“Federal Reserve officials repeated their pledge to keep the main interest rate near zero for an “extended period” and confirmed that emergency measures to prop up the housing market [by buying mortgage-backed securities] will end as planned this month.”
Fed Pledges to Keep Rate Low for ‘Extended Period’ [Bloomberg]

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Comments from “Plugged-In” Readers

  1. Posted by john

    deflation is coming

  2. Posted by sfrenegade

    It would be wonderful if the Fed actually stopped propping up the housing market. I’ll believe it when I see it.

  3. Posted by SFRE

    They will always prop up the housing market, especially since politics is a game designed (rigged) to get re-elected. Its all a scam, with minimal/no difference between the republican and democratic parties.

  4. Posted by DogFriedRice

    Won’t matter much… They still have fannie and fredie securitizing mortgages that are explicitly backed by the government. Which makes them almost as good as treasuries.

  5. Posted by J

    “Its all a scam”
    And you still plan to buy into the “scam”? Is that because you are smarter than all the other people buying into the scam? You think there will always be a greater fool?

  6. Posted by john

    sfrenegade, the Fed will never stop attempting to prop up some, many or all aspects of the American economy as long as we are alive. The Fed is the only entity in America that is able to sustain a financial ponzi scheme without enduring the threat or the reality of prosecution for the damage its ponzi scheme inflicts on individuals and the private sector, with the exception of banks which are essentiall all government sponsored entities.
    The Fed operates with the illusion that it can successfully modify the normal cyclical rhythm of the American economy, however, ultimately, its actions cause damage by creating bubbles and bursting bubbles both of which create enormous economic collateral damage.

  7. Posted by SFRE

    I don’t buy into the scam, I just recognize that it is.
    Things will never change, because we always fail to learn from history. After 10 years all the lessons we learned from the housing bubble will be forgotten. People will either have gotten too old, and kids now will not have learned anything in school to be cautious. Politicians will say things to get elected, then do stupid things to get re-elected. The average person will be too distracted by who Lindsay Lohan is sleeping with, or March Madness to care, or another set of made up wars to fight (reference to Afghanistan)
    With the current push to make people slaves to the state by fleecing those who have done well for themselves (i.e. 43% of people in the US pay zero taxes or pay zero taxes AND receive government assistance, while 1% of the population pays 40% of the taxes), nobody will be left to standup to those in power (certainly not those who only receive handouts from the government).
    In any case, as for thinking there will always be a greater fool, I never underestimate the stupidity of the average American.
    If any of the above isn’t true, then maybe someone can explain 4 things to me:
    1. How somebody who didn’t pay taxes (sorry “forgot” to pay taxes), is now in charge of the treasury?
    2. Explain how they orchestrate a TARP program that was intended to help troubled assets (a scam within itself), then use it to bail out GM. And how those, whose pay grade it is to do the right thing, says something “Is too big too fail” – the ultimate farce.
    3. How they intend to pass a HUGE healthcare bill without voting on it, and without it being something that the majority of people want (I’m not saying I don’t want it, but you shouldn’t force it on a large group that doesn’t want it).
    4. How there has been a war in Iraq, etc., that lasted for soooo many years, when WWII was over in 4 years, and that was fighting on at least 3 continents!. Furthermore, why does the current president feel the need to send MORE troops in Afghanistan, instead of bringing them home.

  8. Posted by J

    Sounds like you are a very experienced investor. No doubt you’ll be an all cash buyer.

  9. Posted by Mole Man

    The government was subsidizing the housing market back in the 1990s when it bottomed out then. Crooked finance schemes are still in play, but much of what we are seeing is the usual pattern of bubble deflation cranked up to the immense scale of this round of shenanigans.

  10. Posted by FormerAptBroker

    SFRE asks:
    > 1. How somebody who didn’t pay taxes (sorry “forgot” to
    > pay taxes), is now in charge of the treasury?
    There are very few people with complex tax returns who 1. Do their own taxes and 2. Even after paying a ton of money for someone to do their taxes have a perfect return. It is not a big deal (unless you read partisan web sites that make it sound that not a single Republican has ever underpaid their taxes).
    > 2. Explain how they orchestrate a TARP program that was
    > intended to help troubled assets (a scam within itself),
    > then use it to bail out GM. And how those, whose pay grade
    > it is to do the right thing, says something “Is too big too fail” –
    > the ultimate farce.
    The overall program let the banks lie about the value of their troubled assets and the changes to FASB rules avoided the failure to a lot of banks. The GM (and Chrysler) bail out was a thank you to the unions. If Realtors ® gave more to the Dems they would have had a $50,000 first time buyer credit. “too big to fail” means gives enough bribes (often called perfectly legal campaign and PAC contributions) to fail. If I am a High School teacher and there is a kid in my class and his Dad let’s me stay rent free (this is perfectly legal) at the family summer place on Lake Como in Italy none of his kids will fail my class.
    > 3. How they intend to pass a HUGE healthcare bill without voting
    > on it, and without it being something that the majority of people
    > want (I’m not saying I don’t want it, but you shouldn’t force it on
    > a large group that doesn’t want it).
    The HUGE bill brings in a lot of cash before it starts paying anything out and it will buy some time before the big Ponzi hits a wall. It will also give a lot more power to the people pushing it through…
    > 4. How there has been a war in Iraq, etc., that lasted for soooo
    > many years, when WWII was over in 4 years, and that was fighting
    > on at least 3 continents!. Furthermore, why does the current
    > president feel the need to send MORE troops in Afghanistan, instead
    > of bringing them home.
    The military industrial complex pays more in bribes (often called perfectly legal campaign and PAC contributions than the unions, health care and Realtors ® combined so as a thank you they need to keep a couple wars going and over SEVEN HUNDRED (over a THOUSAND if you count smaller facilities like the US owned hotel used by military personnel in downtown Tokyo) bases around the world fully staffed and up and running 24/7 365 days a year. Everyone should read “War is a Racket” (see below) like I did in High School
    http://www.amazon.com/gp/product/0922915865/ref=pd_lpo_k2_dp_sr_1?pf_rd_p=486539851&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=B0028QGU4O&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=0TBZH19ES7MAVS4JGAHT

  11. Posted by SFRE

    @FormerAptBroker: Nice Response. My point was that you would think that people would learn from this stuff, since it has happened as far back as history is recorded, but they don’t. They will prop up it for as long as they can, because as someone said earlier, the Fed is the only entity can maintain a Ponzi scheme.
    And my point with Geithner is that he may have complicated taxes, and such, but I would have felt better had he overpaid his taxes. For me he falls into douche camp with Charlie Rangel. Anyway, its like a good ol’ boy club of former Goldman Sachs people, and they certainly helped get us into this mess. You can’t have the ones who caused the problem help fix it. And you certainly can’t bail out everything, you need to let stuff fail. I think the collective wisdom on SS could have done a better job, instead of all these backroom dealings.

  12. Posted by steve

    since it is question time, why is no one talking about the Lehaman’s massive accounting fraud and the NY Fed’s role in helping them get away with it?

  13. Posted by SFRE

    That can also be mentioned, unfortunately the majority of people who vote lack the ability to understand what you are talking about, so they won’t care.

  14. Posted by NoeValleyJim

    43% of people in the US pay zero taxes or pay zero taxes AND receive government assistance, while 1% of the population pays 40% of the taxes
    This statement is false though often peddled by the usual propagandists. I am surprised to see you repeating it actually, you are usually more astute. You are referring to income taxes only, not overall tax burden, which is much more widely distributed.
    Every income quintile pays taxes, the lowest quintile paying 13% of total income and the highest 34.5% of total income. The highest quintile (not 1%) makes 41.5% of comprehensive income and pays 48.8% of overall taxes. This is mildly progressive, but not extraordinarily so.
    http://www.taxfoundation.org/files/wp1.pdf
    See page 23 and 24 for what I am talking about.
    It is of note that only really the top quintile pays more in taxes than it receives in government spending though. This has been true for a long time though.
    Here is a slightly more complicated view of the same idea:
    http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=453
    You can see by looking at the median tax burden – 50th percentile – that it 31% on the 4th decile and only rises a bit above that to 40% for the highest decile. Some people, in the 90th percentile for overall taxes, do pay as much as 45% of their overall income on taxes, but this is pretty rare.
    State and local taxes are generally pretty regressive and offset the progressivity of the federal income tax. Social Security tax is very regressive.

  15. Posted by J

    You can lead a conservative to logic, but you can’t make them think.

  16. Posted by corntrollio

    The CBO released several charts of effective tax rates as well as share of income — this chart goes through 2005, which is where the federal portion of NVJ’s link came from:
    http://www.cbo.gov/ftpdocs/98xx/doc9884/12-23-EffectiveTaxRates_Letter.pdf
    Note that if you include all federal taxes (excise + corporate), as NVJ said, the poor definitely pay federal taxes. If you include individual taxes only, then the EITC comes into play, and some lower income people get a credit.
    I believe NVJ’s data includes state tax data (from 2002) as well, which would include sales taxes (which are highly regressive).
    Funny to see the propagandist echo chamber stuff come out in full force in this thread.

  17. Posted by SFRE

    @NVJ: I was referring to the Income Tax, and the point was that 43% of people do not pay federal income tax. I used the link below (3rd row of numbers after the year headings): http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2276&DocTypeID=7
    Obviously people who don’t work and receive government handouts, still pay taxes (sales tax, gas tax, etc.)
    @FormerAptBroker: Geithner did the taxes himself, and made the error, which is why he is a moron. Aside from the fact that he is/was likely involved in plenty of schemes. Here is the link, where he admitted doing the taxes himself, and made an error: http://www.cbsnews.com/stories/2009/01/21/politics/main4745567.shtml
    @J: I dont know why you assume I am conservative. I am for equality, but when 43% of people pay zero federal income tax its insulting. But people who are often ignorant make assumptions (in this case derogatory), because their minds are to small to see outsider their little world.
    “An astonishing 43.4 percent of Americans now pay zero or negative federal income taxes. The number of single or jointly-filing “taxpayers” – the word must be applied sparingly – who pay no taxes or receive government handouts has reached 65.6 million, out of a total of 151 million.”
    http://www.cbsnews.com/stories/2009/04/15/politics/otherpeoplesmoney/main4945874.shtml?

  18. Posted by corntrollio

    That 43% of people don’t pay federal income tax stat is rather misleading though.
    There are several perfectly innocent reasons not to pay taxes in a given tax year that don’t mean you’re a deadbeat. If you’re a student, you likely don’t pay income taxes — partly because you are likely eligible for various education deductions and credits and because you don’t make very much money. If you’re elderly, you might not make enough money to pay taxes (especially when coupled with deductions/etc.).
    And if you think we should get rid of certain tax credits, I’m all for that. Let’s dump the one for buying a house, for one thing. Hell, let’s get rid of the whole mortgage interest deduction too — that’s just a handout. And let’s get rid of anything that subsidizes fossil fuels or ethanol. But let’s get off the bandwagon of the talkinghead nutjobs who think this is only about poor people. Plenty of not-poor people get tax credits and tax deductions for various things that have nothing to do with being poor.
    Then there’s the EITC. Some people don’t agree with it. Guess you’re one. Oh well.

  19. Posted by J

    “I dont know why you assume I am conservative.”
    Non-denial denial.

  20. Posted by NoeValleyJim

    There is nothing particularly sacrosanct about the Income Tax. Plenty of people don’t pay Property Tax either, does that make your blood boil, too?
    If you want something to be outraged about, how about the fact that the very tip top of the wealth pyramid has the lowest tax rate of all? People who live entirely off investment income pay very low tax rates, most famously Warren Buffet, who pays a lower rax rate than his secretary. This is what 29 years of tax cuts for the rich and tax increases for the middle class have brought us to.

  21. Posted by SFRE

    @NVJ: That bothers me too. I think everyone should pay the same proportionality, which is why I always supported the flat tax, and not having any deductions. Unfortunately the IRS/Government and other lobby groups, would never allow it. Anytime the government is involved, things get overly complicated, more costly, and less effective.

  22. Posted by hangemhi

    let’s see, if I make $1 million per year and pay 50% in taxes I take home $500,000. that is really rough and unfair. much more so than the janitor making $20,000 a year who pays FAR FAR less than 50% in taxes. that guy is ripping off the rich. those poor rich, we need to give them more tax breaks so their percentage is the same as the teacher, the janitor, the bus driver – those losers are lucky I let them drive my kids to school and clean up after i miss the urinal
    i re-pasteYou can lead a conservative to logic, but you can’t make them think because i can’t think of anything nicer to say

  23. Posted by SFRE

    @hangemhi: Its equality. Besides, why who people have done well for themselves should be punished disproportionately to the rest of the population, that is unfair, especially at the level of disproportions we see today. I also think that if there were no deductions, the tax rate would be significantly lower than 50%.
    You call it tax breaks, yet, the people who are paying 0 income taxes are receiving the biggest tax break. I’m saying no tax breaks for anyone.

  24. Posted by corntrollio

    “You call it tax breaks, yet, the people who are paying 0 income taxes are receiving the biggest tax break.”
    If you really think that, you don’t know much about the tax system. Generally corporations receive the biggest tax breaks, followed by rich folks.

  25. Posted by SFRE

    I dont think anyone – individual or corporation, should receive tax breaks.

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