as how they laughed about gold at
375$,i new they wouldn't get it now anyway.)

What current mainstream and schooled economist's
and market men miss is the fact that this is a
currency event,it does not compute with their
constant supply/demand/kensian/university
education.

I've spent the let 4 hours deciding on whether to
move out of leveraged physical commodity paper
assets or into leveraged commodity equities......tough
call.

In a comparative sense,there really are 40 million
dollar farms that can be bought for a
million..unbelievable opportunity.

[errolanderson]

Feel quite uneasy about this Fed action
yesterday. The ramifications are very
deep and it will create tremendous pain
for those outside of Wall Street. Still
believe this was a big bank move. What
about fixed incomers?? Does the Fed even
care?

How is this supposed to create jobs?
Someone, please explain this story.

What happens if this market drops
anyways due to a worsening slowdown? And
that is highly possible. The U.S. is
hooped, with no more bullets.

Why is it our society can't face up to
the pain it has to go through to come
out of the other side of this mess with
actual real green shots for the economy.

Bankruptcies have to occur. Credit
defaults have to occur. But politicians
run from it. Media doesn't want to print
it. And the banks hide from it under the
shirt-tails of the big daddy Fed.

Guess I'm just showing my disgust with
how this crisis is being handled.

Errol

[hobbyfrmr]

Cotton picken, I don't follow you about the 40
million dollar farms that can be bought for one
million.
Are you talking about the USA, or western
Canada?
I thought that Sask farmland is a solid place to
park your cash away from the anticipated volatility
of the stock market.

[ASRG]

At what point do people finally say enough? Where is the tipping point?

I suspect in the USA some areas are getting close to the tipping point? When people lose everything they've worked for their whole lives (sometimes generations)......what do they have to lose?

When do they rebel and go postal?

Will we see an "Arab Spring" in America?

[grassfarmer]

He means our $million farms are/may be worth $40
million I assume.

[samhill]

I'm thinkin he's saying with 1 million down you can
buy $40 million worth.
1/40 = 2.5%

maybe

[fjlip]

How about they OWE 40 mil, net worth 1 mil?

[fjlip]

Think Big Sky Farms/ pork, big dreams, economics of scale on paper, then reality bites.
The markets are unforgiving even to the huge operations.

[cottonpicken]

Sorry should have been more clear,i was rationalizing
some of the precious metal properties valuations
usings a farm as a sort of metaphor.

None of them have been keeping pace with the rise in
the metals price.

[sumdumguy]

The salvation for those with a pile of cash may
be increasing interest rates and this will keep
them current with inflation.

Just when all the brains think they have it all
figured out as in the gold bulls, the governments
will play the trump card. As in raise the margins
for precious metals or confiscate.

Silver may be the play? But then governments
get real offended when the price gets near $50.

Just guessing like everyone else. This is giving
me a headache.

[sumdumguy]

If I only would have listened to Jim Sinclair in
2003.