Half A Trillion In Treasury Purchasers Are Unaccounted For

ipatent · Dec 23, 2009

This is potentially explosive. You won't find articles like these in the mainstream press, that's for sure.

Sprott Calls The Fed "A Ponzi Scheme" As Half A Trillion In Treasury Purchasers Are Unaccounted For

We must admit that we were surprised to discover that "Households" had bought so many Treasuries in 2009. They bought 35 times more government debt than they did in 2008. Given the financial condition of the average household in 2009, this makes little sense to us. With unemployment and foreclosures skyrocketing, who could afford to increase treasury investments to such a large degree? For our more discerning readers, this enormous "Household" investment was made outside of Money Market Funds, Mutual Funds, ETFâs, Life Insurance Companies, Pension and Retirement funds and Closed-End Funds, which are all separate reporting categories.

This leaves a very important question- who makes up this Household Sector? Amazingly, we discovered that the Household Sector is actually just a catch-all category.It represents the buyers left over who canât be slotted into the other group headings. For most categories of financial assets and liabilities, the values for the Household Sector are calculated as residuals. That is, amounts held or owed by the other sectors are subtracted from known totals, and the remainders are assumed to be the amounts held or owed by the Household Sector. To quote directly from the Flow of Funds Guide, "For example, the amounts of Treasury securities held by all other sectors, obtained from asset data reported by the companies or institutions themselves, are subtracted from total Treasury securities outstanding, obtained from the Monthly Treasury Statement of Receipts and Outlays of the United States Government and the balance is assigned to the household sector." (Emphasis ours)

So to answer the question - who is the Household Sector?They are a PHANTOM. They donât exist. They merely serve to balance the ledger in the Federal Reserveâs Flow of Funds report.

Our concern now is that this is all starting to resemble one giant Ponzi scheme.
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the1 · Dec 23, 2009

The Fed and US Government are the biggest shell game on earth.

Illum · Dec 23, 2009

Well being new, I have to ask... Isn't this how QE is implemented? Or is this something else? Haven't we all known this was happening, I can't see how this means anything to the market, unless I am missing something.

spinn · Dec 23, 2009

how credible is zero hedge?

rcaldwell · Dec 23, 2009

Yep, getting close to "Escape From New York" time.

PlusMinus · Dec 23, 2009

Quote from spinn:

how credible is zero hedge?
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You're asking the wrong question. This is Sprott. ZeroHedge merely linked him.

spinn · Dec 23, 2009

I realize that....but how credible is zero hedge? cnbc seems to hate them, so thats good.

PlusMinus · Dec 23, 2009

Quote from spinn:

I realize that....but how credible is zero hedge? cnbc seems to hate them, so thats good.
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That is true. Chalk one up for ZH.

Actually CNBC hates anything that threatens it as a source for "conventional wisdom".

S2007S · Dec 24, 2009

Would be nice to see this on cnbc or bloomberg once in a while, everything feels completely backwards in this world. I don't think it matters how clearly these articles are written, everything in this matter will be ignored until markets finally collapse and then finally this information will be put set forth.

DrPepper · Dec 24, 2009

I keep wondering who would be stupid enough to buy our treasuries despite the fact that the US is bankrupt and will never be able to repay our national debt, let alone the interest on it. Nevertheless, all of the treasury auctions reportedly go okay. A giant Ponzi scheme would sure explain a lot of things.

Stories like this make me want to sell my home and buy a farm out in the country, put all of my money into gold and silver bullion and buy a lot of ammo for self-protection before the shtf.