Good morning, folks. As you can imagine, with a new baby who spent her first eight days in the hospital, I’ve been a bit behind on writing and trading. Of course, there is actually a lesson in there for all of us too, in that we need to make time for family and life events when we need to.
Don’t forget that we have this week’s Live Q&A Chat at 2pm EST at https://tradingwithcody.com/chat. We’ve canceled the last two weeks’ chats because I was in the hospital with the baby, but we’re on our normal schedule for the chats once again.
Fed’s gonna taper! It’s a taper-mania. Taper-fest! Taper, taper, taper.
Let’s put this stupid Fed Tapering discussion to bed, shall we?
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January FOMC Meeting Preview: Fed To Taper Again At Ben …International Business Times-by Moran Zhang-1 hour ago“If the Fed doesn’t taper because of this market volatility, I think it sends a bad signal for the market that the Fed is beholding to the markets and …
Fed To Decide on Tapering This Week — To Delay or NotFox Business-21 hours ago
Fed poised for $10 billion taper as Bernanke bids adieuCBS News-3 hours ago
Fed poised for further $10 billion taper as Bernanke bids adieu
In-Depth-Reuters-11 hours ago
With the Federal Funds Rate at 0%, meaning that banks can borrow as much money as they want from the taxpayer and pay no interest or cost at all, plus all the other “emergency” policies that are still ongoing despite banks reporting record profits yet again last year, plus the fact that banks are allowed to just pretend that their losses don’t exist on the accounting standards of post-Bailout FASB, plus the savings and benefits that come from being explicitly guaranteed not to fail by the taxpayer…we’re talking about trillions of dollars in “stimulus” and “QE” and “liquidity” and outright welfare that the banks and giant corporations are getting every year right now.
Let’s say, just to really be on the low side, all the current welfare programs for the Too Big Too Fail banks amount to about $100 billion a month or $1.2 trillion a year in subsidies.
If the Fed “tapers” some $10 billion a month, that’d be $120 billion a year. That would mean they’re still pumping some $75 billion a month into the system in what’s left of the QE policies. That’s $900 billion a year that’s still being pumped in through just this one mechanism of QE.
So we’re now at $2.1 trillion in annual subsidies for the banks after the taper. That’s down from about $2.22 trillion in annual subsidies.
The entire US economy as measured by GDP is about $15 trillion.
So if the Fed tapers a few billion dollars here and there on a $2.1 trillion ongoing annual pumping and subsidizing of the banks does that really make a difference? We’re talking about subsidizing the banks to the tune of 15% of the entire US economy once again this year, whether the Fed tapers or not.
You can see that the banks will have sucked all the money out of the system before back in 2008 and you can see that they’re doing it every day and every year still.