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Presenting The Fed's Balance Sheet Through 2012 - Fed Will Surpass China As Top Holder Of US Debt By The End Of The Month
As is all too well known by now, starting over the next few days, the Fed will commence purchasing $75 billion in Treasury securities monthly until the end of June, and will buy an additional $35 billion in Treasurys to make up for declining holdings of MBS (due to repurchases). We still believe that as a result of the imminent drop in rates (especially those around the curve belly), as we have claimed for over a month, the feedback loop that will be created will result in a far greater repurchase frequency of MBS securities over the next 8 months, and we would not be surprised if at some point in Q2 2011, the Fed is buying $150 billion in Treasurys monthly. Since nobody will believe this until it is actually confirmed by the H.4.1., we will leave this topic alone for the time being. And after all its will "only" mean a rotation of Fed holdings, a switch in duration, and an impact on the shape of curve. What is certain is that on June 30, the Fed's balance sheet will have $2.68 trillion (or more) in holdings, of which $1.77 trillion will be in Treasurys, compared to the $840 billion today. What is also certain is that the Fed will not be able to stop there. Which is why we have extended the projection period through January 2012. At that point the Fed will hold $2.6 trillion in US Treasuries, or roughly 25% of total US marketable debt at that point. And for those who collect now completely irrelevant statistics, the Fed will surpass China's $868 billion in UST holdings before the end of November. Yes, ladies and gentlemen, shit just got real.
Incidentally, nowhere do we assume that the Fed will have launched QE 3, 4, and so forth, over the next 12 months, even though we now estimate the probability of America becoming an exponentially self-monetizing, Weimar-type case study in hyperinflation at over 50%.
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"Yes, ladies and gentlemen, shit just got real." - fucking genius - keep up the great work kids
I liked this quote: "we now estimate the probability of America becoming an exponentially self-monetizing, Weimar-type case study in hyperinflation at over 50%"
Whats two things they don't teach you in school? Money, and history. And definitely not the history of money!
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and more that they don't teach you in school: critical thinking, high confidence in your own unpopular opinion, self motivation, ....
Hahaha. Everything is fine. Invest all your money in PCLN.
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metals are surging. wondering if this is the melt up http://www.youtube.com/watch?v=eb1n1X0Oqdw
WHAM! The stock market collapses because there is no one to buy any of the stock for sale, at any price. It happens in the morning and the word gets out quickly. People know that something big is going on. By noon Eastern Standard Time the whole country is awash in the news. By two o'clock in the afternoon the big box stores are starting to sell out of groceries. All gasoline, food, and ammo are sold out that day. The unthinkable has happened. America has gone to her bunkers and awaits the anarchy that is sure to come. And the next day it begins. Those too stupid or unheeding are out and about looking for what they did not have to begin with. Violence breaks out all over the country, with warehouses in major cities being especially abused. Within a couple of days there is organized looting and robbing taking place. The bigger the marauding gang the more vicious they are. Power begets cruelty and lack of compassion.
A financial earthquake? Could that happen? What would it look like? http://www.cbsnews.com/video/watch/?id=6111518n
For a minute there I thought I was reading a TEOTWAWKI novel...
But, putbuyer is right about being prepared for anything. Gold, silver, guns & ammo, food and rural farmland are all worth looking at if the SHTF.
If things look like they could get that bad, the Bearing will look at moving to Peru! Could live well there with what we have, and they are used to a lot of poverty around. Self-sufficient in food too.
losing hope is the worst thing that can happen; so a good plan like yours is a must
i already have become a hobby farmer, and am investing my wages along those lines along with a hoard bought in 2003
good luck DoChen, and I hope your exit goes smoothly if it comes to that!
what will the guns & bunker crowd do with lots of rural farmland?? they'll only need a half acre for themselves (since they will shoot everyone else, and not be haulin tons of food to the market) but will need about 60 acres of wooded land as a bufferzone.. with beartraps, etc
Well, the Fed is supposed to be the lender of last resort, right?
with 2.7 trillion on the Fed books, you know that there is going to be be major foreclosure on everything that moves in the good ole USA down the line
the statist pipe dreams must compete with jackboots that will have amassed 2.7 trillion doolars in claims
guess who wins on that score?
Bernanke has no idea what he is doing but this is all he knows. It will be QE till eternity or until we blow up. If we just let the system reset 2 years ago, we would probably start moving up on real numbers and growth.
When this blows up it will be a shot heard round the world.
Even the inmates are shaking their heads at the absurdity of it all.
Well, no need to listen to those unscrupulous, underhanded, mysterious little untrustworthy commie bastards anymore.
Mission Accomplished.
BTW, does the Fed make campaign contributions, handle wire transfers for TPTB or any other sort of activities that'd make some folks blush if there were an audit of the total scope of Fed activities? No, not just like where the audit discussions drew to a close last time of auditing FOMC OMO decision making (Farce) but the whole enchilada.
Any educated guesses?
Messers Pauls, please!
I predict that the fed will forgive the principal and interest on the bonds it has "bought" and the treasury will magically be solvent again.
Slick.
That should provide plenty of spending room for the war with China it would cause.
Exactly
The only real losers are the people.
If I remember the moves in 'art of war', China will become an impoverished nation pretty soon holding worthless paper.. pretty soon.
I don't think you read the art of war. If you had, you would see that China has taken whole. So what if China loses out on the value of its dollar stockpile? They have the entire world's industrial base! It doesn't matter what kind of money is circulating in the world, it will all flow that way until that changes.
Entire world's industrial base? Exaggerate much?
LOL what a fucking douchebag
And what, pray tell, does China actually produce that we can't do without???
Peter Schniff has had his way with you...
"even though we now estimate the probability of America becoming an exponentially self-monetizing, Weimar-type case study in hyperinflation at over 50%. "
Does this mean you see a 50% chance of no hyper inflation? Or does it mean that the 50% is that the dollar hyperinflation won't be a case study? Hell if it's 50% no hyperinflation then that is good news, means that we are playing Russian roulette with only half the chambers loaded, far better then my estimates :)
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Huh? The Treasury offers the debt and the Fed buys it? What a great system (heavy sarcasm)......only in a broke country can you offer debt and buy it yourself. And the statist want to investigate BoA, JPM and Wells? Why aren't the lined up to put an end to this madness?
Uh-huh. Yup.
mo money
mo money
keep on truckin'!
This is taking liars loans to a whole new level
LOL
I just wanna front fun the fuckers. So 5-7 year futures should fair well. I know they're at historical lows but never underestimate the power of the fed, they can take these bonds to newar 0 if they so desire.
well....i would say better us than them but there's something to be said for china to hold worthless shit, considering they've put our people out of work because they won't let the yuan float and nobody has the balls to call them on it since a trade war might happen. $2 knick knacks would be gone, now what?
If you feel that bad about it, burn down a Wal-Mart or three. "They" are merely vendors to the people who put Americans out of work. Know your enemy.
Funny you think it was the Chinese that put you out of work. When you lose your job because your company wasn't profitable due to high state taxes and regulations, is it the fault of the neighboring state that doesn't have those taxes or regulation?
If you get mugged, are you poor and wounded because everyone else wasn't also mugged?
Yeah, couldn't possibly be because your company was actually unsuccessful, or rife with embezzlement, or a pump and dump scam.
Bloomberg says that Goldman Sachs was advising traders to 'buy the long end of the curve.' Surprise! Anyone see where the 30s were trading? what a joke. its no wonder that the carpenter, the plumber, the trucker, the cashier, the waitress, et al, despise the BANKERS.
Ben Bernake when he was younger:
"Can anyone give me a 5 dollar bill for a twenty?"
Exactly. It is a fucking joke. Seriously.
I am Not paying. Repeat after me; I am not paying.
One more time; I am not paying, dummy.
Translation; don't have the balls to admit it so will steal from someone, anyone, must be some dumbfucks to steal from.
I don't get it!! 40+ years of exporting American jobs , how the hell did this thing go wrong???
I looked at the picture and this song played in my head: http://www.youtube.com/watch?v=b0LDbf4ipWM
The Fed can buy unlimited amounts into infinity.
Because they are accountable to no one.
And our foreign debt enablers are inclined to keep wolfing down U.S. Treasuries as long as the PIIGS countries keep imploding.
And nobody, I mean NOBODY is ever going to audit the Fed.
i don't know, i think we might just get the fed audited, but will the money that is effectively grafted out of the pockets of generations of taxpayers ever be returned?
There may be bigger games than central banking at this point, so the drama of the fed ending might just be the thing to keep us all busy while the set up for the next scam takes hold...(I heldplessly sighed)
Youre absolutely correct Robo. Its all about keeping the stock market going. I knew this a long time now and i don't even go to Harvard. You don't have to be a fucking genius to figure it out, Just a cold hearted realist. Those who would flag this as junk are not facing the cold hard facts. The facts are, To the Fed, There is no economy, Unemployment or Americans..There is only AT&T, Goog, AMZN, Appl, Amzn, Etc, And no, The Fed will not be audited. Im not saying its right, Its just what it is. In the end, We are all screwed. If this was Huffingtonton Post Robo, I would fan you...
The US Federal Reserve Note (AKA US Currency) has one enumerated consideration;
IOW, it is accepted for payment of US taxes and settlement of AT&T, Goog, AMZN, Appl, Amzn, Etc. as long as the sellers will accept it. So much for the peeps in NA. For the peeps on the rest of the planet, YMMV.
Where it gets really interesting is if some of these newly-elected 'Tea Partiers' actually grow a pair and don't accept the invite to the corruption ball perennially hosted and paid for by wall street (admittedly fantasy if past history is any guide).
If any of the new congressmen don't want to play ball with Lloyd and Jamie and instead re-institute a Constitutionally-mandated currency (or even some similar bastard variant) the fed is on the hook for all those notes they have circulated; which is now outside the US Government. This in turn means their stockholders will have to settle the claims against those trillions of assets on their books. Guess who those stockholders are? A bit of quick legislation should insure that the first claims paid are to the Social Security Trust Fund (largest holder of fed debt).
A return to the Constitution with cutting the cord between the US Government and the six sinners, and you have the sacking of the TBTF and the fed fait accomplis.
Ok, I know this is fantasy, but Obummer doesn't flee the country after complete discrace every day and I may as well increase the tension level a bit?
Monetization is the price the debt enablers pay for interest on excess cash made off our consumption and our system of "free trade", not to mention they're doing business with the only military power in the world. They'll take their hit like we will. Everyone in charge will smile....so far.
FED, Red...what's in a letter?
Imagine what the world will be like when they merge and combine their power for the good of all!
so kiss a little longer...laugh, a little longer....
http://www.youtube.com/watch?v=ji08P-R00OY&feature=related
Strange...looks like they edited out the gulags
Frankly, I think Ben is going to be buying a lot more toxic MBS rather soonish, not unloading it.
On second thought, any extra MBS is going to be worth what? Not much at all.
Yet the MBS the Fed holds, as displayed, is priced as something substantial. So the level is a bit optimistic, in that case (but this is extend and pretend ya know, ya gots-ta-baleeve!).
However, on third thought, all that consolidated MBS muck, is also falling in value and credibility faster than even the Fed reputation, or the USD it prints, (or the Govt it props up) that these assets 'back'.
So, Ben probably could use more physical RE assets, just to make it look like he has some realisable actual assets to back up his balance sheet?
Back to my first thought, I recon he's going to end up with a lot more MBS, they just wont be worth anything, so will only inflate the asset book in abstraction (... but if he had the note ... that could actually mean something ... sell it off to his TBTF mates, like, really cheap ... hey, Bill! ... come over here a minute ...).
Things that make you go ...hmmm.
.
Tyler just doesn't seem to get it yet.
For starters, relative to its legal commitments, the U.S. government robbed the Social Security and Medicare Trust Funds of at least four trillion dollars. When you take $4 trillion that doesn't belong to you, you can't pay it back - because it's $4 trillion and nobody could pay that back - so we're going to default in some fashion. But we have to at least appear to pay it back - because we're the government and we are responsible for the rule of law. So
So, you were always going to monetize just to plug that hole. We've known that was coming - if nothing else - for a decade.
The Fed is monetizing. This is not amazing. This is not historically unprecedented. This will not lead to hyperinflation.
Monetization is a kindler, gentler version of default. Go hysterical about it because you think it's not supposed to happen, but you're wrong. It is supposed to happen because it is the better than outright default.
What are some good monetization trades, in your opinion...
Well, it's the middle of the night but...
You had to try to pick of some of the DGP at $37.75-$38.00 and maybe just from now on. Whether you think gold is a bubble or you think we will be going back to paying in ducats, there's one answer on everyone's lips: gold.
Singapore dollar still looks good, surprisingly, and I like the Korean won - but less. Brazil is just SO crooked. I mean you hope, but...
In stocks? Yikes...U.S. stocks just give me the chills. I'd wait for a crash first.
I'm hoping that companies in Singapore, Korea, Australia and Canada really start to decouple and shine.
Bernanke is making a BIG mistake by monetizing regularly and gently. It will start to generate a very predictable little roller coaster. I just wouldn't know how to play that, though, frankly.
Anyway, the thing about monetization is that it's a result of a managed deflation. Managed deflations are the worst possible environment for investing. So, sorry, just nothing that exciting to say, really.
Invest in your own or your family's education maybe???
hey, y'know your handle is an anagram of 'The Money Retard'.
just an observation. no judgements...
There is nothing 'kind' about monetization. You tax people 12% straight off the top for social security, blow the money, then monetize the debt because it is the only remaining option. Diluting the value of the dollar raises the cost of commodities, which leads to higher prices for fixed expenses such as food and fuel, so you are taxing those who can least afford it twice.
You've got a screw loose if you don't have a problem with the insidious effects of monetization.
Glenn Beck show Nov 3rd 2010 ... Glenn Explained this to the viewers
He did a great job.... the masses are wake - ing up...
The US Dollar is Dog Food ... like germany 1922 ...
When people loose faith in their currency ... they get out of it..
This time it will be a theater full of people , and some bozo
shouts >>> " FIRE...! " it will be 4 times bigger than
the crash of 1987 . That was bad , I got beat up that day..
The Dollar about to say good bye to 76s and say hello to 75s. Bens inflation wish may come sooner than later. When the dollar falls below 60, I will quote Max schumacher.."All of a sudden it's closer to the end than the beginning, and death is suddenly a perceptible thing to me, with definable features".
Developing nations could do the unthinkable, refuse to sell their products in dollars, especially raw materials. It is either huge internal inflation due to pricing in dollars or cut the dollar out of the loop. That would collapse USA within few weeks.
Bernanke just made the all-in bet, betting on the importance of US consumers to the world markets. I think that is way overestimated. They will call this bet and Americans will face the Argentina 2001 type of collapse.
Looks like my theory was right -- according to this chart, the Fed is laundering MBS's into Treasuries. Guess who gets to pay for it all. :(
Wasn't China's holdings of USTs seen as a distinct threat to national security just a short time ago? Remember when the Joint Chiefs said that external debt was of major concern?
Well, the debt is no longer going external, get it?
Events unfolding cannot be reduced to conspiritorial causalities. It is more instructive to look at what is happening in terms of logics of the unconscious, or dream logics ...
If you owned a restaurant but were your own best customer, it wouldn't really be considered a viable business, would it?
Depends how many other customers you have. If you are 'best' at 5% and have 25 customers at 3-4%, you're making good coin (only 95% of what you'd make if you didn't eat your own dog food). You might even improve the quality of the product knowing you'll be eating it too.
They bought or rather printed anouther 9 months , thats it.
Priceless, literally.
If I did not know any better the Fed is throwing in the towel and trying to piss off China. Gold has just experienced a $45 one-day reversal and still has room to run. Ben cannot be this stupid unless the game plan all along was to bring the United States down.
If I did not know any better the Fed is throwing in the towel and trying to piss off China. Gold has just experienced a $45 one-day reversal and still has room to run. Ben cannot be this stupid unless the game plan all along was to bring the United States down.
Yet, another first for America, is this a great country or what?
This is just a bad dream which can't be true, For Christ's sake! We just "won" the cold war, somebody has things mixed up, surely you mean; this is happening in China and Russia? don't you? Really! Having said that, I've often thought it was not really a smart move to go immediately from "Winning" the cold war to "Starting" the hot one! Perhaps our rulers believed that that which had brought victory in the Cold war would guarantee victory in the Hot one. ( so far in Afghanistan, Iraq and soon to be Yemen, we have only been throwing gas on the fire, it hasn't really flared up yet, When America has destabilised the World financially, then the Hot war will really begin. This fire is going to be really hot when it finally gets going!)
let's ponder on the FED
a private BANK owned organisation that prints our currency (odd concept that a private banking cartel prints legal tender for the nation)
1. prints FRN's
2. buy US Treasury bonds
3. bonds come due, Fed issues more FRN's and buys those bonds..
amasses assets based on US gov debt.
debt becomes larger than income (tax base) of US gov.
FRN's are devalued as world gov's cannot finance the debasing of the FRN( called the dollar by some.)
Fed becomes insolvent..
Congress enacts the repeal of the Fed charter to print legal tender
Congress enables the treasury to print US NOTES to be only legal tender in USA
Fed Bank cartel goes BK.
American holders of FRN's get to convert to US Notes for pennies on the $. (implication that all private debt will be reduced by this amount so offset of loss of FRN value)
US debt to fed is abolished as Fed Bank cartel goes BK.
US economy recovers and borrowing by Fed Gov
is again possible..
a dream or is this the game plan.
if so better get out of those 18 banks who own the FED..
comments welcome.
"Well, it might work." - RR
I'm in no way trying to defend the Fed or fractional reserve banking for that matter when I ask this, but: Isn't this a good thing? Do we really want China controlling the lion share of U.S. debt?
I know the whole thing is a ponzi, but the idea that China could (if it wanted to) dump Treasuries and thereby tank the dollar (if it wanted to) is a little troubling...
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If I did not know any better the Fed is throwing in the towel and trying to piss off China. Gold has just experienced a $45 one-day reversal and still has room to run. Ben cannot be this stupid unless the game plan all along was to bring the United States down.
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If I did not know any better the Fed is throwing in the towel and trying to piss off China. Gold has just experienced a $45 one-day reversal and still has room to run. Ben cannot be this stupid unless the game plan all along was to bring the United States down.charlotte condos - indigo airlines
If I did not know any better the Fed is throwing in the towel and trying to piss off China. Gold has just experienced a $45 one-day reversal and still has room to run. Ben cannot be this stupid unless the game plan all along was to bring the United States down. a+ exam questions | ase exam questions \ ccda exam questions \ ccent exam questions \ ccia exam questions \ ccie exam questions \ ccip exam questions \ ccna exam questions \ ccna security exam questions \ ccna voice exam questions \ ccna wireless exam questions \ ccnp exam questions
Staff has also projected the Fund balance and reserve ratio for each quarter over the next several years using the most recently available information on expected failures and loss rates and statistical analyses of trends in CAMELS downgrades, failure rates and loss rates. Staff projects that, over the period 2009 through 2013, the Fund could incur approximately $100 billion in failure costs. Staff projects that most of these costs 642-647 | Pass4sure 642-165 | Pass4sure 642-067 | 1z0-051 | Pass4sure 310-065 | Pass4sure 642-504 | Pass4sure 642-655 | Pass4sure 650-195 |