Hi Jim,
I was just running some numbers yesterday and although you have stated this many times before, it became clearly obvious to me from the numbers that Bernanke never intends to reduce the balance sheet of the Fed, nor could he if he wanted to.
I looked at IRS statistics about the number of tax payers by income (available on the IRS.gov website). There are something like 14.5 MM individual tax payers who earn more than 200K. Each one of those would have to pay 58,000 a year in *ADDITIONAL* taxes to cover just the $85BB a month of QE 3. Double that if you want to also cover the one trillion a year short fall in the budget (deficit). So if a guy making 200K (who
probably takes home 120-130K) could pay an extra 116K a year in taxes, we can keep our debt at 16 Trillion and keep spending the way we’re spending. Of course from the numbers you can see how preposterous that is.
I tried spreading the burden across more people, but kept coming to a number that was too much to bear, so I kept moving up the income ladder and the * "best"* balance was the 200K and above paying 58K a year, which is still ridiculous and impossible.
They never intended to "unwind" any of the QE’s and certainly not QE3. This is a blatant transfer of wealth from foreign holders of dollars to the US. Now what’s the catalyst that will give foreigners the strength to stand up to America’s financial bullying?
Thanks again for all you do for us.
CIGA Rangan
Rangan,
You are not only right, but please focus on the quality of much of the old and recently purchased debt. The answer is it is total junk for which the Fed is more than likely paying issue price. That stuff will be on the balance sheet of the Fed until it dies one way or another.
This economic crisis we are in is a total result of the actions of the manufacturers and distributors of over the counter derivatives..........................................
Rather than fixing the OTC derivative problem, which could have been done before Lehman was flushed, the solution was to make the Fed a "Resolution Trust" but with no means whatsoever of making those worthless and worth-less assets silk purses out of Petunia’s ear.
Regards,
Jim
http://www.jsmineset.com/
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
| 
