Yves here. I have a small quibble with Wolf’s claim that QE is equivalent to “printing money”. Marshall Gittler walks through the transactions at the Fed and at the banks and in the private sector accounts (you should look at his charts) and concludes:
Bank ABC has only shuffled the composition of its portfolio around. It’s exchanged bonds for reserves in what is no more than an asset swap. There is no increase in the size of its balance sheet.
The central bank’s balance sheet, on the other hand, grows substantially. On the asset side it gains 40 bonds and on the liability side, reserves increase by the same amount. Note though that there is no change in cash in the hands of the public—what we know as money.
The whole operation leaves the Treasury’s balance sheet unchanged. No new bonds are issued, no revenues received.
So we can see that while the central bank’s balance sheet does expand, the only impact in the private sector is to change the composition of the banks’ balance sheets, exchanging bonds for reserves. The total assets of the private sector don’t change. Hence no money is being created any more than, say, if someone sold their stocks and put the money into bonds.
But aside from that wee bit of nails on the chalkboard, Wolf describes accurately how the Fed’s misguided efforts to use the wealth effect (trickle down theory in new clothes) have backfired, literally enriching the rentiers at the expense of a large swathe of low and even ordinary wage earners.
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.
The “wealth effect” was held up by the Bernanke Fed as a pretext for printing money and creating asset bubbles. As prices were ballooning, those who owned the assets would feel wealthier and spend some of their gains, the theory went. This would somehow stimulate the broader economy, not just luxury retailers and Michelin-rated restaurants. But it didn’t work for everyone.
Prices for housing have jumped and rents have jumped too, yet renters – there are 38.7 million of them, 34% of all households, according to the Harvard Joint Center for Housing Studies (PDF) – well, they saw their real wages decline by 7.6% between 2007 and 2012.
An analysis of wage and housing data by the National Low Income Housing Coalition found that for someone earning the federal minimum wage of $7.25 per hour, an “affordable rent” of 30% of income would max out at $377 per month. But the average “zero-bedroom” apartment now goes for $680 per month. For a household to be able to afford that “zero-bedroom” apartment, it would need an annual income of $27,200. And it would need $39,080 a year to upgrade to their dream two-bedroom palace.
At the same time, cheaper, older housing units are torn down to make room for more expensive condos and apartments – 12.8% of the units that had rented out for less than $400 a month met that fate between 2001 and 2011. It’s all part of urban renewal, but where the heck are the low-income renters supposed to go?
“It’s an ongoing problem that is made more important against the backdrop of increasing demand for those units,” Chris Herbert, research director at the Harvard Joint Center, told Bloomberg. “At a time when we have a growing number of low-income renters struggling to find units they can afford, the fact that these low-cost units are the ones most likely to be lost from the stock is a concern.”
The toxic mix of declining real incomes of renters and rising rents has had an impact: In 2011, about 11.3 million households were spending over half of their income on rent, according to the Harvard Joint Center, a 28% jump from 2007. And given what has happened over the last two years to real wages and rents, the ratio must have gotten even worse.
“The private market doesn’t build housing that low-income people can afford anymore,” Sheila Crowley, CEO of the National Low Income Housing Coalition, told Bloomberg.
Hence the idea of subsidized housing as a solution. There are a slew of options. Among them, developers may have to stick a few token “affordable” units into their developments, in return for some kind of benefit from the local government, and ultimately the taxpayer. Other affordable housing units are built outright with taxpayer funds. Then there are the federal programs, such as the Section 8 vouchers that subsidize rent in private housing to bring it down to 30% of income.
Low-income renters who actually received federal support inched up from 4.4 million in 2007 to 4.6 million in 2011, the Harvard Joint Center found. But in a sign of our times, the number of potentially eligible households, such as low-income families, seniors, and the disabled, soared from 15.9 million to 19.3 million.
In high-cost places like in my beloved city of San Francisco, these trends have reached absurd levels: housing is getting too expensive even for people with good incomes. Renters are being evicted in record numbers from more affordable rental units – “affordable” by San Francisco standards – that will then be redeveloped and converted into condos. For developers, it’s a deal: the average price per square foot rose 16.6% year over year to an all-time high of $778, according to Trulia. It’s now almost 20% higher than during the prior bubble in 2007! The average listing price of a one-bedroom apartment rose to $791,884. The average listing price for all homes hit $1.8 million.
The rental market took its cues. In December, rents were up 10.6% from prior year, putting San Francisco in the number one spot of the 25 cities on Trulia’s list. Average rents now exceed $3,000 per month. And they aren’t for gold-plated palaces but for rental apartments.
That’s the wealth effect. The many trillions of dollars, euros, yen, yuan, and pounds that central banks have printed have found their home, so to speak. Real estate in Manhattan, London, San Francisco, and other trophy cities around the world is becoming too expensive for middle-class families to live in. Paris is on that list as well, but the higher end of that market is in turmoil; prices are skidding as rich people, in an effort to escape French taxation, are selling, but suddenly there aren’t a lot of buyers.
Chairman Bernanke padded himself amply on the back. His heroic multi-trillion dollar manipulation of asset prices has been successful; among other consequences, it’s pushing the cost of rental apartments beyond the reach of people with even decent jobs. With households stretching more and more to pay rent, they have to tighten their belts elsewhere. The crummy holiday shopping season was one of the signs. Yup, the wealth effect.
But it seems even the Fed is getting nervous about the wealth effect. Hidden in the middle of the 25-page minutes of the last meeting, under the most wooden and convoluted prose, the Fed issued a doozie of a warning: it fretted about financial stability. Read…. Plagued By QE Indigestion, Fed Issues Asset-Bubble Warning
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I have claimed since QE2 that it is but a wealth transfer from the poor (who get hit by the inflation disproportionately and have no assets to offset it) to the rich (who benefit from the increasing asset prices).
BoE even admitted it in one of its notes, but believes (or puports to) that w/o it all would be worse off, so on balance QE was better than no QE.
As we know, of course they have to say that!!!
BTW was that the BofE under Mervyn King or Mark Carney?
King. Surprise surprise.
I’m really curious how much space Haldane will get under Carney… (that’s not to say that that QE paper was by Haldane, I can’t remember it actually)
Warren Mosler is also not a fan of QE: http://moslereconomics.com/2013/11/18/qe-letter-reprinted/
here’s the note
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb120306.pdf
Re: QE and printing money, isn’t it more the case that the Fed is swapping reserves worth $x for bonds worth substantially less than $x? If I swap a $1 for your .10c MBS, presumably I’ve created 90c from somewhere? (even if the MBS has a fictional value of $1, this is no more than an accounting trick; in reality I’ve still subsidised you with 90c).
Or to put it in even more reductionist terms, if those bonds were really worth what the Fed was swapping them for, why would I need to swap them with the Fed?
Caveat; I’m not an expert in the machinations of QE :)
No, the Fed is not buying them for less than market value, although the bid side on a large trade will lead to a lower price than a small order. And the Fed might be a bit sloppy on trying to get the best price. But you will not see gross discounts.
The Fed was indeed sloppy here..
“As a major purchaser of government-guaranteed MBSs, the Fed is directly implicated in the government’s tolerance for wishful thinking. The” extent of likely losses is evidently not known. The New York Fed, apparently, did not examine the MBSs it purchased to find out how many have inflated prices or are burdened by too many underwater borrowers who can never repay them. The Fed didn’t bother to look further because the securities are guaranteed by Fannie and Freddie. That seems like ludicrous reassurance—one federal agency guaranteeing the holdings of another agency. The government is thus on both ends of the transaction and certain to lose if the securities turn out to be duds.””
http://www.levyinstitute.org/publications/?docid=1739
But the Fed did send a White Paper to Congress to try and get homeowner relief and Congress thought that had too much moral hazard.
Thanks, FM. To the extent the FRB’s engage in qualitative easing, acquiring risky, illiquid assets in exchange for their legal tender and interest-bearing Reserves, I’d say they’re money-printing. Gittler’s piece shows none of that.
Holy moley, what has happened to the Levy Institute?
That is an embarrassing remark.
Fannie and Freddie are now in conservatorship. The government will make whole the GSE’s equity on any losses, which is a back door to a full faith and credit guarantee (they did it this doofus way so as not to trigger consolidating the GSE’s balance sheets with the official Federal balance sheet, which would hit debt ceiling limits. Note that this is not as illegitimate as it sounds, since the debt ceiling is absolute, and does not allow for the netting of the GSE’s assets against liabilities. The bad part is not the balance sheet gamesmanship as in preserving the fiction that they are private companies by leaving a rump of public shareholders).
There is no credit risk to the NY Fed, so the diatribe about them being remiss about not caring about the quality of the mortgages is 100% wrong. Acting as if there is is a foot in mouth and chew statement. The taxpayer bears the cost of any credit losses no matter who owns the bonds, be it the NY Fed, Pimco, or your mother-in-law’s account at Merrill. Like it or not, the Fed sticking itself in the equation does not make a difference in terms of outcomes to taxpayers.
In addition, the Fed is largely, if not entirely, buying new issue bonds (I wish I had time to check but I really need to turn in). The recent vintages of MBS have been underwritten to standards that even private mortgage analysts like Laurie Goodman say are too stringent (average FICOs of 750, much higher down payments than even pre-crisis MBS, which were also underwritten to way higher standards than subprime). Wray also seems to have missed the fact that Fannie and Freddie became insolvent not due to the MBS they guaranteed (which are the securities the Fed is buying in QE), but to the subprime loans and bonds they bought in their investment portfolio.
Thanks for posting this. I’ll alert my buddies associated with Levy so they can make sure inaccurate material like this does not get published in the future. Wray (who in fairness here is relying on Bill Greider, this is a quote from Greider that Wray accepts on face value) does not recognize the limits of his knowledge.
There is plenty to fault the Fed on, but if you start making inaccurate charges, the Fed and its allies can dismiss critics as uninformed hysterics. That’s why precision is critical.
Isn’t VoodQ’s point that the “Fed” is “buying” (accepting as collateral) assets above, not “less than market value” as you say, due to extend and pretend “mark-to-unicorn” accounting standards now in effect for five years? It would seem to me that accepting worthless junk in exchange for an interest-free gambling stake is the equivalent of monetizing debt, that is, printing money. No?
I still don’t get why the Fed needs to load up its balance sheet with MBS. On the other hand I do understand how rates can be manged by purchasing treasuries. However, I don’t see a clear correlation with rates and the purchase of MBS. I also don’t see an exclusion restricting it from purchasing existing securities of dubious value. The New York Fed says:
“The FOMC noted that these actions should put (not will put) downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative….Agency MBS purchases will likely be concentrated in newly-issued agency MBS in the To-Be-Announced (TBA) market because these securities have greater liquidity and are closely tied to primary mortgage rates. The Desk may purchase other agency MBS if market conditions warrant.”
How much “other” has been purchased, and what constitutes “other”?
Link for above post: http://www.newyorkfed.org/markets/ambs/ambs_faq.html
I still don’t get why the Fed needs to load up its balance sheet with MBS.
The central bank can’t simply increase dollar balances in reserve accounts because the Fed’s mandate forbids it. So if it wants to increase those balances it must take away an equal amount from securities accounts. This is why Wray and Mitchell and Mosler and Keen were saying that QE would not increase the money supply: because those reserves had no channel to the real economy and because the total quantity of financial assets remained unchanged.
On the other hand I do understand how rates can be manged by purchasing treasuries. However, I don’t see a clear correlation with rates and the purchase of MBS.
Remember that rates were already at zero before QE started. Once the Fed had driven the interbank rate as low as it could it ran out of tools to stimulate and enabled QE in the hope that banks would lend more into the real economy if they were buried in reserves.
But in a modern banking system banks are not reserve constrained. They can always get what they need for payments and balancing liabilities, therefore any additional reserves added by the Fed were literally useless, which is why we see those dollars just sitting there.
Thanks for the explanation. Still not sure I get what you’re saying. Are you implying the Fed is clueless regarding the effects or intents of QE?
My personal opinion is the Fed leadership is so steeped in monetarist nonsense they can’t think of anything else to do. They’ve gradually become aware over the last four years the real economy isn’t responding to ZIRP and QE as predicted and have continued QE in the hopes that if they made a show of stimulus (because most everyone still believes the Fed is all-powerful), people might start spending again.
They’re well aware, however, that belief in the QE myth is pushing a speculative financial boom; that’s why Bernanke raised the spectre of ending the program back in the Spring, to see how markets reacted. The long-term interest rate jump in response brought new mortgage applications to a halt and scared the hell out of the Fed governors, so they backed off. Since they’ve bounced back and forth, unable (I think) to reach a consensus on which way to go.
I largely agree with this. They also have a Messiah Complex (or mission-creep as Yves has said), and are so dogmatically wedded to their broken economic model that they cannot see that, functionally, they have become a deeply, dangerously reactionary force.
Doug Terpstra – Totally agree with you.
No, the Fed is not buying at above market value.
The Fed is engaged in a raw supply and demand + psychology exercise.
More demand = higher prices. And the Fed putting that much firepower into the markets makes investors feel all warm and fuzzy.
Has anyone ever coined the term “fiat credit” or “monetized fiat credit”? If not, would it be a useful term for thinking with? I ask as a total layman.
Yves, your honest intellectual horse power is refreshing. I’m always trying to wrap my lightly educated mind around all this stuff. Not sure what the hell is going on with QE but the whole operation seems much more complex than a zero sum creation and destruction game of balancing book keeping entries. I envision these operations more like matrix operators that do not commute, i.e. AB does not equal BA, introducing uncertainty and creating non-reversible effects through their operation.
Top- notch quote from Gittler. What the Fed does is identical to your personal bank taking money from your savings account and depositing it in your checking. You’ve got the same quantity of dollars at the end of the day.
You penchant for sarcasm is quite remarkable. But just to correct your humorously fallacious post there for the benefit of those who didn’t catch your humor, it would be more accurate to say that the Fed transfers money from your savings account into the checking accounts of the rich and politically connected.
Then we’d see the total personal savings of the country falling, wouldn’t we? And they aren’t, are they? Which makes your polemics falsifiable, doesn’t it?
If total = rich + non-rich then any transfers from non-rich to rich (or vice versa) would never change the total. So are you resorting to sophistry?
Oh, so your saying he didn’t actually mean what he wrote.
Uhg wait. You were being serious? That’s why pseudoscientists (and religious nuts) bug me so much; they can be so confident when being totally nuts or irrelevant. Since no empirical basis in reality is required (Steve Keen points out in his book “Debunking Economics” plenty of fallacious, disproven nonsense written into modern college economics textbooks–and therefore economics as a field of study does not require a basis in reality) all sorts of nutty beliefs can be justified. In other words, if you are trying to argue about what’s going on based on what economists would say, I’d laugh at you, because then you have no credibility and deserve none.
What does happen at 0% interest is “financial apartheid” where the poor get nothing for their savings (if they have any) and can’t get a line of credit to save their lives, but meanwhile the rich and well connected get gobs of near 0% “money” to buy every asset left and right that isn’t nailed down. Which they have recently down to buy up most of the free housing in America. So now the poor and (formerly) middle class, who don’t have access to that cheap money, now get to work like slaves providing half or more of their income to Blackstone just to have a place to live. It’s pretty disgusting really.
On the plus side though this is the kind of stuff that’s going to cause the system to collapse a lot sooner than it otherwise would, so maybe we should be rooting for more of it.
What does happen at 0% interest is “financial apartheid” where the poor get nothing for their savings (if they have any) and can’t get a line of credit to save their lives, but meanwhile the rich and well connected get gobs of near 0% “money” to buy every asset left and right that isn’t nailed down.
Reserves can be used to buy securities, not “every asset”. Stop misinforming people.
J Gordon, your nastiness is uncalled for. Keep it up and you go in moderation. I wasn’t around to police the Wray threads, but there was way too much bad behavior. I’ve already put some people in moderation and you are asking for the same treatment.
And ZIRP, which is what you are beefing about, is a completely different policy than QE, so now you’ve shifted ground. The Fed could use QE with Fed funds at 5% to flatten the curve or try to reduce mortgage spreads. The fact that the Fed is exiting QE but continuing ZIRP through at least 2015 shows they are independent policies.
Can the Fed continue ZIRP absent QE?
Yes, absolutely.
What I meant is will the absence of QE yield the Fed less control over rates than they have at present? The curve will surely read differently absent its influence.
If QE is such a benign and simple swap then why are they doing it in the first place? No one benefits? The composition change from various relatively illiquid assets to very liquid assets called dollars is a clue to just how the benefits accrue.
Malmo – you are right, it’s not benign at all. Again, more one-sided reporting. They wouldn’t be doing it if someone wasn’t coming out ahead, which begs the question: who is coming out the loser?
It seems pretty simple to me. Reserves can be and are being leveraged through loans to fuel asset speculation. Those dicey MBS cannot be. They are no different from a bank’s perspective than so many anvils of equivalent ‘value’.
And as to what those anvils are worth, who is buying them except for the Fed?
Reserves aren’t loaned out other than to another bank. They sit on hard drives at the Fed, bouncing from one bank to another as payments are cleared. Why do you think the money supply never responded to QE?
The conception of reserves becoming deposits as loans are made is a hundred years out of date.
He said leveraged, not lent out. Are ye daft?
Leverage means loan, Beard. When someone takes on a loan they are said to be “leveraging”; when they pay it off they are “deleveraging”.
Your tone is out of line. Keep it up and you go in moderation. Just because I didn’t police the Wray posts does not mean this sort of conduct is permitted here.
And reserves aren’t leveraged. The Fed accommodates lending by adding reserves.
The banks are utterly awash in excess reserves. j gibbs is barking up the wrong tree.
I don’t even see what reserves are meant to accomplish as they can’t be lent and are supplied after loans are made. What are they and what’s their point?
The people at the top don’t understand their own monetary operations.
This is simple, housing prices are still inflated, wages are not as inflated. Support for housing as an asset will continue, poor people are not assets in the eyes of the corporations unless they are poor enough to get a government subsidy that they then spend at a corporation. The only solution to this problem is revolution. We can talk about it in economic terms all the live long day, but it boils down to power and power alone.
Theoretically, the Fed believes that the only solution to a burst bubble is to blow a BIGGER bubble.
Practically, they believe in stealing from the poor to give to the rich.
If (when?) we have civil unrest in this country, the Fed will deserve much of the … credit.
I should think that the social classload of people that the Fed works for should get all the credit.
They are certainly getting ready. A billion hollowpoint rounds to Homeland Security, tanks and paratanks for local police forces, switching police departments Prime Directive from citizen safety/crime prevention and control to Police Force Protection, etc.
If QE does not create money as Marshall Glitter explains, how is it possible for the Fed to create the “wealth effect” using QE?
What might account for rapid increases in housing prices in glitter gulch? It isn’t an amorphous blob buying those places, it is individuals making a decision based on expected future income and future anticipated price increases, as well as an influx of out of country buyers expecting the same thing. Apparently, wealthy Chinese are snapping up property in San Francisco hand over fist, and the so called high tech sector pays quite a bit more than McDonald’s, so they can afford to pay more.
In the eighties, Toronto house prices climbed at such a quick rate, anyone trying to save for a down payment was left in the ditch, even with the high interest rates at the time. The marginal buyers desiring to pay ever more higher prices were from Hong Kong in the lead up to the hand over to China in 1997. Wage earners cannot compete with millionaires, and there were legendary stories of people doing yard work and being approached with offers of double or more of the “current market value” of their home., with the proviso that they hand over the house as soon as possible, with the time frame being hours. Some homeowners took it, dropped their rakes and took the cash to the bank.
If you bid up the price of some asset by aggressively entering the market for them, then people who are already holding that asset see the value of their portfolios increase in accounting terms.
Not only in accounting terms. They can use it as collateral to get more cash than before etc. etc.
“[…] for someone earning the federal minimum wage of $7.25 per hour, an “affordable rent” of 30% of income would max out at $377 per month. But the average “zero-bedroom” apartment now goes for $680 per month. For a household to be able to afford that “zero-bedroom” apartment, it would need an annual income of $27,200. And it would need $39,080 a year to upgrade to their dream two-bedroom palace.”
Tricky. This argument implies wages for a single individual represent typical total earnings for a single household, even though a majority of “households” in modern America have two adult earners. (We aren’t living in 1960 any more.) Low wage single persons living alone are more likely renting a room from somebody else. This isn’t exactly a new phenomenon in America.
For low-income households, there are also taxpayer funded subsidies like food-stamps which contribute unearned income — with no income tax burden and more likely tax credits. If the “affordable” number for two persons at full time minimum wage (disregarding subsidies) is proposed to be 30% ($377/mo), then for two persons working at minimum wage, that 30% of two-earner wages would provide $754/mo for “affordable” rent of a studio apartment, with another $74 available to pay utilities or other expenses (already taken into account by calculation of the 30% available for rent).
It is quite true that a household of two earners permanently employed at full time minimum wage would be hard pressed to come up with the additional $223/mo necessary to make the jump to a two bedroom unit unless one or the other of them receives a $1.40/hour raise above minimum wage (or both receive an average $0.70/hour raise).
The real rub comes with the truly astonishing assumption by lefties that most minimum wage earners will continue to be full time workers in the face of Obamacare costs. If employers aren’t retards, full time workers are going to be heavily thinned out where possible, and a fall to 29 hours a week for each of two minimum wage earners will crush their household income by 28%.
The left have now suddenly realized (but will never admit) their vision of heath care through health insurance mandated for “full-time” workers has generated an entirely predictable (and mostly avoidable) cost to employers of large numbers of minimum wage workers. Facing the certainty that “income inequality” for their primary voting constituency is about to get whacked, this clear glimpse of the gallows has animated the millionaires in Congress to emergency measures to save their pensions.
Their only possible route of escape is to passionately tout a dramatic increase in the minimum wage as the “patriotic” thing to do.
After that achievement, they will pull straight faces and claim they are shocked — shocked! — that marginal workers are being laid off, never to be replaced except by robots.
Please don’t confuse Obots with the left. Their leader is a Manchurian candidate created by Chicago slumlords whose only understandable agenda is to become personally rich, and ACA’s only significant beneficiaries will be insurance company executives whose companies have gained the right to practice extortion against the young and the healthy, and who can be counted on to loot the proceeds without further ado.
j gibbs – perfect.
QE is still an unfinished transaction. If it were truly as benign as Gittler and Smith believe, then the question arises, “Why did the Fed undertake it?”
Also, I will note that excess reserves have not absorbed the QEs- they don’t move dollar for dollar- the QEs are larger by about a factor of two according to the charts I see from the St. Louis Fed.
Maybe the Fed is buying foreign dreck too?
Meanwhile, a bailout of the entire population would have fixed everyone from the bottom up but that would be equivalent to Pharaoh letting the slaves go free even if he received a good price for them.
quote:”The central bank’s balance sheet, on the other hand, grows substantially. On the asset side it gains 40 bonds and on the liability side, reserves increase by the same amount. Note though that there is no change in cash in the hands of the public—what we know as money.”
Look at this graph:
http://research.stlouisfed.org/fred2/graph/?g=r1k
This graph indicates that there is in fact a dollar for dollar change in the amount of bank deposits and currency in the public’s hands. Deposits and loans track together until
QE comes along. Today bank deposits are in excess of loans by the same amount as
QE has added. It looks like the $2.7 trillion added to the Fed balance sheet has also added about $2.7 trillion to total bank deposits (beyond what is created by loans).
Great catch, Jim. It’s because Reserve Banks buy assets from the public, as well as from commercial banks. And because commercial banks, flush with reserves under QE, also buy assets from the public, thereby creating deposits.
Here’s FRBNY’s depiction, emphases mine:
When the Fed buys an asset, the effect on the broad money supply depends on who sold the assets and what they do with the funds they receive. If the seller is a bank, reserves go up, but broad money only increases if the bank responds to the increase in its reserves by lending more to households and businesses. If the seller is an investor other than a bank, reserves go up, and broad money also goes up in the first instance as the seller’s bank puts a sum equal to the amount it receives from the Fed into the seller’s bank account. But if the seller uses the money to pay down debt, the broad money supply declines again by the amount of the debt repayment. As of early 2011, the behavior of the broad money supply, economic activity and inflation all suggested that recent money growth had not been excessive.
http://www.newyorkfed.org/education/lsap/
(expand the section: Money and Inflation)
BTW, note the sentence that follows the one emphasized. It’s a description of debt deflation far superior to Keen’s, because it relies not on sectoral, behavioral or distributive channels, but on pure deposit math identities. And it supports the well-known populist claim that repayment of debt is dissipative of broad money. Contra Krugman, contra Say’s Law.
Quibbling with our humble blogger’s quibble. Money printing this was and is.