FED backed into a corner; Not good!

[AztecWilliam]

The outlook for the Federal Reserve is not good, as the linked article explains. But it is not unrelated to the way the whole U.S. government operates.

I realize that some will argue this point, but for me national priority #1 is to rationalize our federal expenditures in such a way that the budget can be balanced (better yet at least a bit in the black) without raising taxes. That will be hard to due since the Democrats have absolutely NO interest in spending less or balancing the budget. (Decreasing the deficit on a yearly basis is fine, but if there is a smaller deficit that just means we are going to Hell in a handbasket a little more slowly.)

And, let me be clear, if you allow politicians (Dems worse in this regard that Reps, but both bad) to "balance the budget" by raising taxes, it will never happen. Anyone with half a brain knows that sooner or later the national debt will become so great that servicing that debt will largely squeeze out every other area of federal spending. The breaking point may well be pretty far off, but it will come eventually. And, let me add, long before the budget is 90% service on the debt, the situation will be seen far and wide as intolerable.

The current bad situation that confronts the Federal Reverse is of a piece with the whole financial approach taken the United States government. It's irresponsible, impractical, and dangerous. (Wonder why the counties around D.C. are among the richest in the country? Answer; please refer to the saying attributed to Willy Sutton.)

finance.yahoo.com/news/the-federal-reserve-s--4-3-trillion-ticking-time-bomb-121801977.html#

AzWm

[aztecwin]

Lots of things to think about in this article and the video. Whenever I read about the workings of the Fed I always wonder if people really understand what is going on and I also wonder if it really performs a useful function. Maybe banking would not be a viable business without some form of Partial reserve system but the current Fed goes far beyond what we commonly think of as the role of the Federal Reserve. Even some folks with very sophisticated financial backgrounds call for an audit of the Fed.

Then when you get into the issue of the Fed buying Federally issued bonds you wonder what is the point. Is the Federal Government unable to sell enough of the open market? If not is that a further sign that we are getting close to that tipping point where we can't service our debt and fund all the current function of government let alone the legitimate functions.

It all goes back to the basic question of can business and government remain viable when built on debt rather than capital? That very question, if you understand it, tells you why wealth is concentrated in the hands of those who hold capital (the rich) and the middle class use of debt pushes it closer to the poor.

There is lots more that could be talked about but this is enough.