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The Fed Buys Last Week's Treasury Notes

hypocritexposer

Well-known member
The question is did the Fed implicitly tell the primary dealers they are merely holding the treasuries for a flip, and that it would acquire them immediately. Absent this $4.8 billion in effectively monetized bonds, what would the Bid To Cover have been for the primaries? Would this have been the second practically failed auction for USTs after the deplorable 5 year auction results a day prior? One wonders if there would have been 62% indirect interest in these bonds (which the day before had a measly 32.5% indirect bid) if the purchasers were aware of the Fed's immediate prompt monetization of a large part of the directs' balance.

It is truly a sad state of affairs when the Fed has to manipulate public and media perception in this way, and has to cover up for the complete lack of interest in US Treasuries.

Here is the evidence Martenson dug up:

http://www.zerohedge.com/article/feds-ust-pomo-pyramid-scheme-exposed
 

hopalong

Well-known member
hypocritexposer said:
The question is did the Fed implicitly tell the primary dealers they are merely holding the treasuries for a flip, and that it would acquire them immediately. Absent this $4.8 billion in effectively monetized bonds, what would the Bid To Cover have been for the primaries? Would this have been the second practically failed auction for USTs after the deplorable 5 year auction results a day prior? One wonders if there would have been 62% indirect interest in these bonds (which the day before had a measly 32.5% indirect bid) if the purchasers were aware of the Fed's immediate prompt monetization of a large part of the directs' balance.

It is truly a sad state of affairs when the Fed has to manipulate public and media perception in this way, and has to cover up for the complete lack of interest in US Treasuries.


I am sure if you were to ask oldtimer he would say Bush had been doing this for the last 80 yrs BUt then we all know how the BUSH BASH SYNDROM has affected him

Incidentally I heard there is a cure for the bash BUSH sydrome oldtimer.
pm me and I will hook you up to the link, :wink: :wink: :wink:

EH???
 

hypocritexposer

Well-known member
maybe we can try this again, and have a decent discussion on what this means.

My understanding of this, is that it is a backdoor method to monetize the debt. And get $4.8 Billion into the money pipeline.

The only way to pay this back at a later date, is to increase tax revenue. Either by increasing the tax rate(s) or have inflation increase tax revenue for the Government.

If the Government does not intend to raise taxes, then they are hoping that inflation will cover the increase in revenue needed.

Tim Geithner has asked for the debt ceiling to be raised to $12 Trillion, before Oct. Do they need to increase the ceiling to increase their purchasing, buying back, of future bonds?

Is that more or less correct?
 

hypocritexposer

Well-known member
A very dangerous thing occurred last Thursday and Friday. The Federal Reserve monetized roughly 40% of the nation's enormous debt. This means that the Fed printed money to flow into the economy in order to cover over 40% of the debt burden the U.S. now carries.

Within days the U.S. government quickly sold off this portion of the debt, creating even more debt, leading Treasury Secretary Timothy Geithner to request from Congress a lifting of the debt ceiling so that we could cover our obligations. That, of course, will create even more debt.

This economic shop talk may sound like gobbledygook to most average citizens, like myself. But the bottom line is that what the Fed did last week will create what is known as 'hyper-inflation.' The cost of goods and services rises so fast that average citizens can't afford the basic essentials of living.

However, the dirty little secret among economists and government bureaucrats is that what's bad for the citizens in this scenario is actually good for the government. In a hyper-inflation scenario the government makes more money due to the tax structure being based upon percentages. Thus, the government makes more money without having to enact an official tax increase.

http://www.examiner.com/x-3704-Columbia-Conservative-Examiner~y2009m8d13-The-nation-quickly-descending-into-chaos
 
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