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Fed Treasury Holdings Pass $1.5 Trillion
It seems like it was only yesterday that the Fed passed the $1 trillion mark in total Treasury holdings (actually it was on that memorable Winter Solstice of 2010 but who's counting). Well it is not even 5 full months later, and the Fed has already added $500 billion in holdings. Following today's $6.94 billion Pomo, total Fed holdings of US Treasurys have now passed $1.5 trillion (which is ironic because the net new cash tendered to the Treasury per total Bond, Note and Bill issuance and redemption in 2011 through the most recent settled auction is $350 billion, in other words the Fed has funded about 140% of the total Treasury cash needs). As a reminder there is just under 6 weeks left until QE2 ends, at which poin the Fed's Treasury holdings will be about $1.6 trillion, and the Treasury will be without its primary (over and above the maximum) source of capital.
The Fed's lead over China continues. It is probably irrelevant that official Chinese holdings of US debt have now declined for the 5th consecutive month.
And here are the details of the most recent weekly Fed balance sheet power expansion exercise.
- Total holdings increased by $21.2 billion in the week, as Treasury holdings increased by $29 billion, offset by $7.8 billion in MBS/Agency repayments.
- Excess reserves declined by $8 billion, even as the Adjusted Monetary Base increased once again, albeit this is delayed so rather irrelevant.
- Total foreign custodial holdings declined by $11.1 billion primarily due to a $16 billion reduction in Agency debt.
For those concerned about the surge in excess reserves in recent weeks, as we have noted there has been nothing odd about this (the SFP unwind was the primary driver). In fact, the cumulative change in reserves and Fed asset holdings is now precisely zero, meaning the two are in perfect alignment.
Repayments of Agency and MBS holdings continue to be at a very slow rate. Once again, just as we expected.
And lastly, while "Other Fed Assets" dipped in the last week by $6.3 billion, although this appears to be a bimonthly event, where there seems to be a reindexing event occuring. Look for a jump in this series next week.
Source: H.4.1, TIC
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Exponential bitchez!!
Left hand of government, meet your new best friend, the right hand of government. Why is the right hand severed at the shoulder, and in the hands of an international banking cartel, I cannot say definitively!
But I can say, check out the latest from the Capital Research Institute "United States of Corruption & Injustice"
http://www.capitalresearchinstitute.org
America isn’t the only country with serious problems, but the US dollar is still the world’s reserve currency (for now), so what happens in America invariably impacts the entire world. As such, its problems are typical of those found across the entire world. Problems such as:
The nation has completely lost sight of its founding ideals...
I've asked before on other posts and I asking again. What is the end game? How does the Beast intend to extricate itself? Is history going to rhyme?
war
more?
A lot more.
You were supposed to write "Sure."
Rhyme fail.
How about, "four"?
Sure.
Retired General Wesley Clark said that within weeks after 9/11, the gameplan was to take out 7 countries in 5 years.
http://www.youtube.com/watch?v=SXS3vW47mOE
Iraq, Afghanistan, Libya, Pakistan...
Who's next? Iran? Syria? Who's the seventh?
Pakistan wasn't on the list (at the time)
It was Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and then Iran.
Venezuela, Yemen and anyone else who doesn't play Monopoly.
War with China could reduce US Treasury debt, the Fed could just create some more to fill in the void.
didn't you catch the haarp attack on the foxconn factory?
Surprising that the General hasn't had any boating accidents yet.
unnecessary - no one listens to him. even bill fired him
The end game is a new reserve currency being created and the US economy dying a slow painful death.
...and slowly becomes just another third world country. So get yours while you can because "on a long enough timeline the survival rate for everyone drops to zero".
"The end game is a new reserve currency being created and the US economy dying a slow painful death."
^^This^^
Simple: anyone who owns paper is going to get paid back 10 cents (max) on the dollar.
Doesn't matter what type, all paper assets are ultimately a claim on someone else's future output.
We have a bubble in claims on a shrinking amount of real human output. We can play games with the financial (accounting) system for a while, but at some point the work output needs to pay the creditors.
The current "paper era" will end in tears.. then we'll get back to doing real work and wondering what the hell we were thinking....
Simple: anyone who owns paper is going to get paid back 10 cents (max) on the dollar.
Doesn't matter what type, all paper assets are ultimately a claim on someone else's future output.
We have a bubble in claims on a shrinking amount of real human output. We can play games with the financial (accounting) system for a while, but at some point the work output needs to pay the creditors.
The current "paper era" will end in tears.. then we'll get back to doing real work and wondering what the hell we were thinking....
Simple: anyone who owns paper is going to get paid back 10 cents (max) on the dollar.
Doesn't matter what type, all paper assets are ultimately a claim on someone else's future output.
We have a bubble in claims on a shrinking amount of real human output. We can play games with the financial (accounting) system for a while, but at some point the work output needs to pay the creditors.
The current "paper era" will end in tears.. then we'll get back to doing real work and wondering what the hell we were thinking....
There are two choices for the end game:
1. Denial. They will ride it out to the bitter end, al la the Western Roman Empire.
2. Global government. Let the thing crash, then REALLY whip up the publicity machine and ride in with the new "man with a plan" to erase the fractuous foolishnesses of the past and bring in a modern, technological, efficient super-state. Throw in a new currency and a base level of welfare for everyone.
Actually, the 'plan' is probably 1 + 2.
The Honorable Dr. Ben S. Bernanke has made an incredible job so far, in financing a gargantuan government deficit with printed money leveraged x10 by the PDs without producing a single % of consumer inflation.
or a single % of real added value. Can price discovery be ignored forever? Stay tuned.
Don't Feed the Trolls
Ah come on, entertainment purposes only, I promise. Even a train chimp won't dance if you don't feed him from time to time.
ask the minkey, he's the businessman!
I am pretty certain Mr. HamyWanger is just pulling our leg with all these comments:D
del
On a long enough timeline, the number of ZH posters who know HamyWanger is a parody of a troll drops to zero.
HammyWrangler
lol
When did HarryWags kill himself?
I guess the real answer is many times over
Treasury Debt, the real bubble.
And why can't people see this? It is so apparent.
They don't want to see it. That would require them to make a choice: Either to be a coward or a hero. They flee such choices.
Gold is up, DXY is up, Stocks are down, oil is up... On a technical analysis, It looks like one big lump of shit
Boy oh boy, the FED must be one of the wealthy institutions on the planet... they even lend money to governments! Anyone know where they got their wealth from? Did they make a genius product/invention in the past which revolutionized the world and made them hugely wealthly that they could lend money to governments and buy debt from countries as big as the USA... Boy oh boy, they must have gold and silver by the truck load down there at the FED.
Even the Fed won't fight the Fed. What happens if the Fed defaults?
you're forgeting pensions, ss, 401ks. it's all your money (i'm canadian) and you let them take it without a fight? did i subscribe to CNN for naught?
+1
CNN is great for the obscene
Mom botoxing 8 year old girl?
Our society fell apart a long ago, and CNN is the freak show
How much longer before the Fed holds more treasuries than the rest of the world combined?
We'll be hitting the nitrous button soon and blowing the competition away... A 1st place finish to make us all proud.
I have a very simple question. If the Federal Reserve is buying US Treasurys, what are they buying them WITH? I assume they are buying them with borrowed money. But who do they borrow from? Member banks? And do these banks then borrow from the Feds in order to lend to the Feds?
Funds are created out of thin air at some point. But how does it all get recorded on the books?
Looking at the process from the outside it looks as if Vinnie and Charlie are both broke, so they get together and agree to lend each other $1000 bucks and then go off happy because now they both are flush.
The money is created ex nihilo since the start. The FED buys back USTs from the primary dealers at a privileged price in fresh cash money.
If you believe USTs have the intrinsic value at which the FED buys them back (i.e. if you're a Keynesian liberal like me), then no money is really printed. But for redneck libertarians, USTs have a real value close to zero, so it's like money has been printed out of thin air.
You should have chosen the handle "HamishWanger", and then you could have delivered all your mock posts in Scots, and had us all REALLY confused!
then Rutledge would've had to shoot him.
Keynsian Liberals don't believe in Intrinsic value. You have just outed yourself as a closet Austrian.
Yes, it is implicit in all statist, Keynesian economic thinking (sic) that value, ALL values, can only be imputed by and defined by government. Without the wise and steady hand of government to guide us, every human would just sit motionless in the mud and the rain until we starved to death.
Or tracter the shit out of everything and sit nice and cozy and say fuck your weather control war bitches. Haarp rings all over that area before they had to open the floodgates.
http://www.fohguild.org/forums/attachments/screenshots/172370d1305936523...
I figured it out.....
HamyWanger is really the Bizarro Tyler Durden.
If Tyler is the matter then Hamy is the anti-matter.
Case solved
Alter-ego?
The bizarre but accurate answer is the the 'money' created is fictional, kinda like a corp printing new stocks to dilute the value. Look at Weimar Germany or Zimbabwe. The only reason it can get away with it is because the USD is the global reserve currency. But make no mistake - the Fed is wiping out any value the dollar has, most of the US polulation is going to be ruined. And then what?
And then what?
To the slave labor camps, bitchez!
to get rid of the books, they'll have to implode building 8!
Maaaaa-gic! Duh da duh! You can have anything, that you desire...
Maaaaa-gic! Duh da duh! And you know you're the one who can put out the fire...
I have a very simple question. If the Federal Reserve is buying US Treasurys, what are they buying them WITH? I assume they are buying them with borrowed money. But who do they borrow from? Member banks? And do these banks then borrow from the Feds in order to lend to the Feds?
---
Binko, over the last few years, the FED has alternated between two ways of paying for the QE purchases. One is to borrow the money from the Treasury who sells very short term notes (57 days as I recall). This borrowing went as high as %550 bn and was the kick start on QE 1, which dealt mainly w purchased GSE paper. And for all of 2010, when the FED was buying treasury paper, they funded it (just under $200 bn net) by borrowing from the Treasury.
I appreciate this sounds nuts - the Treasury sells paper, give money to the Fed who uses it to buy Treasury paper - but that's what they did.
The 2nd method - which is also used to paydown the debt from the Treasury - is to 'type' up an increase in bank reserves. Bernanke described this in mid 2010 before Congress - they literally data punch enter a higher number for bank reserves. This is where funds are created from thin air and they are recorded on the banks book as an asset (their savings account at the FED) and as a liability on the FED's balance sheet.
The Vinnie and Charlie tale is very apt, I think, except that Vinnie has first xeroxed the $1000 bucks on a color copier. But this hasn't prevented them from being flush and happy.
"..........As a reminder there is just under 6 weeks left until QE2 ends, at which poin the Fed's Treasury holdings will be about $1.6 trillion, and the Treasury will be without its primary (over and above the maximum) source of capital. "
Uuhhm.. Yeah, okay. That's gonna go over like a pregnant pole vaulter.
Need moar anonymous billionaire overlords to come save us and give Ben and the shareholders some relief. Someone has to buy these treasuries. We need a hero billionaire.
Not enough billionaires left to bail us out like JP Morgan's friends did in 1907.
"in other words the Fed has funded about 140% of the total Treasury cash needs"
If the market knew details of the "shadow budget" of the U.S., it would be a game changer.
You assume the market doesn't know. I think everyone is pretending that it's all good. It's like being in a casino where all the slot machines are paying out with every pull, but the fire alarms are going off and there's talk that the roof is on fire.
That's a damn good analogy, I'm going to use it.
You can never have enough money & while central banks are providing it the people are glued to the slot machines even though the chances are good they will all burn to death.
Swap it all with government pension funds so it runs a full circle!
Seems like I read here on ZH that the big US banks are sitting on some $1.5T in reserves. If that is so, couldn't the Fed require the banks to buy UST's thereby continuing the ponzi for a while longer and funding treasury? Then when the banks are 'full' the Fed could let them (banks) off load on to the Fed's balance sheet (again). Obvioulsy this is similar to check kiting and similar to what's alrerady been done with 'toxic mortgages' but it would allow them to ping pong it just a bit longer and postpone the final collapse.
The banks are required to buy Treasuries already. They're called Primary Dealers.
Yes, mykillk, I understand that. Perhaps I should have been more clear and stated "buy and hold" or "invest" their excess reserves as opposed to flipping the bonds back to the Fed within a week or so of settlement. It's all creative accounting (fraudulent for peasants like me) anyway. Thanks for your reply.
It is like "crossing the streams": A Fed liability, in this case, the excess reserve, ends up being the same instrument that is the actual asset, in this case the Treasury.
crossing the streams
ha, ha
I like that.
It's the same as drinking your own piss when you're dying of thirst.
http://www.youtube.com/watch?v=x8w95xIdH4o
so that last play, what group of idiots go in?
after we rock back and forth for another 18 months or so,
who eats the shit?
Classic Pump and Pump!
I used to think something bad was going to come from all of this, but now I relealize we are safe. Nothing can stop this organization. They are here to protect us from ourselves. It really is an amazing feat (and sight to see), to keep all of the non-performing assets under lock and key. All the power of capitalism can't break down the door and redistribute these assets. Now that the short sellers have been ground down to dust, keeping the market up is as simple as printing more money...we can all sleep well.
Skinwalkers, egyptologists, and voodou bokor all agree that corpse powder is heady stuff.
How can I get into this Federal Reserve shareholder Monopoly game..??
Assemble an unencumbered, substantial bloc of liquid capital and approach a small national bank teetering on the edge of the abyss; then hope that they don't burn through it before the end of the great recession whilst praying that they don't fall afoul of any of the banking regulations with draconian, capital-destroying, and unpetitionable administrative fines. Then, if there is no 'bank holiday' or spontaneous bank run, you may eventually begin to collect a (substandard) return on your extremely illiquid investment.
Everyone in the country was in shock. People’s net worth had devalued more than 53% overnight. The value in savings accounts dropped in half and neither merchants nor consumers knew how to react because they had never been through something like it before. Luckily for me,.....
http://silverdoctors.blogspot.com/2011/05/living-through-currency-devalu...
BWBC...Buy When Bernanke Croaks
It's the end game that worries me - what is the Fed's goal - sure we will have QE3,4,5 but their product "the dollar" will be destroyed - so is the game to grab all the countries assets (National Parks, harbors, toll roads, bridges...etc) then roll in with a new global fiat system - that this is all by design - and if so is it so powerful that it cannot be undone by a black swan or another power - China? or has some backroom deal like what the Vatican cut with Spain in dividing the world in halve already been made - ?? the world wonders...
1.5 trillion is nothing. You people have lost it completely.
As a reminder there is just under 6 weeks left until QE2 ends, at which poin the Fed's Treasury holdings will be about $1.6 trillion, and the Treasury will be without its primary (over and above the maximum) source of capital."
----
Tyler, an alternative source of capital is the $1.5 or so trillion in bank reserves. During a 2 week period (starting 5 weeks ago), $80 bn in reserves departed the FED's balance sheet, matched almost to the dime by a $80 bn growth in the Treasury's bank account at the FED.
I've no clue what was given (if anything) in exchange for this.
Perhaps there was no linkage, twas a mere coincidence, but it looked awfully like the type of date punch entry whereby the reserves are created in the first place.
In the future, it is possible the FED, even absent QE, could still keep bank reserves growing. While part of the growth in reserves was due to the SFP winddown you note, another big component was writing up reserves (eg borrowing money from the banks) in order for the FED to cover Treasury checks written on the Treasury's checking account.
Then whenever the Treasury's checking runs down, similar data punch entries can simple swap over reserves to the Treasury, followed by the same reserve replacement to cover subseqent checks.
Simply a modified form of the FED's check kiting operations. A super ponzi scheme wherein the brilliant minds at the FED have discovered a way to run a ponzi w/o the inconvenience of finding a new patsy every know and then.
we called this game early in ZH's history: reserves are created by keystrokes, not by accumulation of earned dollars. Those reserves then are "stored" at the Fed and the banks earn a modicum of interest on those funds. Then the funds, after careful aging in the Fed's cellars, are available as if they are real money for things like buying USTs. That storehouse of phony wealth is still sitting there, a year's worth of issuance, and has not been called.
For those, like Bernanke, who like to say there is no money-printing, and the debt is not monetized, the facts say otherwise.
QE 3 must happen, as there aren't enough buyers of this level of debt issuance.
I disagree with the commonly accepted notion (incl by Tyler) that the reserves haven't been tapped yet. I submit they are being tapped every day via the Fed Funds market, combined with securities lending deals that fuel stock and commodity speculation. In the process the banks can arrange to both get the interest payments on reserves at the FED AND to earn fees on each of the Fed Funds market transactions. An example of these transactions are the hedging operations via the IOER deals that Tyler has brought to our attention (on all the collapsing repo market rates articles).
Ask this - if the banks are blessed with multiple millions of dollars in new reserves each month, wouldn't they desire to find ways to maximize the benefit to them AND wouldn't they be clever enough to find ways to do so?
Take a look at the b/s of a bank like BofA. You'll find $300 bn plus of Fed Funds purchases and another $300 bn in Fed Funds sales (in the misleading terminology of b/s financing they call the borrowing and lending of bank resrves as Fed Funds 'purchases' and 'sales'). They are even allowed to lump the Fed Funds deals with securities lending and associated repo agreements, proving that those transactions are joined at the hip.
When a BofA 'sells' its reserves it loses the interest income thereon, but they get it right back when they 'purchase' a corresponding amount of reserves - so they continue to get what they would have earned before. PLUS, by channeling those FED Funds transactions viw securities lending/repo agreements they earn fees from the hedge funds and other clients and the hedgers and clients get to fire off (presumably) profit making operations.
Since the sum total of these kinds of transactions appear to leave total reserves (which is all we are focusing on when we focus on the total bank reserves of $1.5 trillion) unchanged, we think that reserves are untapped, when in reality there are a huge number to transactions with deep market impact going on within the $1.5 trillion worth or 'reactor fuel.'
The Bernank has invented a perpetual motion machine.
The age old dream of scientists, inventors and tinkerers. All of them schooled by an economist.
That's why these guys are paid so well.
Why hasn't The Bernank won a Nobel prize for this?
Mr. Creosote appears overFed...Another bucket for monsieur!
http://www.youtube.com/watch?v=BlK62rjQWLk
I can top that, ''Democrats only'' http://www.c-span.org/Events/Washington-Journal-for-Friday-May-20/10737421677-1/
So... the gas grill has to go back?
I love it when I do a google search and ZH is the first or second link. I Googled "amount of federal reserve treasury holdings", and this was the second link. ZH is an "invaluable asset".