Fed in the market buying agencies

Discussion in 'Financial Futures' started by scriabinop23, Dec 11, 2008.

  1. Good post, thank you.
  2. dcvtss


    DX taking a beating
  3. Is the Fed Taking the First Steps to Selective Default and Devaluation?

    JESSE’S CAFÉ AMÉRICAIN ( http://www.infowars.com/?p=6451 )
    December 10, 2008

    Editor’s note: It appears this is a device to create hyperinflation and usher in a new global currency.

    We have been looking for an out-of-the-box move from the Fed, but this was not it.

    The obvious game changing move would have been for the Treasury and the Fed to make an arrangement in which the Fed is able to purchase Treasury debt directly without subjecting it to an auction in the public market first. This is known as ‘a money machine’ and is prohibited by statute.

    But as usual the Fed surprises us all with their lack of transparency. They are asking Congress about permission to issue their own debt directly, not tied to Treasuries.

    This is known in central banking circles as ‘cutting out the middleman.’ Not only does the Treasury no longer issue the currency, but they also no longer have any control over how much debt backed currency the Fed can now issue directly.

    If the Fed were able to issue its own debt, which is currently limited to Federal Reserve Notes backed by Treasuries under the Federal Reserve Act, it would provide Bernanke the ability to present a different class of debt to the investing public and foreign central banks.

    The question is whether it would be backed with the same force as Treasuries, or is subordinated, or superior.

    There will not be any lack of new Treasury debt issuance upon which to base new Fed balance sheet expansion. The notion that there might be a debt generation lag out of Washington in comparison with what the Fed issues as currency is almost frightening in its hyperinflationary implications.

    This makes little sense unless the Fed wishes to be able to set different rates for their debt, and make it a different class, and whore out our currency, the Federal Reserve notes, without impacting the sovereign Treasury debt itself, leaving the door open for the issuance of a New Dollar.

    What an image. The NY Fed as a GSE, the new and improved Fannie and Freddie. Zimbabwe Ben can simply print a new class of Federal Reserve Notes with no backing from Treasuries. BenBucks. Federal Reserve Thingies.

    Perhaps we’re missing something, but this looks like a step in anticipation of an eventual partial default or devaluation of US debt and the dollar.
  4. Ron Paul: Printing Money Only Prolongs The Pain

    Paul Joseph Watson
    Prison Planet.com
    Thursday, December 11, 2008

    Amidst the hand-wringing of the automaker bailout debate, Ron Paul took the opportunity on the House floor yesterday to remind Congress that the real culprit behind the financial crisis is the Federal Reserve, and that allowing the Fed to continue to print money without audit will only prolong the pain.

    “If you look at the grand problem we have it’s much much bigger,” said Paul.

    “There were many who predicted that the climax would be exactly as we are witnessing,” said the Congressman before lamenting that no one seems willing to go back and discover how financial bubbles form and how they burst.

    “Instead we just carry on doing the same old thing….we spend more money, we run up more debt, we print more money, and we think that’s gonna solve the problem that was created by spending too much money, running up debt, printing too much money and here we are today,” stated the Congressman, adding that Congress was debating about “tinkering on the edges” while failing to deal with the big problem.

    Paul said that the Fed’s creation of over $8 trillion dollars in obligations was outside the audit of Congress.

    “They create this money and when the Fed chairman comes before our committee we ask, where did you dispose of this $2 trillion dollars that you’ve created recently, he says well it’s not your business, he doesn’t even have to tell us” exclaimed Paul, adding that the Federal Reserve was out of control.

    “We’re dealing only with finding victims, we cannot get rid of the debt,” said Paul, adding that the cause of the bubbles was the result of monetary policy dictated by the Federal Reserve system.

    Watch the clip below......... http://www.infowars.com/?p=6465
  5. tradersboredom

    tradersboredom Guest

    Economic growth or nominal inflation is the only wayt to reduce long term debt.

    countries like Zimbawe have no assets so their currency is worthless outside their country.

  6. tradersboredom

    tradersboredom Guest

    Zimbawe countries like that don't export anything or have anything that anyone wants to import or want to buy from. there currency is practically worthless outside the country and is therefore not even traded.

  7. Only $3B to move interest rates down 50bp...!!! Imagine what 200B could do. I think we could see fannie mae long rates at 3.0% within a month or two if they keep buying the long duration stuff.

    Great post. I had my finger on that pulse ... nice eh?

    Interesting how that purchase of longer dated stuff goes to operation 3, which was 12/12. My post was 12/11... Ideas?
  8. Actually, Zimbabwe exports more than it imports. I think that's probably part of the reason their stock market was able to return a better percentage than their *HUGE* inflation rate. If you had your money in the stock market there in an index fund, you actually came out ahead.

    The US relies on internal demand for most of our companies. That's going to add to the problem if we hyperinflate. We don't have much that anyone else wants.
    #10     Dec 20, 2008