Rick Santelli is often given credit for inspiring the Tea Party movement. He’s given us a few deliscious rants over the past couple of years, but he also offers sobering and informed opinions on how the US government is dealing with recession. You can find the interview audio HERE:
Glossary for those not sure of some terms:
CPI – A consumer price index (CPI) measures changes through time in the price level of consumer goods and services purchased by households.
QE – Quantitative Easing is a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system.
Monetization is the process of converting or establishing something into legal tender. It usually refers to the printing of banknotes by central banks, but things such as gold, diamonds and emeralds, and art can also be monetized. Even intrinsically worthless items can be made into money, as long as they are difficult to make or acquire. Monetization may also refer to exchanging securities for currency, selling a possession, charging for something that used to be free or making money on goods or services that were previously unprofitable.
Securities – Securities are any form of ownership that can be easily traded on a secondary market, such as stocks and bonds. It also includes their derivatives, such as futures contracts, options, or mutual funds.
Like selling NDP MPs to be used as slave labour in North Korea?
Don’t lend money to the government. Most mutual funds are loaded with investments in Treasuries instead of investing in the economy.
The government is now the first choice of investment for the masses. They are unwittingly funding most of this.
Rick Santelli … Stop Spending !
http://www.youtube.com/watch?v=K_7PwbxcDbs
Quantitative Easing is not “increasing the excess reserves of the banking system”. It’s when a central bank creates money ex nihilo (“printing money”) because interest rates are already near zero. This is accomplished by buying securities on the open market. (“Excess reserves” are reserves banks carry in excess of those required by regulators and are regarded as wasteful; TARP allowed the Fed to pay interest on these for the first time in 2008.)
Pablo: A central bank implements QE by first crediting its own account with money it creates ex nihilo (“out of nothing”).[1] It then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus hopefully induce a stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.
http://en.wikipedia.org/wiki/Quantitative_easing
Cjunk – that’s pretty much what I wrote, in more words. Among the problems we have now is that these excess reserves are not being lent and do not stimulate, i.e., they remain “excess” – which of course is counter to the goal of QE.
… or do banks pass them on to their trading desks?
DELICIOUS is spelled incorrectly.