Open Market Operations And Statistics

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Sat, 08/08/2009 - 18:27 | 30501 Anonymous
Anonymous's picture

MMM, Tyler if you were a piece of bacon I'd dip you in chocolate and sell you at hillbilly carnivals.

Sat, 08/08/2009 - 19:16 | 30531 D.O.D.
D.O.D.'s picture

I was going to say something to that effect, but not nearly as amusing...

Sat, 08/08/2009 - 20:42 | 30581 Anonymous
Anonymous's picture

Lies!!

Sat, 08/08/2009 - 23:22 | 30667 dnarby
dnarby's picture

Heresy!!!

Sun, 08/09/2009 - 01:44 | 30732 My cognitive di...
My cognitive dissonance's picture

I don't believe!!!

Sun, 08/09/2009 - 14:27 | 30952 D.O.D.
D.O.D.'s picture

What are we not believing? That hillbillys would pay money for chocolate dipped anything?  For God's sake they pay money for a deep fried candy bar...think about it...there is your consumer driven icon....

Mon, 08/10/2009 - 12:02 | 31508 Anonymous
Anonymous's picture

I don't think you can credit hillbillies for the deep-fried candy bar. The fried Mars bar was a British invention. We've just copied it, as we have with so many things British.

Sun, 08/09/2009 - 03:19 | 30761 Anonymous
Anonymous's picture

Wow Tyler, a bunch of space monkeys! Ready to sacrifice themselves for the greater good. I'm impressed!

Listen up, maggots. You are not special. You are not a beautiful or unique snowflake. You're the same decaying organic matter as everything else.

Sat, 08/08/2009 - 18:42 | 30503 lizzy36
lizzy36's picture

What part of the market isn't being propped up by the fed/and or treasury?

The end of QE should be interesting.

I would love to see what the Agency and MBS numbers look like. 

I hope you continue to hyperventilate in the manner to which i have become accustomed(and frankly adore). The type of research presented herein, is why you should have the following (and perhaps the ego) that you do. 

 

 

Sat, 08/08/2009 - 23:09 | 30664 Anonymous
Anonymous's picture

well, it isn't going to be pretty, esp if, like thy reportd on bloomberg recently:

fed=10% tresury market
fed=25% mbs market

compared to the results posted in this post, I bet those mbs #'s are going to be interesting.

Sun, 08/09/2009 - 05:21 | 30779 Anonymous
Anonymous's picture

25% 0f MBS market? try 95%. seriously.

Sun, 08/09/2009 - 09:51 | 30830 Anonymous
Anonymous's picture

Does anyone have exact numbers on this - the fraction of GSE debt and treasury debt the fed is buying? It'd make for an interesting future post.

Fri, 08/28/2009 - 10:14 | 51610 hbjork1
hbjork1's picture

lizzy36:

If you still believe in Freud, you certainly got your compliment right even though might have ment to say superego. With the ego in control, what you get is; "..Just the facts ma'me, Just the facts."

It appears to me that the republic can be safely handed off to the next generation.

Sat, 08/08/2009 - 18:32 | 30505 Anonymous
Anonymous's picture

I just read the Keynes-worshiping book Lords of Finance, which includes a profile of 1930s German central bank chief Hjalmer Schacht. After reading this post, I began to think of Bernanke as a Schacht-lite.

Sat, 08/08/2009 - 19:14 | 30529 Cheeky Bastard
Cheeky Bastard's picture

yes but the main difference between Bernanke and Schact is that Schacht was capable in transforming Germany from basically a third world country to an industrial superpower in a time period of 10 yrs .... Bernanke is a moron, Schacht, on the other hand, was not ..

Sat, 08/08/2009 - 20:32 | 30574 Anonymous
Anonymous's picture

how is bernanke a moron (in that respect)? or do you think he is going to transform us from an industrial superpower to a third world country in a matter of 10 yrs, if he is reappointed?

Sat, 08/08/2009 - 20:47 | 30584 Cheeky Bastard
Cheeky Bastard's picture

your reasoning is false. I have not state that in my comment; that is your false premise drawn from my critical observation about Bernanke and Schacht. Bernanke is, with all due respect, a moron because he is following his dogmatic view on the causes of the Great Depression and it is implementing that view in his policies in present time. If you did more research about Schacht, you would see, how his monetary and economical polices strengthened Germany's power in post-Versailles era and derailed the long term effects of hyper inflation experienced because of the Treaty of Versailles .... Schacht was, a goddamn Nazi, but that does not mean that the he was not a brilliant banker.He understood the power of a strong banking system combined with powerful industrial output and industrial base. Bernanke on the other hand is not so brilliant, because if you took your time and red the things he wrote about the Great Depression, you would see that Bernanke is nothing more than neo-Keynesian banker, who carries a premise that monetization and QE +  government spending can short the duration of this Depression. He does not take into consideration the future ramifications of that kind of policy. It is like he doesn't even think about the taxes that would need to be raised just to finance the debt in the upcoming years, and as if he does not understand the difference between the effects of private and public spending ..

Sat, 08/08/2009 - 21:11 | 30603 Anonymous
Anonymous's picture

You would consider Bernanke a moron if you thought he really beleived what he says. The guy is a charlatan, a wizard of sophistry. Do you really think he's that stupid? Do you really think that Bernanke beleives in QE? His work on the depression merely gives him the grounds to execute his handler's objective. That is to destroy the dollar and create the opportunity to construct a new world monetary system. Youre on point with the economics Cheeky Bastard....but have you considered the motive? Bernanke isnt a moron...he's just trying to kill the dollar and make it look like it wasnt intentional.

Sat, 08/08/2009 - 21:20 | 30611 Cheeky Bastard
Cheeky Bastard's picture

im not going into hidden motives he and his masters have. i judge by what i see and what i know, and i know that Bernanke is doing it wrong. his goal may be the destruction of the dollar, but that is simply idiotic, because, he can establish a one currency global system without destroying the dollar, he can introduce new currency trough the IMF and the WB, which then, can make obligatory to use the new currency as a way to trade among nations and private entities. and he can also, trough the IMF and the WB set the obligation that all dollars be replaced for the new currency issue in some mechanism from which the US can profit ... if the destruction of the dollar is the real goal here, it can be done in a more elegant and profitable way then blowing the world economy into the upper atmosphere ...

Sat, 08/08/2009 - 21:57 | 30633 Anonymous
Anonymous's picture

If his thesis proves false, can we at least revoke the Ph.D.? And if it is revoked, can we then get rid of him?

Sat, 08/08/2009 - 22:02 | 30635 Cheeky Bastard
Cheeky Bastard's picture

lol ... check this out, someone edited the article on ben on wikipedia ... hahahha

 

Bernanke was educated at East Elementary, J. V. Martin Junior High,somalia, and pillon High School, where he was class valedictorian. At age 11, Bernanke won the state spelling bee competition but finished 26th overall at the national competition in Washington, tripping up on the word “edelweiss.” Bernanke also taught himself calculus, edited the school newspaper, and achieved a near-perfect 

 

http://en.wikipedia.org/wiki/Ben_Bernanke

Sat, 08/08/2009 - 23:31 | 30674 dnarby
dnarby's picture

Cheeky, they clearly came for a knife fight.  Please, put away the shotgun.

Sun, 08/09/2009 - 06:40 | 30791 Anonymous
Anonymous's picture

the problem with this argument is the debt remains. Destroy the dollar, close the banks and the debt is obliterated, Argentina style.

Sun, 08/09/2009 - 07:46 | 30797 Narcolepzzzzzz
Sun, 08/09/2009 - 09:49 | 30829 Anonymous
Anonymous's picture

I'm not sure Bernanke is neo-Keynesian. Certainly Keynes would not have given approval of Bernanke's behaviors or actions.

That said, I'm not sure what I'd define him as. Friedmanesque, possibly, believing the money supply is nearly be all to end all. Though I'm not sure where Friedman would ever have approved of the degree of actions he has taken.

I also doubt he is stupid. Stupid would mean he is incapable of pulling off even the most subtle of challenging events. He clearly has pulled this off quite nicely - and with little coverage (save ZH's). I'd say he is a "political tool seeking to retain his position in an administration which does not admire his talents", which means he's basically an Obama policy monkey, rather than a shaper of policy.

Sat, 08/08/2009 - 22:00 | 30634 Anonymous
Anonymous's picture

germany was no more a 3d world country after
ww1 than hitler was a good jew....germany was
exhausted and prostrate but that is quite a
different state than being a 3d world country
from organic causes....it still had colonial
posessions and no one occupied germany as
a colony.....

i suspect that germany would have recovered no
matter who lead it although schacht may have
had a more beneficent influence than others...

Sat, 08/08/2009 - 22:17 | 30639 Cheeky Bastard
Cheeky Bastard's picture

you have got to be kidding me. First of all, Germany had no stable financial system and no defined economical program. Second of all the reparations which were meant to be payed gobbled most of Germany's budget. Third, Germany had no colonies, except some part in the North-West Africa, and that was lost in the Treaty of Versailles and was given to France. Forth thing is that there was no valid infrastructural net which could unify the country and facilitate economical development. The first highway was built during Schecht position in Deutsche Bundesbank ( later Reichsbank ) and Ruhr-Westphalia was industrialized so it could fully exploit the potential of its mineral richness. Schacht was there to bring order into Germanys banking chaos and restore some equilibrium necessary for further development of the country. So your little thesis without any arguments holds no water; Schacht was one of the most brilliant European central bankers, and he had accomplished that during one of the toughest periods. Oh and also, he reduced Germany's debt not by borrowing but by improving production and manufacturing output and capacity.

Sun, 08/09/2009 - 01:23 | 30717 Anonymous
Anonymous's picture

It's amazing, really, how Germany was able to accomplish all of this through an independent monetary policy, using a fiat currency (sovereign credit -- not a metallic standard) with an economic goal of full-employment. Despite the fact that it was in horrible shape, with ruinous war-reparation obligations and no prospects for foreign investment, the German economy was up and running within four years, even before the armament spending began.

Sun, 08/09/2009 - 02:21 | 30745 Cheeky Bastard
Cheeky Bastard's picture

yes, thank you, i knew something slipped my mind. one of the main causes of, oh so famous, hyperinflation in the Wiemar Republic was, beside the reparation cost, that their debt was denominated in another currency; that was one of the major flaws, and when they changed the exchange rates from fixed to the price of gold, to floating rates the currency simply imploded/exploded. combining that historical factor with the prevalent economical policies Schacht enacted, the concept of Lebensraum ( Living Space ) was a direct consequence in assuring vast natural wealth as a pool from which raw materials could be drawn. Strategically the Annexation of Poland made no sense, but when one knows that Poland had one of the largest iron ore, and other metal, quantities in Europe that move was completely logical. And Schacht went separate ways with the top officials in Nazi regime when there were visible signs od racial and religious cleansing. up until that point Schacht was close to Hitler, because Hitler was a perfect " pawn " in securing that Schacht's idea of economically strong Germany is enacted. 

 

And, one last thing i would like to say is; dont confuse the political environment in which Schacht was working; just look at what he has done. And it is well documented ( search the internet for transcripts from Nuremberg Trials ) that Schacht was in strong opposition to Hitlers idea of racial purity and the idea that Germans ( Goths, not Aryans, Aryans are a tribe from India which settled in northeast Iran after it was defeated 1000 BC and lost control over India, and who can still be found in Iran settled in a semi-close communities in some areas in Kurdistan ) were superior to other nations. Schacht even spent 4 years in a concentration camp. And i strongly recommend to any of you ZHers who are interested in the role of a central banker to read as much as possible about Schacht and his policies while he was on the helm of Reichsbank. It will give you valuable information about how should a central banker behave in a times of great economic disturbance.

Sun, 08/09/2009 - 10:06 | 30833 Anonymous
Anonymous's picture

Schacht may have been a Nazi, but that is debatable. His goal was national self-interest and not necessarily party policy management. The fact he wound up in a concentration camp and turned state's evidence at Nuremberg implies that at worst, he was an opportunist (much like Bernanke).
In addition, his goals of improving production and increasing output were as much fulfilled by the work of Albert Speer as they were by his own efforts....though I'd argue Speer was aware of the slave labor he employed to achieve some of these gains, while Schacht most likely was not aware.

All told, however, let's consider our current state of affairs. The primary issue is the increase of the money supply into a deflationary environment. This, in itself, is a "good" thing, though Keynes' called it "pushing on a string". It could have little or no effect. Or it could. And if it does, what would that effect be? Well, for one thing the effect is inflationary...because avoiding inflation is all about timing and supply management. Yet since there are so many sources of money supply out there (bonds, currency, etc.), you can't manage them all. Indeed, the issuance of stock is a money supply which is NOT managed by the Fed.

The question is - can Bernanke manage it the way he says he can? The answer MOST LIKELY IS NO. But maybe he can...I'm sure we all hope and pray he does. But I don't put my future in the hands of hope, like so many people did in November.

Sun, 08/09/2009 - 10:28 | 30840 Anonymous
Anonymous's picture

Embrace the deflation, my friend, embrace the deflation.

Sun, 08/09/2009 - 10:32 | 30844 Anonymous
Anonymous's picture

LOL. I expect hyperinflation.
However, I also recognize the next step AFTER hyperinflation is deflation.
Or a new currency.

Sun, 08/09/2009 - 10:30 | 30842 Anonymous
Anonymous's picture

Germany was only better than a 3rd world country due to its history of growth and stability. By all other measures of political and economic stability, it was a disaster after WWI. It's being kind to say they were a third world nation.

The difference was, they had the political will to rise above their station.

As many soldiers returning from WWII said, they saw more of themselves in Germany than in France or Britain. The German desire to improve oneself showed itself moments after the bombings ended, and they began to rebuild as best they could.

Sun, 08/09/2009 - 11:25 | 30866 Anonymous
Anonymous's picture

Define third world nation.

Sun, 08/09/2009 - 12:02 | 30887 Anonymous
Anonymous's picture

The "classic" definition of non-aligned Cold War nations no longer applies, obviously. Nor would it to post war Germany.

The pejorative definition of a "developing" nation would apply to today and Germany.

Being more specific - a nation whose total output is below that of large industrial nations or without a stable political environment.

It's a given Germany faced unstable political situations until the rise of Nazi Germany. This was partially due to economic instability.

Post WWI, it's unclear what Germany's total output was relative to the rest of the world since reliable statistics are unavailable (though many guesstimates abound). What IS clear is that while Germany may have improved its total output, it was a developing nation DUE to war reparations, which were overwhelming the economy. By 1920, this took a very visible form as monetization caused hyperinflation over the next few years.

To say Germany was anything other than a developing nation prior to the cessation of war reparations is to take a leap of faith regarding its place in the world. Third World nations typically see large portions of their output exported - just as Germany was seeing.

Sat, 08/08/2009 - 18:33 | 30506 Anonymous
Anonymous's picture

wow, TD, this is great. thank you for providing this analysis.

Sat, 08/08/2009 - 18:34 | 30507 Anonymous
Anonymous's picture

beautiful.

Sat, 08/08/2009 - 19:13 | 30508 . . .
. . .'s picture

Three points.

***First, Jansen and Yves miss the point that the Federal Reserve may be acting illegally in purchasing at auction using an agent (assuming Jansen's description of the law is right).

Jansen says: "I believe that the Federal Reserve can only buy securities from the Treasury when it rolls over maturing holdings. The Treasury only resurrected the 7 year note in March and consequently the Federal Reserve would have no bonds to roll in the auction. Ergo there lack of participation."

Jansen says it is illegal for the Federal Reserve to buy Treasuries at auction, absent a rollover.  Based on Jansen's claim, it is presumably also illegal for the Federal Reserve to purchase at auction using an agent.  (The government doesn't bless arson, just because you hire people to do it for you.)  Moreover, it is not unheard of for the law to presume that a purchase and resale is wired with the purported buyer acting as an agent of the ultimate buyer.  So, why isn't it reasonable to suspect bad intent by the Fed, absent the Fed presenting evidence to the contrary?  This isn't a criminal trial, and ZH doesn't have the resources of a prosecutor and police officer.

***Second, Yves and Jansen don't really focus on the impact an auction fail, or successful auction at a higher rate, would have had on the market.  If there'd be a big negative impact, why not suspect bad intent, absent the Fed presenting evidence to the contrary?  Again, this isn't a criminal trial.

***Third, Bernanke has been drawing a Nixonian/Clintonian distinction about monetization.

Tyler says "Furthermore, is Bernanke pulling a Clinton and while claiming under oath the he is not monetizing debt, he is effectively doing just that on well over $30 billion in Treasuries, which the Fed acquires within 10 days of issuance?"

Yes, I have understood Bernanke's testimony to Congress to mean that he thinks having the Fed purchase Treasury Securities is not monetization if the Fed's goal is to ease credit conditions for consumers and businesses rather than reduce interest rates for the US government.

Sat, 08/08/2009 - 18:39 | 30509 arnoldsimage
arnoldsimage's picture

marla... how do i change my username?

Sat, 08/08/2009 - 19:00 | 30517 Miles Kendig
Miles Kendig's picture

Send her an e-mail and ask...

Sun, 08/09/2009 - 09:12 | 30814 assumptionblindness
assumptionblindness's picture

Change your username if you must but pleaaaassssssee keep your avatar!

Sat, 08/08/2009 - 18:40 | 30510 Anonymous
Anonymous's picture

Furthermore, is Bernanke pulling a Clinton and while claiming under oath the he is not monetizing debt, he is effectively doing just that on well over $30 billion in Treasuries, which the Fed acquires within 10 days of issuance? <<<<<

TD,

it all depends on what "is" .......is....

Sat, 08/08/2009 - 22:49 | 30657 rapier
rapier's picture

Bernanke really said he was not monetizing?  How odd.   There is nothing scandalous about this, it's what they do.  The current scope is unprecidented but for the life of me I can't understand why he would deny it.

What's the counter claim he makes? What does monetize mean?

If someone can link to the Bernake quote I would apprciate it. I want to get the whole context.

Sat, 08/08/2009 - 23:48 | 30682 texpat
texpat's picture

Monetizing (printing money to buy your own debt) is one thing... but buying treasuries (with printed money) to 'keep their yield low' is called 'quantitative easing'.

Whoa! It's the same or similar thing.

Someone more qualified may be able to identify whether the money so injected is 'sterilized', or if indeed, this is relevant or makes any difference at all.

Sun, 08/09/2009 - 19:05 | 31111 huubs
huubs's picture

e.g. listen at 1:15 in the video link at http://market-ticker.denninger.net/archives/2009/08/06.html (though it is a bit a truncated context)

Sat, 08/08/2009 - 18:45 | 30511 Anonymous
Anonymous's picture

Can't wait to hear from the experts. There must be a simple explanation that will render ZH concerns completely unfounded and hypochondriacal.

Sat, 08/08/2009 - 20:12 | 30562 simonsays
simonsays's picture

in experts we trust.

Sun, 08/09/2009 - 13:24 | 30923 Anonymous
Anonymous's picture

Studies show and experts agree that people will believe almost anything if you say "studies show and experts agree that .. " I majored in sales and marketing because studies showed there was a far greater ROI from making people believe they are getting value than actually providing them with it.

-Pump Monkey-

Sun, 08/09/2009 - 15:07 | 30979 Anonymous
Anonymous's picture

I majored in sales and marketing because studies showed there was a far greater ROI from making people believe they are getting value than actually providing them with it.

You forgot to say "and experts agreed"

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