Andrew Huszar: Confessions of a Quantitative Easer

I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

Five years ago this month, on Black Friday, the Fed launched an unprecedented shopping spree. By that point in the financial crisis, Congress had already passed legislation, the Troubled Asset Relief Program, to halt the U.S. banking system's free fall. Beyond Wall Street, though, the economic pain was still soaring. In the last three months of 2008 alone, almost two million Americans would lose their jobs.

The Fed said it wanted to help—through a new program of massive bond purchases. There were secondary goals, but Chairman Ben Bernanke made clear that the Fed's central motivation was to "affect credit conditions for households and businesses": to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn. For this reason, he originally called the initiative "credit easing."

My part of the story began a few months later. Having been at the Fed for seven years, until early 2008, I was working on Wall Street in spring 2009 when I got an unexpected phone call. Would I come back to work on the Fed's trading floor? The job: managing what was at the heart of QE's bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months. Incredibly, the Fed was calling to ask if I wanted to quarterback the largest economic stimulus in U.S. history.

Via: WSJ

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$3.39T Quantitative Explosion: Fed Owns More Treasuries and MBS Than Publicly Held Debt Amassed From Washington Through Clinton

(CNSNews.com) - The same day that the Federal Reserve's Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBS) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBS than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.

Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBS has increased seven fold.

As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBS.

Via: CNS News

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Sen. Brown weighs in on Bernanke replacement

WASHINGTON — Sen. Sherrod Brown circulated a letter yesterday calling on President Barack Obama to appoint Janet Yellen to replace Ben Bernanke as chairman of the Federal Reserve.

The letter, written by the Ohioan and signed by as many as 20 other Senate Democrats, commended Yellen’s career, saying she has had a “solid record as a bank regulator.”

Brown’s office declined to make the letter public. However, TheWall Street Journalreported yesterday that Brown was the letter’s author.

Yellen, 66, vice chairwoman of the Fed, is competing against former Treasury Secretary Lawrence Summers for the position. Summers, a former president of Harvard University, served as chairman of Obama’s National Economic Council.

Brown said in the letter that Yellen is a stronger candidate because of her “significant monetary policy experience,” including as deputy under Bernanke since 2010. She previously was president of the Federal Reserve Bank of San Francisco.

In the letter, Brown praised Yellen’s ability to recognize the housing bubble of 2008 as a national threat, saying it was a feat that “speaks to her … intellectual rigor and willingness to challenge conventional wisdom regarding deregulation — traits essential for a successful Fed chairman.”

Yellen is a 1966 graduate of Brown University and earned a Ph.D. in economics from Yale in 1971. If Yellen were to be nominated and confirmed, she would be the first female chairman of the Fed board.

Bernanke’s second term as chairman ends on Jan. 31.

Via: Columbus Dispatch

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Federal Reserve Chairman Ben Bernanke The greatest fraud in history

Too few Americans are prepared for what’s coming our way. We are facing a grave crisis that will have a dramatic effect on every American citizen, our national security and our very way of life. It is the asymmetrical warfare of financial terrorism, and the U.S. politicians, the central bankers, the global leaders are the terrorists. Sound harsh? Absolutely. Frightening? Although a healthy dose of fear is indeed warranted, it should not paralyze you, but compel you to act. Preparation is an effective antidote for fear.

But prepare for what? I’ll admit that I was never that good in Economics classes as I found them to be very boring. Even today, I find the talk of derivatives, toxic assets, off balance sheet loans, and so on to be complex and hard to follow. I suspect I’m not alone in thinking this way. It was not until gas reached almost $5.00 per gallon in 2008 and I realized that I had “more month than money” that I wanted to know everything I could about what’s going on in the financial world.

Having accepted that I’m only good at a few things, one being an investigator, I decided to spend as much time as possible investigating the who, what, when, where, why and how behind our current economic situation. Why are we going broke as a nation, and why are we, as Americans, running out of money before the end of the month while our standard of living declines as well?

What I found disturbed and alarmed me. The challenge now is to articulate my findings so everyone is able to understand given the complexity of the subject. That’s no reflection on you as a reader, but an indictment of our elected and appointed “leaders” who deliberately cover their greed and financial criminal activity by talking in a manner that only a select few can understand. However, one thing I understand is fraud, which is what is being perpetuated on everyone reading these words. Hopefully, I’ll be able to convey the urgency at hand, and plainly explain how we are being systematically robbed and looted, and the fallout that will result.

Via: Canada Free Press

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US Credit Rating Cut by Egan-Jones ... Again

Ratings firm Egan-Jones cut its credit rating on the U.S. government to "AA-" from "AA," citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality.

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The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. (Read more: Fed's 'QE Infinity' — Four Things That Could Go Wrong)

In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.'s realgross domestic product, but reduces the value of the dollar.

In turn, this increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power, the firm said.

In April, Egan-Jones cuts the U.S. credit rating to "AA" from "AA+" with a negative watch, citing a lack of progress in cutting the mounting federal debt.

Via: CNBC

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