Excerpt…

I was drinking coffee at 3 a.m. because I couldn’t sleep. So I thought, screw it, I am just going to pull an all-nighter and begin writing my first of three parts about the Fed and what I expect going forward.

One thing I can’t stop writing about is how these ‘experts’ expect the Fed to simply clean their balance sheet up without deflation or recession. It literally bugs me how I hear 99% of the time that the Fed has control of everything.

Do you honestly think they know what is coming next [the Fed]?

Putting it simply, the Fed spent over $4 trillion dollars transferring toxic mortgages on to their own balance sheet from Wall St. and buying Treasury bonds to finance the U.S. government and suppress yields. In doing so kept liquidity plentiful for all.

The process went something like this. . .

The banks were stuck with worthless, or at least nearly worthless, MBS (mortgage backed securities) and other related securities during 2008. These things were bad. Not only was their re-sale value collapsing, but who knew if their intrinsic value (money they needed from homeowners paying their interest payments) was going to keep flowing in.

In an act of desperation, the Fed printed up money with a few clicks. And through “Open Market Operations” they gave the banks money through paying top dollar for those toxic ‘assets’. They transferred fresh money back to Wall St. and inherited those ‘assets’ onto their own balance sheet – at the expense of taxpayers.

This was called “quantitative easing”, QE for short. . .

The Fed justified this all by telling the public that with healthier banks and their new riches, they would lend to eager borrowers. The more money borrowers have, the more they can consume. And with our GDP roughly 70% consumption, this would fuel the economy, increase employment because of the increased demand, and everything would be as good as before.

Being a natural born skeptic, I doubt their proposed intentions from the beginning, as I am sure many of you did as well.

In reality, the Fed needed only to kick the can down the road and buy time. . .

Read the rest of my article here and find out what the Fed is really doing.

Also, all this writing is great. Any feedback and tips is appreciated dearly. I hope to continue not boring my readers.