Bill Gross Asks The $64,000 Question: "Who Will Buy Treasuries When The Fed Doesn’t?" His Answer: "I Don't Know"; Gross Is Getting Out Of Risk

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Wed, 03/02/2011 - 10:23 | 1010945 Liberty
Liberty's picture

That's a silly question.  The Fed will buy the Treasuries of course!

Wed, 03/02/2011 - 10:24 | 1010957 buzzsaw99
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Wed, 03/02/2011 - 10:59 | 1011074 Fish Gone Bad
Fish Gone Bad's picture

Our new found friend, Libya, will have 30 billion reasons to help buy our debt.

Wed, 03/02/2011 - 11:00 | 1011083 buzzsaw99
buzzsaw99's picture

The new Libyan gubbermint should pump out their oil as fast as they can and put all that "money" in the bank to watch it grow! LMAO!

Wed, 03/02/2011 - 11:10 | 1011118 Mad Max
Mad Max's picture

Yes, electronic entries of "money" in a "bank" are vastly more valuable than keeping on hand one of the world's most useful physical commodities.

Wed, 03/02/2011 - 11:13 | 1011130 buzzsaw99
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Wed, 03/02/2011 - 11:33 | 1011214 66Sexy
66Sexy's picture

problem is, where does a declining dollar fit into all this? if the dollar drops it will prop up stocks and commodities, no matter who buys treasuries...


so.. could that be the end game?

Wed, 03/02/2011 - 12:53 | 1011620 hbjork1
hbjork1's picture

The end game will be to buy land, gold, silver or some other non perishable commodity.  Perserving buying power isn't easy.  I have a couple of fixed value pensions, one from 1972, one from 1986.  The 72 pension has been reduced in buying power by a factor of 6-8, depending upon how I measure it.  BUT, the country has relative stability and there has been much progress in things like health care and technical support for the routines of daily living. 

How many of those who read this have been on a cruse lately; easily affordable by a large segment of the population.  Air travel security was a pain in the neck but my last trip to LA took about 5 hours (From Detroit) and back less than that, coutersy of the jet stream.    A short (it seems) 50 years ago you would allow 2 to 3 days, depending upon how much rest you might want in between.  International travel today is very easy. 

The games that people play have always been there.  Corruption was alledged in the building of the Erie Canal.  Histories on the Union Pacific Railroad construction sometimes highlight the graft.  The California leg of that railroad used what ammounted to slave labor from China.  Los Angeles, that is in a semi-arid zone, grew with water stolen from the ranchers along the Colorado. 

There are now 300+ million people in the country.  Even if it must be done as a share holder, the long term inflationary defense holding is productive farm land.  Effective yields are low ~1-4% through the years. And it may take a few years to recover transition costs but value is not transient.

Wed, 03/02/2011 - 10:32 | 1010983 High Plains Drifter
High Plains Drifter's picture

Chairsatan, I love it. That's about right....


Now after all of this time, who among you can argue that this is not being done on purpose, the destruction of the United States as we have known it , right before your eyes.

Wed, 03/02/2011 - 11:48 | 1011276 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

I have search for an answer to that question ad nauseam.

When the 30 yr bonds mature where is the money going to come from to pay back the principle?

Just curious....

Wed, 03/02/2011 - 10:39 | 1011010 Max Hunter
Max Hunter's picture

Correct. They have to. Any foreigner that does is a fool.. And are we to expect that over 10% of our GDP is to be borrowed for the government to spend us out of a recession/depression? How absurd. Prepare accordingly. I'm hoping for another email from my favorite ammunition site to drop another grand on ammo and clips..

Wed, 03/02/2011 - 11:13 | 1011129 Chump
Chump's picture

Someone posted this on another article.  It gave me some ideas.


Wed, 03/02/2011 - 11:19 | 1011155 grey7beard
grey7beard's picture

>> Prepare accordingly. I'm hoping for another email from my favorite ammunition site to drop another grand on ammo and clips..

So, how much have you put into medical supplies, or are you expecting incoming lead to pass harmlessly through your Terminator like body?

Wed, 03/02/2011 - 11:22 | 1011171 Mad Max
Mad Max's picture

It's only harmless if you're a T1000.  Any earlier model and it's a major nuisance, or worse.

Wed, 03/02/2011 - 11:57 | 1011318 Max Hunter
Max Hunter's picture

So, how much have you put into medical supplies, or are you expecting incoming lead to pass harmlessly through your Terminator like body?

Good one smartass.. Actually, guns and ammo are only a portion of what i've done to prepare for chaos or possible emergency. They can also be used for barter. So, the answer is yes, medical supplies along with food, water, fuel and a host of other things that would allow me to stay indoors and need nothing from stores while many other are scrambling for basic necessities.

It appears your wisdom alone will be enough to sustain you and your family if our everyday lives are interrupted with an emergency. Good luck with that.

Wed, 03/02/2011 - 12:58 | 1011648 Bob
Bob's picture

It has to be scary indeed to have kids and a house in an urban area when you contemplate armageddon. 

At times like those, being a renter who is foot loose and fancy free with a rural destination at a reasonable distance is a luxury that few can afford otherwise. 

Wed, 03/02/2011 - 14:55 | 1012199 grey7beard
grey7beard's picture

>> It appears your wisdom alone will be enough to sustain you and your family if our everyday lives are interrupted with an emergency.

Oh, I've liquidated my city holdings and moved to a bit of rural acerage.  I've a nice off grid cabin to go along with the house on the propety.  My assets as well protected as one can probably be, considering the future is not clear.

I just find the Rambo types pounding their chests about buying "another" thousand dollars worth of ammo and clips to be humorus.  Never do you hear of anyone bragging about their stores of medical supplies and other not so glamours necessities.  I'd say if the lead starts flying the average Rambo wanna-be's life expectency is going to less than one six round clip.  And bartering bullets?  Hehe, cute.

Wed, 03/02/2011 - 10:51 | 1011049 Doubleguns
Doubleguns's picture

Yes, yes Benny Madoff of the Bernanke will continue to print money to buy the bonds to create the jobs to restore the economy to make us all wealthy.  Then QE3 will makes us wealthier along with QE4 and so it goes. There is no ponzi scheme here. We are all going to be rich. 

Wed, 03/02/2011 - 10:28 | 1010948 Oh regional Indian
Oh regional Indian's picture

Not the PimpleCo blowhard who just got religion, again!

This is not looking good at all. The jawboning that is.

Orchestrated end to musical chairs.

Last one get's to buy and hold the exploding Sack.



Wed, 03/02/2011 - 10:40 | 1011001 wisefool
wisefool's picture

Yup. In the same boat of rats you got buffet telling CNBC this morning that


  • paper money is a terrible investment
  • Governments are a terrible investment
    • New government employees must not be given the same compensation as current ones. (mine:) Anybody who understands large organizational dynamics knows that junior people will not work hard for senior people if there is a chasim in incentive models for time on task.
  • The GSE garentees made finance essential free for underqualified banks and the borrowers on the edge (speculators)
  • Me and my peers could give our money to the government instead of overpaid, tax free, feel good charities. But I dont want to. A "voluntary" tax system is probably not the best one.



Standard generational "I got mine, eat some cake" from both Buffet and Gross.


Wed, 03/02/2011 - 10:43 | 1011015 Oh regional Indian
Oh regional Indian's picture


Wed, 03/02/2011 - 10:41 | 1011017 Oh regional Indian
Oh regional Indian's picture

Very interesting eh, Wisefool? A full court press on "Hate the System".

Gross Buffet: One bite and then you throw up.


Wed, 03/02/2011 - 11:20 | 1011160 wisefool
wisefool's picture

Well Buffet also said, "don't worry, the cake/pie will get bigger. when I was born people could have thought the stockmarket would have gone down 75%, but the american people succeded. I mean we built battleships, we will make alot of cars in 2020, we just have to decide who is going to get them. I mean if you look at the tax forms for the top 400 people over any period of recent time, thier rates consistantly go down"

And then he says, "I never bought a share of bank of america personally" followed by the already mentioned: (sarc/para) I don't want to give my money to the goverment, the same one that funded my entire existance, including daddy's pension and connections.

Wed, 03/02/2011 - 11:25 | 1011186 Oh regional Indian
Oh regional Indian's picture

All these liars must be having to get their noses trimmed everyday.

No wonder plastic surgery is still thriving. The hubris and the delusion is stunning.


Wed, 03/02/2011 - 13:02 | 1011676 Bob
Bob's picture

My favorite nugget from Uncle Warren this morning was "excess US housing inventory will be cleared within 12 months." 


Wed, 03/02/2011 - 14:26 | 1012102 Trundle
Trundle's picture

Young people will eat senior/old people if the incentives are right.

Humidifier yields paella.

Freeze-drying soylent green.

Wed, 03/02/2011 - 10:39 | 1011007 SheepDog-One
SheepDog-One's picture

Theyre all scrambling for a chair, and all the chairs are covered in poop.

Wed, 03/02/2011 - 10:26 | 1010961 DaveyJones
DaveyJones's picture

who bought Yugos?

Wed, 03/02/2011 - 11:21 | 1011164 aurora lancelot
aurora lancelot's picture

I got one 10,000,000,000.00 Yugoslavian Dinar bill.  I bought it on a flee market and paid 40 Euros for it.

Wed, 03/02/2011 - 12:10 | 1011380 ceilidh_trail
ceilidh_trail's picture

Ha Ha sucker- I did better than you!!! I bought a 100 trillion dollar zimbabwe note for only 5 bucks (us)!!! Guess I'm the big wheeler dealer around here...  <sarc>                     By the way, where's harry wanger these days?

Wed, 03/02/2011 - 10:27 | 1010970 Cash_is_Trash
Cash_is_Trash's picture

Ben shall monetize our problems away.

Like IceCap pointed out:

The con therefore is to keep short-term rates as close to zero as possible, while printing money to keep longer-term interest rates as low as possible.

We're in for a bushwhacking

Wed, 03/02/2011 - 10:28 | 1010975 Mad Max
Mad Max's picture

What does PIMCO put their money in if it's not US treasury bonds or stocks?  It's not like you can get a meaningfully insured bank account for the figures they're dealing with.  Does this mean they'll be going into commodities?  Chinese bonds?  Farmland in third world countries?  Their assets don't exist unless they're parked in something.

Wed, 03/02/2011 - 10:38 | 1011008 kalum
kalum's picture

Like you, I NEED to know, Where, where where?

Wed, 03/02/2011 - 10:45 | 1011028 Mad Max
Mad Max's picture

After posting my first comment, I started wondering if this statement could just be a threat used in bargaining to get the Fed to raise interest rates to a level at which PIMCO wants to buy, with the possibility of triggering a debt crisis as the hammer.  Since I'm still puzzled at what other investments could make sense with PIMCO's asset base and focus, this is what I'm leaning toward.  Any other market that PIMCO goes into will be distorted and driven up by the size of the funds involved.  Although most of us commenters would make out well if they decided to pull out of FRNs and go into gold/silver - which would probably make Zimbabwe's currency collapse look glacial in comparison to what that move would trigger for FRNs.

Wed, 03/02/2011 - 11:26 | 1011192 SilverBaron
SilverBaron's picture

The ultimate asset.  Human capital. (slaves)

What would the going rate be?  50 cents an hour in China.

Wed, 03/02/2011 - 10:53 | 1011056 I am a Man I am...
I am a Man I am Forty's picture

lately mexico and brazilian bonds with more yield, among other places

Wed, 03/02/2011 - 14:07 | 1012017 Meme Iamfurst
Meme Iamfurst's picture

a few months back, Mr. Bill bought a Brazilian landfill dump size position of crap mortgages from the Fed at a discount to what the Fed paid ( gosh, what a surprise). 

The kicker here is that ol' Bill did it on margin as i read here on ZH, less than 25% down payment.  Now Bill had the assurance of 'those in the know' that these mortgages would be worth more than he 'paid' and generalte a much needed yield.   Annnnn, wrong answer, they are underwater and thus his leverage is in need of a Australian sized band-aid.  He ain't been happy with ol'Ben B ever since, and has been dishing Benny like a jilted girl friend.

Wed, 03/02/2011 - 10:29 | 1010978 spartan117
spartan117's picture

Pimco just issued a "sell" rating on everything.


Sell everything and convert to what?   Dollars?  Surely, you can't be serious.

Wed, 03/02/2011 - 10:35 | 1010999 Mad Max
Mad Max's picture

Even if they could convert it all into dollars - how?  Are you talking mountains of paper Federal Reserve Notes, bearing no interest and with theft risk?  Or an electronic entry in some bank?  Insuring one depositor for $250k is one thing, insuring one for $100B - c'mon, the only entity that could (maybe) do that is the US federal government, which they just declared is not their preferred credit risk.

As I noted above, I don't even see how they get out of the standard investments in light of the asset base they have.

Wed, 03/02/2011 - 10:36 | 1011003 SheepDog-One
SheepDog-One's picture

Convert to firearms, ammo, and food stockpiles, or die. And dont call me Shirley.

Wed, 03/02/2011 - 10:50 | 1011046 Cash_is_Trash
Cash_is_Trash's picture

R.I.P. Leslie Nielsen

Wed, 03/02/2011 - 10:51 | 1011048 ivana
ivana's picture

USD could be one of scenarios before whole ponzi collapses. Interest rates aprox 15% and USD high high much higher than today... wouldn't you buy?

And how to get worthless USD so high? Just ask "utility magicians"...

Wed, 03/02/2011 - 10:53 | 1011054 spartan117
spartan117's picture

Interest rates at 15% would mean 100% of the Treasury's revenue would be diverted to paying interest on existing debt.  That's armageddon for the USA.

I wouldn't take USD if it were given to me at that point.

Wed, 03/02/2011 - 11:13 | 1011124 ivana
ivana's picture

How about bond buy back from "friendly bond buyers"? So there's general lack of USD liquidity, generaly repatriation, oil very high etc etc ... fin armageddon generaly.

And satan still has power to print and he still have "friends" who need USD cash - so buy back for 20% of original debt?

+ under desk favors for "friends"

Wed, 03/02/2011 - 12:29 | 1011486 John Wilmot
John Wilmot's picture

Exactly right. The Fed has but two choices: monetize treasuries ad infinitum and stoke hyperinflation, or stop monetizing treasuries, allow Treasury to default, and then experience hyperinflation as the dollars abroad repatriate and the ones at home are dumped by everyone en masse.

Even if Congress balanced the budget, there's still a tremendous amount of old debt to roll over all the time, and in order to fund that through real investment, rates would have to rise so much that I think they'd find themselves right back where they started, with massive deficits and Fed funding. And it is clear that the IMF/World Bank and BRICS are actively preparing for a post-dollar international monetary system - game's over. King Dollar's at the flee Paris stage, soon to be hauled back, placed under house arrest, tried, and guillotined. Then comes the Terror...and later, the new consul-for-life.

Wed, 03/02/2011 - 11:03 | 1011092 bs
bs's picture

Sure I can... And don't call me Shirley!

Wed, 03/02/2011 - 11:06 | 1011106 potatomafia
potatomafia's picture

If this does not indicate a treasury bubble, i dont know what does.  The debt market is so large people cant even fathom what to do without it!  and its a good point.  They will have to get into things, assets.. 


The treasury market is the only thing preventing hyperinflation, no? 

Wed, 03/02/2011 - 12:41 | 1011552 MsCreant
MsCreant's picture

And money locked up in the derrivatives market?

Wed, 03/02/2011 - 13:34 | 1011813 potatomafia
potatomafia's picture

I dont know much about that, other than it is huge.. 


Are you saying that the derrivatives market could absorb the money leaving treasuries?  or are you saying that the money would not only flow out of treasuries, but also out of the dirrivatives market?


I think you are implying that it would also flow out, and increase prices even further..

Wed, 03/02/2011 - 14:55 | 1012200 MsCreant
MsCreant's picture

Money locked in the derrivatives market may also be preventing hyperinflation. I may be wrong though. If they blow up, that is a deflation bomb (can the default insurance really pay off if the margin call from hell rings across the globe? NO!). But it is "value" that is parked. I am no expert, but my brain, like yours, likes to play here on this site.

Your supposition was a creative one.

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