Fed to scale back bond buying

[freedom]

So the Fed is blamed for not predicting the future correctly? I thought that's a job for the God, not the mortals? Or can you name a better central bank than the Fed which handles the financial crisis well that no one else should dispute.

[valuebuddies]

So the Fed is blamed for not predicting the future correctly? I thought that's a job for the God, not the mortals? Or can you name a better central bank than the Fed which handles the financial crisis well that no one else should dispute.

cool down freedom, why are you so protective on Fed, don't tell me you are Mr. Ben Bernanke himself lol . I can't comment much on Fed policies, but as what uncle Temparament said, the living costs in Singapore has been significantly drove up since the Lehman's bankruptcy, the impact of the QE (inflation) has spread across the world, take a look at China in the past couple of years. I think no one dare to blame Fed openly simply because the US owns the strongest army

[freedom]

I am not Mr. Bernanke himself, that's for sure. But there is no reason to let a great man take baseless slander, not only it's not his fault, but his great achievement. Unless it is the US citizen who criticizes the Fed's policy, the rest of the world can go fly kites because the Fed does not give a damn.

Now the living cost in Singapore also blames Mr. Bernanke? The inflation in China too? How can Mr. Bernanke manage the living cost in Singapore or the inflation in China?

If that's not slander, I don't know what is.

[valuebuddies]

I am not Mr. Bernanke himself, that's for sure. But there is no reason to let a great man take baseless slander, not only it's not his fault, but his great achievement. Unless it is the US citizen who criticizes the Fed's policy, the rest of the world can go fly kites because the Fed does not give a damn.

Now the living cost in Singapore also blames Mr. Bernanke? The inflation in China too? How can Mr. Bernanke manage the living cost in Singapore or the inflation in China?

If that's not slander, I don't know what is.

Well I am not directly blaming Fed, but is it not true that Fed has created opportunities for the greed peoples to be even more greedy? So much monies in the market lending out so cheap, let's go getting some to hoot properties, hoot stocks etc? Actually I amid that Fed has helped to spur economy growth worldwide, but when it grow too fast, it becomes inflation. I don't now how US manages its inflation, but fake data could be 1 of the reason (I am not surprise because China is well known in this skill), but stock market can't be fake. Would you still buy US stocks now if you are so confident with Bernanke?

And we need to acknowledge that there are 2 group of humans in this world, first group are the supporters, the other one are oppositions. I know you are a big fan big supporter, but you can't just stop the oppositions to grumble.

[freedom]

Unless you have any proof that US is getting higher inflation than the reported number, I will continue to trust the figure provided by the US government. And btw, the growth in US GDP is too low to cause any meaningful inflation in the United States.

And for your information, I was keeping buying US stocks by selling more of my local stocks in the past year. I have absolute confidence in Mr. Bernanke, rather than anyone else who belittles him without a meaningful reason.

I always welcome intelligent disagreement, but baseless slander is not one of them.

If I keep reading that the Fed is the direct cause of the high living cost in Singapore or the inflation in China and India, I normally sum them up as unintelligent disagreement as they can't show any evidence that the Fed should care or have any meaningful way of preventing it.

[ksir]

If a person is dying, the doctor has no doubt would do whatever he/she can to prolong the life.
In this case, to oversimplify the matter, the doctor also happened to be the family member of the dying person.
The dying person has significant power over the world at the moment (might bring down the world to hell with him, seriously?).

So the alternative possible way is, to let the dying person died, because by saving him, the doctor might cause the dying person's enemies or other people to suffer (or in ridiculous way, might cause another afganistan or iran wars).

So if you are the Doctor, what would you do?

[specuvestor]

Firstly the facts: there is an official reserve currency list by IMF. AUD was recently upgraded. And yes Swiss Franc is actually one of the 5 original component of COFER and I wont be surprised if RMB is added within the next 5 years.

http://www.investopedia.com/financial-ed...ncies.aspx

Secondly I think many still dont quite understand the fiat system after the various discussions in various threads. HitandRun had explained the Bretton Wood but didn't go far enough The mighty pound was the main exchange medium before WW1 and London was the financial center of the World. But the process of decline is much more slow than impatient humans want it to be. I doubt RMB will surpass USD in the next 20 years in terms of reserve %.

"In the 1950s the sterling area (35 countries and colonies pegged to sterling and holding primarily sterling reserves) accounted for half of world trade and sterling accounted for over half of world foreign exchange reserves. It took ten years after the end of the war (and a 30% devaluation of the pound) before the share of USD reserves exceeded that of sterling. "
http://www.worldfinancialreview.com/?p=511

The pound was backed by the British Empire ability to mine gold. But US became a dominant power after WW1 and a superpower after WW2 (those who believe in "creative destruction" should study the wars) and Europeans were owing the US truckload of money... which is mainly denominated in USD. With the Bretton Wood the USD was enshrined as the de facto currency of the world as it is the only one intrinsically backed by gold. After the fall of Bretton Wood, Kissinger actively pursued oil to be priced in USD to keep the demand of USD stable. He knew the benefits of a reserve currency status more than mere theory.

The idea of reserve currency is NOT new, the idea of a FLEXIBLE FIAT system is new. There is a difference. With reserves primarily in USD, the US is able exercise her hegemony over the other countries as they are the anchor/ pivot. Hence it was one of the core idea for the birth of Euro.
http://www.telegraph.co.uk/news/1399693/...rling.html

Thirdly though it is true that technically the Fed doesn't need to care about other countries, but since asset prices especially bonds are priced off the US$ curve, the Fed has a big impact to the world, which was not "unintended". This responsibility comes with the inherent advantage of being the reserve currency ie seniorage, reduced currency risk, intrinsic demand for US assets including debt and equity etc. And of course G7 "doesn't care" about FX since they only need to take care of their internal issues. Competitive devaluation is a non starter.

Last but not least, though I have great respect for Bernanke's pragmatic approach, especially the standby swap lines with major central banks, he is largely not considered the best central banker in the world which is recognised as either goes to RBA Glenn Stevens or Israel's Stanley Fischer (who is tipped to be the Fed vice chair, which could actually be very awkward for Yellen)
http://www.gfmag.com/tools/best-banks/11...z2nzgE1fUa
(Using 2012 as a reference as Fischer retired in 2013)

[specuvestor]

Mr. Bernanke is one of the greatest economists of this era. His deep understanding of the economy of United States and way of handling of financial crisis is second to none.

Normal people on the street who are challenging his intelligence are just showing pure ignorance.

Oh yes, because borrowing from the future has absolutely no consequences. And so what about putting future generations on the hook? They deserve it yes?

What borrowing from the future? Did/does the Fed borrow? Hell NO!

The Fed creates money, it does not borrow.

Please understand the Fed before judging them.

If the Fed can create money seemingly without limits, why aren't all of us multi-millionaires?

Our neighbours in the south are millionaires People in Zimbabwe were billionaires if not trillionaires

Runaway inflation and Hyperinflation is real. Don't underestimate them. Though Fed does not issue debt, but they monetise debt and that is an input to inflation unless Friedman is wrong. Just that so far monetarists theory has not been vindicated in this Bernanke's experiment.

[yeokiwi]

I used to read John Mauldin's newsletter but I thought he was equally bad in predicting future. So, Pot calling Kettle black?

One investment manager wrote about him..
http://investingcaffeine.com/2010/04/14/...ries-wolf/

After a while, I thought most of Mauldin's thoughts are quite rubbish..


Quoted from his april 2009 newsletter..
http://www.mauldineconomics.com/frontlin...-mwo042409


2010-11: Back to the Future Recession

I think the country could re-enter a recession in 2010 and 2011; we would go right back into it when those tax hikes start to hit. What do tax increases do? They take money out of consumers' pockets -- and the consumers that actually spend. Plus, 75% of those who will see their taxes rise are small businesses that employ people, so we deflate ourselves.

[valuebuddies]

Firstly the facts: there is an official reserve currency list by IMF. AUD was recently upgraded. And yes Swiss Franc is actually one of the 5 original component of COFER and I wont be surprised if RMB is added within the next 5 years.

http://www.investopedia.com/financial-ed...ncies.aspx

Secondly I think many still dont quite understand the fiat system after the various discussions in various threads. HitandRun had explained the Bretton Wood but didn't go far enough The mighty pound was the main exchange medium before WW1 and London was the financial center of the World. But the process of decline is much more slow than impatient humans want it to be. I doubt RMB will surpass USD in the next 20 years in terms of reserve %.

"In the 1950s the sterling area (35 countries and colonies pegged to sterling and holding primarily sterling reserves) accounted for half of world trade and sterling accounted for over half of world foreign exchange reserves. It took ten years after the end of the war (and a 30% devaluation of the pound) before the share of USD reserves exceeded that of sterling. "
http://www.worldfinancialreview.com/?p=511

The pound was backed by the British Empire ability to mine gold. But US became a dominant power after WW1 and a superpower after WW2 (those who believe in "creative destruction" should study the wars) and Europeans were owing the US truckload of money... which is mainly denominated in USD. With the Bretton Wood the USD was enshrined as the de facto currency of the world as it is the only one intrinsically backed by gold. After the fall of Bretton Wood, Kissinger actively pursued oil to be priced in USD to keep the demand of USD stable. He knew the benefits of a reserve currency status more than mere theory.

The idea of reserve currency is NOT new, the idea of a FLEXIBLE FIAT system is new. There is a difference. With reserves primarily in USD, the US is able exercise her hegemony over the other countries as they are the anchor/ pivot. Hence it was one of the core idea for the birth of Euro.
http://www.telegraph.co.uk/news/1399693/...rling.html

Thirdly though it is true that technically the Fed doesn't need to care about other countries, but since asset prices especially bonds are priced off the US$ curve, the Fed has a big impact to the world. This responsibility comes with the inherent advantage of being the reserve currency ie seniorage, reduced currency risk, intrinsic demand for US assets including debt and equity etc. And of course G7 "doesn't care" about FX since they only need to take care of their internal issues. Competitive devaluation is a non starter.

Last but not least, though I have great respect for Bernanke's pragmatic approach, especially the standby swap lines with major central banks, he is largely not considered the best central banker in the world which is recognised as either goes to RBA Glenn Stevens or Israel's Stanley Fischer (who is tipped to be the Fed vice chair)
http://www.gfmag.com/tools/best-banks/11...z2nzgE1fUa
(Using 2012 as a reference as Fischer retired in 2013)

Very very good insights, thanks Specuvestor