Fed buying treasuries question-----???

Discussion in 'Economics' started by NY_HOOD, Mar 19, 2009.

  1. the fed is buying 2-10 year treasures? buying alot of these instruments will bnring down rates on the aforementioned?
    am i correct? what are they trying to do by doing what they announced yesterday/
  2. the1


    Keep interest rates low and flood the market with money. When the Fed buys treasuries it is injecting money into the economy. When it sells treasuries it is withdrawing money from the market. What they are doing is massive injections of liquidity in the hope inflation will kick back in and inflate the value of assets yet again.
  3. So once again the middle class will be squeezed from every angle, all in the hopes of what?

    With out jobs people can’t borrow. People have way to much debt. Do they think households have corrected there balance sheets hahahaha.

    This is more financial engineering, and we all know were fancy financial engineering gets us, witness, FRE,FNM,AIG,LEH,BCS.
  4. ok..if they are buying U.S treasuries,how is that causing money to get into the economy?
    i know,i'm naive'.
  5. They're buying 350 bln worth of treasuries and 750 bln worth of non-treasury, severely toxic assets (we know they're severely toxic because under TALF, they broadened the range of assets that qualified to be purchases, as in, lowered the already low standards).

    This action, while not only not addressing the disease causing our problems (i.e. unemployment, high and rising), is providing artificial support that can't be sustained long term for treasuries and all those nasty assets such as mortgage-backed securities, troubled student, credit card and auto loans, etc.

    In an efficient, free market economy, the government would not intervene in rewarding companies dumb enough to not manage their risk by loaning money to deadbeats on expensive consumer and other goods, shifting the risk from those companies to the taxpayer, which requires printing massive amounts of dollars if you're the U.S. government, as we already have a 'real' national debt of 56 trillion dollars already (according to the former comptroller general of the United States, David M. Walker, whom I trust inherently more than Bernanke or Geithner).
  6. They can buy diapers for 1 trillion and the money will get into the economy. To bad for the diaper manufacturers that they decided to go with U.S treasuries.
  7. BLSH, while I agree with some of your views, pls get your facts correct.

    They're buying $300bn of USTs, $750bn of agency MBS and $100bn of GSE debt. Agency MBS is a very different story from the sorts of distressed assets they're talking about for TALF.

    Pls don't mix these up, they're completely separate programs. Moreover, while the Fed has already been running the MBS program for some time, TALF (and the distressed bit of it) hasn't even started.
  8. Watch them not buy any.

    Them saying they will buy them did the trick.

    Tricky Tricky. :]
  9. So, the trillion this Bloomberg article references is ON TOP of the trillion+ they announced yesterday?

    I'm asking because this specifically references "securities backed by loans for car purchases, college education and real estate..."


    "Current TALF

    As it’s currently set up, the TALF may lend as much as $1 trillion to investors from hedge funds and pension funds to insurance companies to buy recently created securities backed by loans for car purchases, college education and real estate. Applications for its first loans are due today.

    Broadening the TALF to include older, illiquid and lower- rated securities could allow the participants in the public- private investment funds to potentially repackage assets and sell them on to a wider group.

    The Fed’s policy-making committee, which met yesterday in Washington, said in its statement that the range of eligible collateral for the TALF “is likely to be expanded to include other financial assets.” The Federal Open Market Committee also pledged $1.15 trillion of extra measures to lower borrowing costs, including purchases of long-term Treasuries."
  10. Yep, TALF and TALF II are another $1trn. Come on, what's a $trn among friends?
    #10     Mar 19, 2009