The Fed's 10-1 Leverage Has Paid Off! (Musical Tribute)

The following chart compares the trillions of dollars the monetary base has grown (in blue) to the trillions of dollars household net worth has grown (in red) since the first quarter of 2009.<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTmw9yKjhzgEwR67429GZDWgBc-9bJiAsL8CbKHRNU93G8L4c9QMVhzsgZrzJmQ_UBxZY3lkvKckQqKou-jWqknMwlrU9YU-NFEwh2Fprm84aW262xWRNC7BjHAXoXNTtt0yGLPkF4m9E/s1600/Monetary+Base+vs.+Household+Net+Worth.jpg" imageanchor="1"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTmw9yKjhzgEwR67429GZDWgBc-9bJiAsL8CbKHRNU93G8L4c9QMVhzsgZrzJmQ_UBxZY3lkvKckQqKou-jWqknMwlrU9YU-NFEwh2Fprm84aW262xWRNC7BjHAXoXNTtt0yGLPkF4m9E/s320/Monetary+Base+vs.+Household+Net+Worth.jpg" /></a><br /><span style="font-size: x-small;">Click to enlarge.</span><br /><br />Each dollar the Fed spends gets us back ten! Why on earth is the Fed tapering the sure thing? We need even <a href="http://www.urbandictionary.com/define.php?term=moar">moar</a> leverage! Not less!<br /><br /><div style="color: red;"><span style="font-size: large;"><b>Crazy Theory</b></span></div><br /><div style="color: red;">Let's cash out $10.8 trillion of household net worth (just half of the gain), hand it to the Fed, and let them reinvest it for us! We'll get $108 trillion back! We can then use that money to pay off all our debts and still have plenty left over! Perhaps even enough for every man, woman, and child to retire!</div><br />Why hasn't anyone else thought of this? Genius!<br /><br /><b>December 17-18, 2013</b><br /><a href="http://www.federalreserve.gov/monetarypolicy/fomcminutes20131218.htm">Minutes of the Federal Open Market Committee</a><br /><br /><div style="color: #666666;"><i>Participants were<span style="color: red;"> most concerned</span> about the marginal cost of additional asset purchases arising from <span style="color: red;">risks to financial stability</span>, pointing out that a highly accommodative stance of monetary policy could provide an incentive for <span style="color: red;">excessive risk-taking</span> in the financial sector.</i></div><br />Oops. Please disregard my crazy theory above. It would seem that I was offering the very thing the Fed is most worried about. You have to admit that it seemed like a darned good theory on paper though. I just hadn't factored in any unintended consequences. In my defense, it's really easy to do once I went down the "excessive risk-taking" path (gambling $10.8 trillion on a "sure thing" would definitely qualify).<br /><br /><b>Marrakesh Night Market</b><br /><iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/JzuxAhxuz7g" width="420"></iframe><br /><br /><div style="color: #666666;"><i>The magic lies scattered<br />On rugs on the ground<br />Faith is conjured by the night market's sound</i></div><br /><b>See Also:</b><br /><a href="http://news-these-days.blogspot.com/2010/06/sarcasm-disclaimer.html">Sarcasm Disclaimer</a><br /><br /><b>Source Data:</b><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=rNI">St. Louis Fed: Custom Chart</a>

The Fed's 10-1 Leverage Has Paid Off! (Musical Tribute)

The following chart compares the trillions of dollars the monetary base has grown (in blue) to the trillions of dollars household net worth ...

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