North Dakota Cash Advance Loans

Before QE2 there were QE1, in which the Fed bought .25 trillion in mortgage-backed securities in the s. This money too remains in reserve accounts collecting interest and dust. The Fed reports that the accumulated excess reserves of depository institutions now totals nearly .6 trillion.

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Interestingly, .6 trillion is also the size with the federal deficit - a deficit so large that some individuals Congress are threatening to force a default about the national debt whether or otherwise not this isn't corrected soon.

So ideas have the anomalous situation of an .6 trillion hole within the federal budget, and .6 trillion created through the Fed that is now sitting idle in reserve accounts. If the intent of "quantitative easing" was to stimulate the economy, it might have worked better when the money earmarked for your purchase of Treasuries ended up delivered directly towards the Treasury. That was how it turned out done before 1935, when the law was changed to require private bond dealers to be cut to the deal.

The another thing QE2 did for your taxpayers was to reduce the eye tab for the federal debt. The long-term bonds the Fed bought around the open market are now effectively interest-free for the government, considering that the Fed rebates its profits for the Treasury after deducting its costs.

But QE2 has not helped the anemic local credit market, on what smaller businesses rely; and it is these businesses that are largely accountable for creating new jobs. In a June 30 article within the Wall Street Journal titled "Smaller Businesses Seeking Loans Still Come Up Empty," Emily Maltby reported that business owners rank use of capital as the most critical issue facing them today; and only 17% of smaller businesses said these folks were able to land needed financing.

How QE2 Wound Up in Foreign Banks

Before the Banking Act of 1935, the government was in a posture to borrow directly by reviewing the own central . Other countries followed that policy as well, including Canada, Australia, and New Zealand; and they also prospered like a result. After 1935, however, when the U.S. central wished to buy government securities, it needed to purchase them from private s for the "open market." Former Fed Chairman Marinner Eccles wrote in support of an act to get rid of that requirement that it was intended to help keep politicians from spending too much. But all of the law succeeded in doing was to provide the bond-dealer s a cut as middlemen.

Worse, it caused the Fed to shed control over where the money went. Rather than buying more bonds from your Treasury, the s that got the bucks could just sit on it or utilize it for their very own purposes; which is apparently what is happening today.

In carrying out its QE2 purchases, the Fed had to follow standard operating procedure for "open market operations": it took secret bids from your 20 "primary dealers" authorized to offer securities towards the Fed and accepted the most effective offers. The problem was that 12 of the dealers - or over half -- are U.S.-based branches of foreign s (including BNP Paribas, Barclays, Credit Suisse, Deutsche Bank, HSBC, UBS and others); and so they evidently won the bids.

The proven fact that foreign s got the cash was established in the June 12 post on Zero Hedge by Tyler Durden (a pseudonym), who compared two charts: the entire cash holdings of foreign-related s inside the U.S., using weekly Federal Reserve data; and the total reserve balances held at Federal Reserve s, in the Fed's statement ending the week of June 1. The charts showed that after November 3, 2013, when QE2 operations began, total reserves increased by 0 billion. Foreign cash reserves increased in lock step, by 0 billion -- or over the complete QE2.

In a June 27 blog, John Mason, Professor of Finance at Penn State University as well as a former senior economist with the Federal Reserve, wrote:
In essence, it appears like much in the monetary stimulus generated from the Federal Reserve System went to the Eurodollar market. This is all part with the "Carry Trade" as foreign branches of the American could borrow dollars through the "home" developing a Eurodollar deposit....

Cash assets in the smaller [U.S.] s remained relatively flat.... Thus, the reserves the Fed was pumping into the ing system weren't going into the smaller s....[B]usiness loans still "tank" on the smaller ing institutions....

The real lending by commercial s just isn't taking place in the United States. The lending is occurring off-shore, underwritten with the Federal Reserve System and also this has been doing little or not even attempt to assist the American economy grow.

Tyler Durden concluded:
... [T]he only beneficiary with the reserves generated were US-based branches of foreign s (which subsequently turned around and funnelled the bucks returning to their domestic branches), a shocking finding which explains... why US s are actually unwilling and, much more importantly, unable to lend out these reserves....

... [T]he data above proves beyond a fair doubt why there may be no excess lending by US s to US borrowers: none from the cash ever even went to US s!... This also resolves the mystery in the broken money multiplier and why the velocity of income has imploded.

Well, not exactly. The fact that this QE2 money all wound up in foreign s is really a shocking finding, however it doesn't seem to get the main reason s aren't lending. There were already trillion in excess reserves sitting idle in U.S. reserve accounts, not counting the 0 billion from QE2.

According to Scott Fullwiler, Associate Professor of Economics at Wartburg College, the cash multiplier model is not just broken but is obsolete. Banks do not lend according to what they have in reserve. They can borrow reserves as required after making loans. Whether s will lend depends rather on (a) whether they've creditworthy borrowers, (b) whether they've sufficient capital to match the capital requirement, and (c) the expense of funds - meaning the fee on the of borrowing to fulfill the reserve requirement, either from depositors or off their s or in the Federal Reserve.

Setting Things Right

Whatever is responsible for causing a nearby credit crunch, trillions of dollars thrown at Wall Street by Congress along with the Fed haven't fixed the problem. It may be time for local governments to adopt matters into their very own hands. While we watch for federal lawmakers to acquire it right, local credit markets might be revitalized by establishing state-owned s, around the model in the Bank of North Dakota (BND). The BND services the liquidity needs of local s and keeps credit flowing inside state.

Concerning the gaping federal deficit, Congressman Ron Paul has an excellent idea: hold the Fed simply write off the federal securities purchased with funds created rolling around in its quantitative easing programs. No creditors would be harmed, since the cash was generated beyond thin air which has a computer keystroke within the first place. The government would try to be canceling a debt to itself and saving the interest.

As for "quantitative easing," in the event the intent is to stimulate the economy, the money needs to look directly in to the purchase of goods and services, stimulating "demand." If it is to the balance sheets of s, it might stop there or go into speculation instead of local lending -- as is occurring now. Money that goes directly towards the government, on the opposite hand, is gonna be allocated to goods and services inside the real economy, creating much-needed jobs, generating demand, and rebuilding the tax base. To make certain the amount of money gets there, the 1935 law forbidding the Fed to buy Treasuries directly from your Treasury needs being repealed.

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