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Blatant Treasury Churn At The Fed: Entire POMO Consists Of Just Auctioned Off 3 Year As FRBNY Launches "Flip That Bond" Program

Tyler Durden's picture


Ok this is it. Someone (preferably of the less than multi-millionaire Wall Street marionette variety) in Congress has to look into the blatant bond churn-cum-flip (that was happening behind the scenes a few months ago and is now so blatantly in your face it is a slap to all US taxpayers) which has the Fed paying Primary Dealers billions in commissions for a trade that has absolutely no value added. And while we have been complaining about this for months, today just takes the cake. Below we present the entire list of permitted issues to be monetized by Frosty-Sack. Note that there were 29 CUSIP eligible for buybacks. What happened - the Primary Dealers flipped virtually the entire operation in the form of the just auctioned off 3 Year PQ7! This is half the entire Primary Dealer allocation in the bond auction that was completed on January 11 (whose technical original issue date was yesterday). One more 3 Year POMO, the next of which is on January 31, in which PDs flip a like amount, and the Fed will have monetized the entire auction, but in the process having paid at least a few hundred million of taxpayer capital to the PDs for absolutely no value added! This is a daylight robbery and has to stop.



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Wed, 01/19/2011 - 12:22 | 887167 plocequ1
plocequ1's picture

Now what?

Wed, 01/19/2011 - 12:33 | 887212 IBelieveInMagic
IBelieveInMagic's picture

Me thinks it is a message to Mr. Hu, now that he is in town -- we can monetize our debt at our whim and devalue your reserves...

Wed, 01/19/2011 - 12:37 | 887231 Rodent Freikorps
Rodent Freikorps's picture

Has Obama bent over at the waist for him yet?

Wed, 01/19/2011 - 13:11 | 887386 Drag Racer
Drag Racer's picture

now would that 'bent over' be facing him or turned away??

Wed, 01/19/2011 - 13:50 | 887536 Camtender
Wed, 01/19/2011 - 14:02 | 887573 SheepDog-One
SheepDog-One's picture

OH sure IBelieve, we're really flexin our muscles at Mr Hu, what are you dreaming?

Wed, 01/19/2011 - 12:42 | 887250 TruthInSunshine
TruthInSunshine's picture

Paging Ron Paul. Paging Ron Paul.

Dr. Paul, you promised your supporters you were going to do something about this. We're anxiously awaiting, and we're expecting you to follow through.


Wed, 01/19/2011 - 12:53 | 887296 SpeakerFTD
SpeakerFTD's picture

+ Today's POMO

Wed, 01/19/2011 - 13:25 | 887457 Commander Cody
Commander Cody's picture

If Ron Paul does not address this blatant theft immediately, then he is as big a POS as the rest of the bunch in DC.

Wed, 01/19/2011 - 14:02 | 887579 SheepDog-One
SheepDog-One's picture

Indeed...we've heard the speeches and the promises....we're waiting....

Wed, 01/19/2011 - 14:48 | 887733 flattrader
flattrader's picture

Ron Paul will do some grandstanding in the form of stand-up interviews and possibly some hearings.  That's about it.

He has no sizeable constituency outside of his district.  That's why he didn't follow through on his presidential bid.

He has no sizeable constituency of friends inside Congress either.

He's a lot like Dennis Kucinich.

They are opposite side of the same coin.

Wed, 01/19/2011 - 12:22 | 887168 Ragnarok
Wed, 01/19/2011 - 14:41 | 887709 Canucklehead
Canucklehead's picture

Thanks for the link.  I couldn't find any information on the size of the transaction.  It must be small as you would think they would attach a number to bolster the impact of this "news".

Wed, 01/19/2011 - 12:23 | 887170 JW n FL
JW n FL's picture

"the Fed will have monetized the entire auction, but in the process having paid at least a few hundred million of taxpayer capital to the PDs for absolutely no value added! This is a daylight robbery and has to stop."


Never, it makes to much money...

Wed, 01/19/2011 - 12:31 | 887185 hedgeless_horseman
hedgeless_horseman's picture

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

We the People of the United States of America are complicit, through our inaction, in the destruction of this nation our forefathers worked so hard to create.  Blindness, shame and slavery is our way, unless we find a way to rekindle the spirit of Jefferson and others like him.

Wed, 01/19/2011 - 12:33 | 887214 jus_lite_reading
jus_lite_reading's picture

+14 Trillion Dollars


As I said, only God can save us now from self-destruction

Wed, 01/19/2011 - 12:38 | 887237 JW n FL
JW n FL's picture

1st go sit at the kids table until you get a clue...

2nd $14T as the new or old debt ceiling? you mean $17T?

3rd... Wiki Leaks... the Evil Julian... has in his possesion $20T worth of docs, ish...

There is no 4.. do the math..

$20T minus $17T ='s $3T... so one years worth of pretend and extend for us.

Wed, 01/19/2011 - 12:51 | 887290 jus_lite_reading
jus_lite_reading's picture

Why the attack? I gave him +14 trillion points on jest of US debt. It will be raised to $20T soon. There is no more pretend extend

Wed, 01/19/2011 - 12:58 | 887323 JW n FL
JW n FL's picture

sorry, I am an angry person.

Wed, 01/19/2011 - 13:32 | 887476 Rodent Freikorps
Rodent Freikorps's picture

Do you need a hug?

Wed, 01/19/2011 - 13:40 | 887499 JW n FL
JW n FL's picture

I want a G6, some hookers and a 0% FED Window or I will jump!

Thanks bro, i needed a laugh! be well...

Wed, 01/19/2011 - 13:57 | 887559 JohnG
JohnG's picture

Don't forget the blow.

Wed, 01/19/2011 - 14:00 | 887567 JW n FL
JW n FL's picture

thats why I need the plane... I dont want the cut stuff thats here.

Wed, 01/19/2011 - 13:43 | 887505 JW n FL
JW n FL's picture

instead of the gulf can i swap for a falcon? i really need the head room?

Thu, 01/20/2011 - 08:31 | 889499 blindfaith
blindfaith's picture

jus_lite_reading says " As I said, only God can save us now from self-destruction".

That reminds me of the story about the guy sitting on the roof of his house during a flood waiting to be rescued by God.  He shoos off the guy in the rowboat, he shoos off the helicopter, and he pushed away the tree limb floating by, proclaiming God will save him.  After his death, he asks God why didn't he save him, and God naturally ass, I sent a boat, a helicopter, and a tree limb, what more did you want?

Go save you own ass, God is to busy trying to figure out what to do to save the fish.  Get out of your nice warm house and get into the streets.


U know.. all these folks who think some God or other is going to save them, needs to keep watching Fox, CNBC, and listening to Sara and the neo right for guidance.  Everyone is going to cry like babies with the I wish I hada, I guess I shoulda crap.

Wed, 01/19/2011 - 12:35 | 887222 JW n FL
JW n FL's picture

The Problem, "THE" problem... is, "Us" v. "Them".

You and I were fine with looking down upon the ants as they scurried about? No?

Now those same fucking ants will destroy us all... and its not "Them" or someone else's fault, it is our fault... for not educating them.

WE WANTED US v. THEM! we were so happy... in our Grander'.

We deserve what we are getting, they dont deserve what they are getting becuase they are ignorant.

Wed, 01/19/2011 - 13:14 | 887406 hbjork1
hbjork1's picture

Aw, JW, you worry too much.  What I want to know is; "Who is goiing to win the Superbowl?"  Forget this trival stuff. 

Wed, 01/19/2011 - 13:44 | 887512 JW n FL
JW n FL's picture

cheerleaders! raaa raaaa his boom baaaaaaaaaaaaaaaaaaaaaaa.

Wed, 01/19/2011 - 13:13 | 887400 lesterbegood
lesterbegood's picture

We the People of the Republic for the united States of America have rekindled the spirit of Thomas Jefferson, Benjamin Franklin, Geo. Washington, et al.

The spirit of liberty that resides within us all.

Rekindle that spirit.

By the People, for the People...with liberty and justice for all.


Wed, 01/19/2011 - 13:49 | 887532 JW n FL
JW n FL's picture

1. How much land did George Washington own... in then America... as a %.. 1% or 5% or 10% and so on...

2. what makes you think that you are really better off without the Matrix to support you in your ignorance?

3. what makes you think you could survive minus the FED's printing? you would stand and defend your rights, then? after the fall but not before? just asking???

Thanks for Playing!

Wed, 01/19/2011 - 13:51 | 887535 MachoMan
MachoMan's picture


Wed, 01/19/2011 - 13:54 | 887547 knukles
knukles's picture

original mortgage note

Wed, 01/19/2011 - 14:01 | 887572 JW n FL
JW n FL's picture

Wet Ink for ALL BITCHEZ!!! Get OFF! Your! LAZY FAT ASSES and DEMAND a COPY of your NOTE!!!! NOW!!!!!

Sun, 01/23/2011 - 02:30 | 896805 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

One more 3 Year POMO, the next of which is on January 31, in which PDs flip a like amount, and the Fed will have monetized the entire auction, but in the process having paid at least a few hundred million of taxpayer capital to the PDs for absolutely no value added! This is a daylight robbery and has to stop.

It wasn't taxpayer capital that was paid to the PDs.

It was thin-air FRNs given to the PDs by the Federal Reserve in exchange for Treasury debt.

Since the dollar and perhaps 50% of the U.S. population will be dead by Dec 2013 and Jan 2014, there is really no basis for calling it "taxpayer capital". It's just digital monopoly money exchanged for bubble gum wrappers, for no reason other than to keep the music going a little longer and to enrich the monopoly money men even further before it stops.

Is it sick? Twisted? "Criminal"? Blatant? Should it get everyone mad?


But is it taxpayer capital? No. Because it is debt due after the whole system will fall apart.

Half the country doesn't pay taxes anymore. It's a zombie nation, full of zombie people and zombie banks. And a zombie Treasury, funding a zombie government, and a zombie Federal Corporation with money that comes from "debt" that will not be paid back.

I chuckle when I see the phrase "taxpayer" money used in reference to medium-term and long-term Treasury debt.

On the other hand, even though I assert that the system is going to crash by the time the medium term becomes present, I don't know it like I have a crystal ball. Maybe they will figure out some sick way of preserving dollar-denominated debts after the coming crash so that the U.S. Federal Corporation will continue to exist and will continue to claim the right to collect the debt it promised it would collect from its citizens. In that case, taxpayer capital is currently being promised hand over fist in record levels to the bond holders. What a nightmare, if that is the case.

Wed, 01/19/2011 - 12:23 | 887171 Hephasteus
Hephasteus's picture

Ordinary Citizen Meeting. Ya I noticed those poor suckers at the fed were watching a new show. Flip that bond. Something along the lines of putting a new coat of gold on their tungsten bars and giving themselves a bank loan. [ Laughter ]

Wed, 01/19/2011 - 12:40 | 887242 JW n FL
JW n FL's picture

right in front of God and everyone.. with people standing around... watching, too no avail.

Wed, 01/19/2011 - 13:39 | 887497 Cleanclog
Cleanclog's picture

Have to give more free earnings to JPM and GS as their avg. employee compensation in only $200+K and $300+K.  Poor widdle bankers.  Can't have that.  Find way to pour more money into their deserving coffers.

It is sooooooooooooooooo disgusting.  The distain grows and grows until it pops.  The protests will come.

Wed, 01/19/2011 - 12:24 | 887175 Bruno the Bear
Bruno the Bear's picture

Kind of sucks being me and not a PD in terms of commissions.  What I am really hoping for is Bernacke sitting in front of Ron Paul's committee explaining all this BS.


Hope springs eternal and all of that.....

Wed, 01/19/2011 - 12:24 | 887177 thepigman
thepigman's picture

Bernank ripping off taxpayers to feed

the banksters. Ain't this country great?

Wed, 01/19/2011 - 12:27 | 887190 thepigman
thepigman's picture

Wouldn't entirely surprise me if

the fed's 29 year old traders are treated

to occasional dinner and fine wine by the PDs.

Wed, 01/19/2011 - 12:34 | 887218 Dr. Richard Head
Dr. Richard Head's picture

Robbery schmobbery.  You think anyone, besides the tens of thousands of readers here, in a position of authority will stop this gravy train for the cronies of the Fed?  Shit, I have posted as much of this information on my Facebook page as I can to wake up the few I know, but feedback has been that the posts suck.  I guess telling others that someone is picking their wallet is garbage and I shouldn't do it.  Fuck em.  Hope any fucks who believe in the power of the free market get bled to wealth death.  

Wed, 01/19/2011 - 13:47 | 887525 Commander Cody
Commander Cody's picture

Many people do not want the illusion to end.  They may suspect something's up, but don't really want to know the truth.

Wed, 01/19/2011 - 13:56 | 887556 knukles
knukles's picture

Post sucks...

We want Snooki
We want Snooki
We want Snooki

Wed, 01/19/2011 - 12:35 | 887223 jus_lite_reading
jus_lite_reading's picture

TD says this has to stop but indeed, everyday it is worsening.

Wed, 01/19/2011 - 13:30 | 887470 lesterbegood
lesterbegood's picture

Morpheous: "You were born a slave, Neo."

The Federal Reserve owns every man, woman, and child born in this country.

Don't believe me?

Research "birth certificate bonds" if you dare, and open your eyes.

The Federal Reserve owns all private land in America.

If you "own" real estate, carefully read your deed of trust. You will find that you are listed as a "tenant with privileges of assignment", or words to that effect.

The key word being "tenant":

An individual who occupies or possesses land or premises by way of a grant of an estate of some type, such as in fee, for life, for years, or at will. A person who has the right to temporary use and possession of particular real property, which has been conveyed to that person by a landlord.

Wed, 01/19/2011 - 13:46 | 887520 MachoMan
MachoMan's picture

My deed doesn't say that.  Can you point me to the part on my one page deed where it says anything other than the grantor conveys and warrants good and merchantable title?  Am I missing something?

Wed, 01/19/2011 - 14:09 | 887596 Orly
Orly's picture

Were you born in Hawaii, too?


Thu, 01/20/2011 - 12:21 | 890097 MachoMan
MachoMan's picture

No, but I would definitely like to make a shit ton of money and retire to the north shore of kauai...

Wed, 01/19/2011 - 15:59 | 887924 cxl9
cxl9's picture

Bernank ripping off taxpayers to feed the banksters. Ain't this country great?

Yeah, but most of those taxpayers haven't been born yet. So, no harm done.

Wed, 01/19/2011 - 12:27 | 887184 The Limerick King
The Limerick King's picture

The Bernank is robbing us blind

Handing money to banks in a bind

If you're gonna screw us

The least you could do us

Is give Main street a small reach behind.


Wed, 01/19/2011 - 12:29 | 887200 lunaticfringe
lunaticfringe's picture

Well done I said to the King,

Just stand behind me and pull on this thing.

Wed, 01/19/2011 - 12:28 | 887194 lunaticfringe
lunaticfringe's picture

Daylight robbery has to Tyler please. Just who the fuck is going to stop them? You? Me? Someone with a conscience? These mf'ers don't have conscience'. It's a big club and you ain't in it.

Wed, 01/19/2011 - 12:38 | 887207 plocequ1
plocequ1's picture

Exactly. Just live your life and find God. Theres not much we can do . Look on the bright side. There is no Fed or  money in paradise. In the mean time, Buy the fucking dips

Wed, 01/19/2011 - 12:50 | 887283 MachoMan
MachoMan's picture

And we wonder how religion got coined the opiate of the masses...

Wed, 01/19/2011 - 12:53 | 887298 DaveyJones
DaveyJones's picture

religion and cnbc

Wed, 01/19/2011 - 12:28 | 887197 sunnyside
sunnyside's picture

All jokes aside, what would  be the best way to word a short statement and question to a congressman asking them why this is going on?


Wed, 01/19/2011 - 12:33 | 887213 lunaticfringe
lunaticfringe's picture

They don't fucking care sunnyside. They are too self absorbed with their own selfish needs. This ain't public servive dude. Get that out of your head. The house and the senate are simply career paths for these people to line their own pockets. They don't care about doing the right thing.Fact is, they don't even know what the hell that is.

Wed, 01/19/2011 - 12:42 | 887215 hedgeless_horseman
hedgeless_horseman's picture

That is easy.  Getting an honest answer, and having him or her take real action, is the problem.  Why?  Because everyone is for sale. 

Everyone gets long, and nobody gets hurt.  Right, Cramer?

Wed, 01/19/2011 - 12:34 | 887217 Paul Bogdanich
Paul Bogdanich's picture

The congressmen and senators are incapable of understanding the problem.  Further none of them will take on the banks after the Daley appointment. 

Wed, 01/19/2011 - 13:13 | 887402 Terminus C
Terminus C's picture

+Upton Sinclair

Wed, 01/19/2011 - 12:36 | 887227 fellatio is not...
fellatio is not fattening's picture

Chairman Bernanke, please explain to me the benefit to the country in Selling $3b in bonds to yourself and paying someone else a commission to accomplish this?

Wed, 01/19/2011 - 12:48 | 887275 The Profit Prophet
The Profit Prophet's picture

Is serves three grand purposes.  The PDs bid the auction which serves to lower the bond rate, and then they immediately sell this soon to be toilet paper back to the FED for a few hundred million in free capital. They then use this new found taxpayer capital to bid-up equities.

1) Lower bond rates by "bogus" PD bids.

2) Recapitalize bankrupt banks through POMO commissions

3) Banks use new capital to bid-up equities

Brilliant in its sheer simplicity, however corrupt and misguided it may be.

T.E.I.N. everyone!

Wed, 01/19/2011 - 12:58 | 887319 Wynn
Wynn's picture

Plus, for the Fed to be the outright buyer is illegal. But to buy from from the PD's in only immoral. Apparently, they can live with that.

Wed, 01/19/2011 - 15:01 | 887769 RockyRacoon
RockyRacoon's picture


...for absolutely no value added!

is wrong.

The value is being able to skirt the law.   Hey, that's value!

The Fed can blame the whole thing on the PDs.  

Plausible deniability has become a tradable asset.

Wed, 01/19/2011 - 12:56 | 887310 MachoMan
MachoMan's picture

is this statement in letter form or made at gunpoint?  We need you to elaborate the context.

Wed, 01/19/2011 - 12:30 | 887201 DaveyJones
DaveyJones's picture

when exactly do these people go to jail?

Wed, 01/19/2011 - 12:32 | 887204 thepigman
thepigman's picture

Never. They're saving the world on

your children's tab.

Wed, 01/19/2011 - 12:33 | 887211 101 years and c...
101 years and counting's picture

when someone with a spine is, never.

Wed, 01/19/2011 - 12:45 | 887261 DaveyJones
DaveyJones's picture

exactly, our entire democracy is run by criminals now. It will take an uprising. The longer it takes, the more people will starve. That's a sick statement..but so was this article.   

Wed, 01/19/2011 - 13:03 | 887345 earnyermoney
earnyermoney's picture

We're not a democracy. We're a fascist state masquerading as a democracy.

Wed, 01/19/2011 - 12:51 | 887288 tmosley
tmosley's picture

Don't worry.  The jail will come to them, in time.  More than likely, they will wind up buried underneath it.

Wed, 01/19/2011 - 12:32 | 887206 Rodent Freikorps
Rodent Freikorps's picture

The very idea of freedom presupposes some objective moral law which overarches rulers and ruled alike. Subjectivism about values is eternally incompatible with democracy. We and our rulers are of one kind only so long as we are subject to one law. But if there is no Law of Nature, the ethos of any society is the creation of its rulers, educators and conditioners; and every creator stands above and outside his own creation.[C.S. Lewis]

Wed, 01/19/2011 - 12:44 | 887258 Apply Force
Apply Force's picture

The Laws of Man lord over the Laws of Nature only by man's consent.

I relinquish such consent and will glady meet any banker/politician/etc/etc who wishes to include me in their games in any open field or dimmly lit alley to "discuss"...

Wed, 01/19/2011 - 12:54 | 887301 Rodent Freikorps
Rodent Freikorps's picture

If only the Code Duello still held sway.

Wed, 01/19/2011 - 12:32 | 887209 Paul Bogdanich
Paul Bogdanich's picture

Now that Bill Daley is the new President and his old firm is the primary beneficiary of the theft what are you going to do call ghostbusters?  The only way the American idiots are ever going to take an interest in what is happening is after the system fails.  As long as they can hold together the semblance of normalcy the propaganda system will keep the population pacified.  Here America, here's American Gladiators.  Watch this.

Wed, 01/19/2011 - 13:16 | 887412 topcallingtroll
topcallingtroll's picture

ghost busters is just a silly superstition. St vincent will solve everything. This is all part of His plan. Get drunk tonight in honor of st. Vincent but do not blog drunk. The evil midget demon GG caught st vincent in a moment of weakness and made him blog.stupid shit.

Wed, 01/19/2011 - 12:38 | 887233 NotApplicable
NotApplicable's picture

Paging Dr. Paul!

Wed, 01/19/2011 - 12:38 | 887234 RobotTrader
RobotTrader's picture

Like I said.

There is no limit to how much crap the Fed can buy.

And no limit to the size of its balance sheet.

Nobody will ever audit the Fed.


Alpha Dog PigMen and Washington Plutocrats remain in total control.

It is the same old "Wash, Rinse, Repeat" cycle again and again.

Wed, 01/19/2011 - 12:42 | 887251 JW n FL
JW n FL's picture

no one wants to say it or read it so they junk you... like you are inside the beltway with your own hand up Ben's ass making him speak...

God Bless You and Yours Robo!

Wed, 01/19/2011 - 13:11 | 887389 topcallingtroll
topcallingtroll's picture

You can call market tops by robos junk quantity. When the junkers capitulate i will short the motherfucker out of the spx.

Wed, 01/19/2011 - 12:44 | 887260 thepigman
thepigman's picture

True dat. This ain't the half of it.

All those crappy $1.5TR MBS the bernanke

bought are guaranteed by Fannie

and Freddie. Take a wild guess who's

backstopping them. Hint: Look in the


Wed, 01/19/2011 - 12:45 | 887264 TheGreatPonzi
TheGreatPonzi's picture

I agree, and this is sad, however I don't see why you prefer stocks to gold, considering that gold outperformed stocks in 2010.

Wed, 01/19/2011 - 13:03 | 887349 lieutenantjohnchard
lieutenantjohnchard's picture

hey, catfish mouth. last week you mocked the bears with your zlc post even as you have only (your words) 30% of your money invested. now you're mocking the bulls which rely on pomo and money printing to sustain the ponzi. what's next?: mock the neutrals?

btw: if there's "no limit to how much crap the fed can buy" what should an investor do to preserve their purchasing power? don't reply gold, silver and pm's etc ... since you never seem to let a day pass without mocking them, too.

Wed, 01/19/2011 - 14:07 | 887590 SheepDog-One
SheepDog-One's picture

Like I said...fuck off and die RainbowTrader.

Wed, 01/19/2011 - 14:15 | 887615 Orly
Orly's picture

I'm with JW.  Keep calling it as you sees it.


Wed, 01/19/2011 - 15:04 | 887775 RockyRacoon
RockyRacoon's picture

Of course.   Contrary indicators have great value in this type of market.

Wed, 01/19/2011 - 15:15 | 887807 faustian bargain
faustian bargain's picture

There is no limit to how much crap the Fed can buy.

And no limit to the size of its balance sheet.

They hope.

Wed, 01/19/2011 - 12:40 | 887243 mark mchugh
mark mchugh's picture

The profit on the Treasuries is only half the story.

The other half is that the Fed gave the money to PD's to buy them in the first place.  The PDs are more insolvent than America itself.....for now.

These 18 companies have more than 7.5 TRILLION in Debt vs. the US National debt at $14 Trillion. 

Simply stated, the US has what can only be described as a fraud-based economy.

Wed, 01/19/2011 - 12:50 | 887278 DaveyJones
DaveyJones's picture

both sides need each other badly. They're really one and the same thing now, simply moving money around to give the illusion of an economy and in doing so, raping and destroying whatever is left of the real one.  

Wed, 01/19/2011 - 12:55 | 887303 lunaticfringe
lunaticfringe's picture


Wed, 01/19/2011 - 12:41 | 887245 lunaticfringe
lunaticfringe's picture

I like that Tyler does not devolve this blog into politics. I published a blog about restorative justice in this country. It is in fact, why we cannot get healthy until someone with some balls demands the heads of fraudulent bankers.

Wed, 01/19/2011 - 12:56 | 887313 topcallingtroll
topcallingtroll's picture

Calling all trannies. I have seen.some humongous balls on those.chics.

Wed, 01/19/2011 - 12:42 | 887252 DB Cooper
DB Cooper's picture

I would say this is the perfect definition of Treason!

Wed, 01/19/2011 - 12:44 | 887254 Cdad
Cdad's picture

It has to stop, indeed.

And the proceeds from the flip of these soon to be worthless bonds are turned and poured into L. Blankfein Wildest Dreams Park [oil futures] as another nail is driven into the coffin of this once great nation...and all to preserve the power, wealth, and status of an elite scum bag banking cartel and a bunch of idiot Federal level politicians.

So step right up, Average Joe, while bankers f you over at the pump, on your broken mortgage paper, and in your physical silver.  And on it goes for another day during which Mary Shapiro chats with the likes of L. Blankfein and J. Dimon and such about laws she should just go ahead and forget about, and as flash crashes persist everywhere right in the plain sight of Average Joe, who is scratching his head and wondering just how he is supposed to believe in anything anymore, or at least in anything here in America, as another day passes while Ben Bernanke devalues American dollars so that bankers have enough cash to pull off all of these crimes.


Wed, 01/19/2011 - 12:46 | 887269 thepigman
thepigman's picture


Wed, 01/19/2011 - 14:09 | 887599 SheepDog-One
SheepDog-One's picture

They cant do anything about famine sweeping the world thanks to Bernanke, today the mobs are hanging cops dressed in civilian clothes in Tunisia, its only a matter of a short bit of time before its here no matter what the likes of RainbowTrader think about the teflon nature of flipping bullshit bonds to themselves for endless 'profits' its all bullshit and will soon crash down.

Wed, 01/19/2011 - 12:44 | 887256 knukles
knukles's picture

Oh come on. Pretty soon there ain't gonna be nothing left outstanding except the most recently auctioned issue.

When congressmen quit taking fat envelopes, when the migration through the revolving door from gubalint to da street quits, that's when the PD'll get cut out of this totally unnecessary enrichment at taxpayer expense.

Theft.  Pure, clean and simple goober-mentally sanctioned theft.

Wed, 01/19/2011 - 12:44 | 887259 tomp1
tomp1's picture

Question: What price did the PD sell the security to the Fed at this a.m. And if possible what price did the PD get awarded the security when the bought it at auction last week. A quick look at a generic chart seems to indicate prices are about where they were on the 11th. That would give an idea of the gross profit. I would like to know how the commissions get paid - I assume it's by a wide bid offer but would like to know more - in order to try and get more formal - in terms of trying to right any wrongs.

Wed, 01/19/2011 - 12:47 | 887271 Robslob
Robslob's picture


Are you the squids defense attorney or what?

Wed, 01/19/2011 - 12:48 | 887277 No Mas
No Mas's picture

"This is a daylight robbery and has to stop."

No, it doesn't HAVE to stop.  The voting public is quite content with the PTB or they wouldn't be the PTB.

This is another outrage posted here to keep the ZH sheeple foaming at the mouth but, in the end, will result in nothing but more venting.

You are powerless ZH sheeple, to change anything.  I believe the brillance of Tyler's business model is making you, the ZH sheeple, believe that you are in the know and can somehow affect change.

Tyler makes marginal individuals feel knowledgeable and powerful, when in the end, they are niether.

Brillant Tyler.  Like Barnum before you, you play the ignorant masses like a fine violin.  I hope you make many more millions on your idea.

Wed, 01/19/2011 - 12:52 | 887292 lunaticfringe
lunaticfringe's picture

Awww, c'mon No Mas. Give us sheeple some credit. We don't need anyone preaching to us from the high ground as though they are vastly superior to us low brow and ignorant types. If I need a policeman, I'll call ya.

Wed, 01/19/2011 - 12:53 | 887295 topcallingtroll
topcallingtroll's picture

I am sure the president of tunisia thought the same way you do. Surprise!

Wed, 01/19/2011 - 12:55 | 887307 SilverRhino
SilverRhino's picture

>> No, it doesn't HAVE to stop.  The voting public is quite content with the PTB or they wouldn't be the PTB.

The shitty part is you are entirely correct.   Now it just boils down to what nation to escape to.   Only one problem, there is no more land of opportunity and real freedom.


Wed, 01/19/2011 - 13:04 | 887352 topcallingtroll
topcallingtroll's picture

The public is always happy with tptb until they are not.

Wed, 01/19/2011 - 13:06 | 887363 The Profit Prophet
The Profit Prophet's picture

Perhaps the most ridiculous series of statements I've ever read.  So in summation, your general opinion is that it's better to be ignorant than to be informed???!!! 

You're an idiot! 

T.E.I.N. everyone!

Wed, 01/19/2011 - 17:41 | 888374 The Fonz
The Fonz's picture

Powerless? Odd.. for the first time in my life I understand what is happening in the world that has stripped me of my prosperity and prospects. I understand that it has happened many times before in human history and I understand how to prosper from it, in large part due to the work of this site.  I saved large amounts of silver and have focused and sacrificed as a result of that understanding. Through the work of this site and others like it I am gaining a future and the knowledge to not be fooled by the work of liars all around me. I don't see them possessing much power greater than the ability to keep me fooled, and that ability is failing them quickly.

You seem like a fool to me No Mas. Capable of understanding the existing mechanics of our system but without the foresight to see that the fundamental change lies in the future from a massive increase in the quality of knowledge disseminated at a very low cost at very high speed. For instance I began studying 16 hours a day when I became homeless and moved into a van on the side of a public street. I did this for the cost of a cash internet connection and a small netbook. If you don't understand that as the end of the status quo you might be missing something important. 

Wed, 01/19/2011 - 12:50 | 887285 topcallingtroll
topcallingtroll's picture

I saw ron pauls last interview. He has sold out now. It is time for the pitchforks or whatever modern equivalent you choose. Motrin and a heating pad work fairly well for pitchfork elbow but it only truly heals with time and rest.

Wed, 01/19/2011 - 12:53 | 887299 lunaticfringe
lunaticfringe's picture

got a link?

Wed, 01/19/2011 - 13:00 | 887327 topcallingtroll
topcallingtroll's picture

Its the interview with both him and his son. The father says there wont be any major shifts in policy and people should vote to lift the debt limit. Sorry no known link. It was on the boob tube.

Wed, 01/19/2011 - 13:10 | 887383 earnyermoney
earnyermoney's picture

the Paul's are 2 of 535 congressional representatives. Those 2 are in the minority. How is stating reality selling out?

Wed, 01/19/2011 - 13:44 | 887509 Drag Racer
Wed, 01/19/2011 - 12:51 | 887287 billwilson
billwilson's picture

Can someone educate me on fees/commissions on a hypothetical $1 million bond.

How much does the Treasury pay in fees when it issues bond?

How much does the Fed pay in fees when it buys?

Wed, 01/19/2011 - 12:57 | 887311 vortex
vortex's picture

Regardless of ignorant post talking about sheeple thinking they gonna change the world... I read ZH not for the impression of being change but for the fun...

Best quote of the year so far:


"what are you going to do call ghostbusters?"

Good Job Paul Bogdanich !!!!


Wed, 01/19/2011 - 13:02 | 887342 topcallingtroll
topcallingtroll's picture

I have faith that St. Vincent McCrudden will eventually set things right. Believing in ghost busters is just a silly superstition.

Wed, 01/19/2011 - 13:03 | 887347 max2205
max2205's picture


Wed, 01/19/2011 - 13:11 | 887390 Tyler Durden
Tyler Durden's picture

We want to thank our friends across the pond for spreading this discovery:

Wed, 01/19/2011 - 14:01 | 887571 baserunr
baserunr's picture

Please tell me you have at least e-mailed this info to Rep. Paul's office?

Wed, 01/19/2011 - 13:19 | 887434 terranstyler
terranstyler's picture

You have controlled your fear. Now, release your anger. Only your hatred can destroy them! :)

Wed, 01/19/2011 - 14:14 | 887606 Hephasteus
Hephasteus's picture

We will open the gates of our hatred and call forth the suns magnetic portals.

And not EVEN the mighty MORMANS will save them from our wrath.

They have no idea that we are now thinking with portals.


Wed, 01/19/2011 - 13:55 | 887552 tomp1
tomp1's picture

To robo slob

No, just trying to get the facts - I would love to put and end to

improper activities. I am of the mind that there is an abundance of corruption where it is allowed to fester. By bringing things out into the light as this blog certainly attempts to do is very much appreciated by me, you can believe that.

Wed, 01/19/2011 - 13:59 | 887565 davepowers
davepowers's picture

Where does the Fed get the money to buy the US treasuries?

The popular notion is 'printing,' but nobody describes how the printing occurs.

The liability side of the Fed's balance sheet shows where they get the money and in 2010 they got the money for the US treasury purchases by borrowing it from the US treasury. Who sold treasury paper to raise the money.

In 2010 (jan 6 yr to yr) the asset side of the Fed's BS grew by $194 billion, due to $200 billion plus of US treasury note/bond purchases.

This was matched on the liability side by an exact $194 billion of borrowing under something called the US treasury Supplemental Financing Account - money loaned to the FED (hence a liability of the FED) from the US Treasury who sold treasury paper to raise the money.

Wed, 01/19/2011 - 14:24 | 887634 TruthInSunshine
TruthInSunshine's picture

While The Federal Reserve doesn't physically print money themselves, they do issue credit to member banks, which allows those banks access to funds to loan or otherwise utilize in accordance with regulations.

It's a digital transaction, in a digital world, where the Fed necessarily ensures the amount is recorded on both the debit and  credit sides of its ledger. Presto, change-o, newly digital dollars that member bank can access.

One of the biggest financial lies of the century was when Bernanke told Scott Pelley of '60 Minutes' that the Federal Reserve was not printing money.

That statement was only true from such an incredibly fringe and technical standpoint that it, if nothing else Bernanke had lied about before it (and there has been quite a bit, but I digress), should have vaporized any and all remaining tatters or shreds of an atom or quark of credibility Bernanke still may have had.

It is sad to see what journalism, and American journalism, in particular, had devolved into. Scott Pelley's incompetent, uneducated, unprepared questioning of Bernanke was a crime against journalism, and yet another in a long and pernicious, permanent stain on the media.

Wed, 01/19/2011 - 16:03 | 887930 RockyRacoon
RockyRacoon's picture

Pelley interviews The Bernank -- Hannity interviews Palin.  Same, same.

Wed, 01/19/2011 - 16:53 | 888120 davepowers
davepowers's picture

not clear on what you mean.

1. re 'issuing credit to member banks' - that would show up as an asset on the FED bs, but on balance over 2010, the various lending to bank programs declined, so no printing there.

2. re 'digital transactions where Fed records the amount on both sides of its ledger.  This was true for most of QE 1 where the FED was buying MBS from the banks (increase assets on FED's bs) and paying for that by simply increasing the amount of reserves held by the banks at the FED (increase liability on FED bs). But was this any more than polishing the banks' own BS (thereby allowing them to sell stock and otherwise 'raise capital')? But the reserves just sat there... so how did that amount to printing? 

3. Now, with QE 2 we only have a daisy chain (at least for 2010) where the Treasury sells paper,  loans money to the FED who bought Treasury paper with it (perhaps it should be called a circle jerk). Where is the printing in that?

My view is that the printing press is fractional reserve lending conducted by the private banks - but that printing press is broken due to lack of creditworthy borrowers who want to borrow.

What the FED is doing (at least on its balance sheet) is not printing. Not via QE 1 or 2, notwithstanding most people's assumption that it is.

Where, again, is the printing if the FED is not, on balance, drastically increasing loans to the banks, the banks are not engaging in lending from paper reserves at the FED and QE 1/2 are simply electron shuffling?

Wed, 01/19/2011 - 17:38 | 888355 Tyler Durden
Tyler Durden's picture

The Fed IS Starting to print, even by your somewhat pedantic definition. The differential between excess reserves and incremental QE2 purchases is now about $150 billion.

Wed, 01/19/2011 - 19:01 | 888665 davepowers
davepowers's picture

call it pedantic, but you do look at the liability side of the balance sheet don't you?

That's where some significant bodies are buried.

What you call the difference between excess reserves and incremental QE2 purchases was covered by the US Treasury, Supplemental Financing Account - a loan from US Treasury to FED of $194 billion in 2010. 

Instead of being so committed to the 'printing' notion, maybe this circular money flow (Treasury sells bonds, loans money to Fed, who buys Treasuries) might actually be worse than 'printing.' 

Think about it.


Wed, 01/19/2011 - 18:09 | 888471 TruthInSunshine
TruthInSunshine's picture

In addition to what TD cites, see the following regarding whether the Fed is or isn't printing money, Ben 'cross my heart' Bernanke's word notwithstanding (excellent explanations cited by The Christian Science Monitor - a publication with an outstanding journalistic reputation across the world):


QE2 101: How the Federal Reserve managed to print money

Welcome to the Fed's Magic Kingdom!

Wed, 01/19/2011 - 19:14 | 888701 davepowers
davepowers's picture

I read it when it was posted, as I do all your Fed balance sheet analysis, which is very helpful.

That particular article had a great chart showing the big gap between reserve growth and Fed asset purchases. I'm just pointing out that this gap was filled by the 'circle jerk' of funds via the Supplementary Financing Account.

Your above reference to my 'pedantic' comment suggests you think the reference to the hitherto ignored SFA is supposed to let the FED 'off the hook' or to defend the central bank.

To the contrary, I suspect that the fact the FED is forced to engage in such a circle jerk is a sign of the FED's collapsing power.

Remember the Wizard of Oz. Everybody and his brother thought the Wizard was all powerful.

He was just a short, bald guy with a sound and light machine behind the curtain. I don't remember if he had a beard or not.

Wed, 01/19/2011 - 14:23 | 887644 centerline
centerline's picture

In this close?  A week?  Sure seems like the alligators are right on thier heels.  Or maybe this is on purpose for another reason.  An "in your face" demonstration maybe?

Wed, 01/19/2011 - 14:28 | 887659 ronin12
ronin12's picture

So this is basically another TARP on the "down-low"?

Wed, 01/19/2011 - 14:31 | 887669 michael.suede
michael.suede's picture

Brand this fraud with a name:


And before you get into the technicals of how this fraud is operated, lay it out in simple terms that a 10 year old can understand.

Wed, 01/19/2011 - 18:46 | 888619 DaveyJones
DaveyJones's picture

faster than lightning. No one you see is smarter than he

Wed, 01/19/2011 - 14:33 | 887678 count_zero
count_zero's picture

Come on guys, the PD's are just helping with price discovery. You can't expect the Fed to be able to acurately guess inflation so they can discount the bonds properly.

Wed, 01/19/2011 - 14:36 | 887694 TruthInSunshine
TruthInSunshine's picture

One does have to hand it to the Federal Reserve and all private central banks modeled on The London Central Bank; they do have the ultimate ponzi & scam in their toolbox to have ever been devised.

All you have to be able to do is create money from nothing, and then loan it to governments, forcing the taxpayers of the government to fork over interest, and as a juicy bonus, you get to crash the economy or stoke the economy at will, and accordingly, deflationary and inflationary cycles, thus being able to tip off your masters and allow them to pick up the cherries on the cheap.

Wed, 01/19/2011 - 14:41 | 887710 johny2
johny2's picture

" Flip That Bond " 

best thing I read today, thank you.

Wed, 01/19/2011 - 14:53 | 887754 michael.suede
michael.suede's picture

I need someone to confirm that my layman's assesment of this situation is correct:


I’m going to try and explain this fraud in simple terms:

Step one -Get a massive bank bailout from the Fed after speculating in real estate and having your loans defaulted on, while still getting to keep all the profits you reaped.

Step two -In the process of getting bailed out, have the Fed actually pay your bank to not make loans.

Step three -Take the money the Fed is paying you not to make loans and from the bailouts to purchase bonds from the US Treasury.

Step four -Sell those bonds right back to the Federal Reserve during one of their open market operations where they print money to buy bonds.

Step five -Take a nice cut of commission pie for yourself in the process.

So you see boys and girls, if you own a mega-bank, you can get the Fed to give you money to buy bonds at no cost and no risk to yourself, then you can have the Fed buy those bonds right back while making a nice fat commission for yourself.

Then once you get a nice fat piece of commission pie, you can then turn around and dump it right back into the stock market to speculate on equities – all while assured that should your speculations fail, the Fed will bail you out again.

Wed, 01/19/2011 - 21:51 | 888977 Buck Johnson
Buck Johnson's picture

Your spot on, spot on.  This is exactly what is happening and our economy has become a joke.

Wed, 01/19/2011 - 15:09 | 887794 flaunt
flaunt's picture

It's called "making a market."  lol

Wed, 01/19/2011 - 15:12 | 887801 Hephasteus
Hephasteus's picture

making a market

creating a lie

forming a fraud

All equal footing synonyms.

Wed, 01/19/2011 - 22:04 | 889028 honestann
honestann's picture

But "daylight robbery" is precisely the modus-operandi of government, right?

Nobody is going to stop this!  Everyone who COULD stop this is part of the "club of predators".

Only one choice remains for producers.  Either be a host to the predators and parasites... OR... totally withdraw from their system [to the extent possible].  Convert all forms of paper wealth (cash, savings account balances, stocks, bonds, etc) into real, physical goods (gold, silver, other durable commodities, farmland, seeds, productive equipment that you actually operate to produce real, physical [and fundamentally necessary or important] goods).  Unless "you just cannot", sell your real estate and rent/lease... to avoid suffering the ever-increasing property taxes and other fee-scams that are just getting started now/soon.

And finally, here's what will benefit you most, if you can bring yourself to "just do it" (with planning, of course).  Once you've converted all your paper and non-portable assets into gold, move your butt, and any "business" you may have, to another country.  Many are far more benevolent, but more important, almost every country treats "foreigners" much better than their own slaves (ahem, "citizens").

The appropriate time to "do something about it" was years ago, if not decades ago (like 1971 if not 1933 if not 1913).  So it is very late already.  But soon it will become impossible.  Do NOT try to time this one.  You will be very, very sorry if you do.

Do NOT follow this link or you will be banned from the site!