The Only Two Charts That Matter For The Fed

Tyler Durden's picture


Here are the only two charts that matter:

First, the Fed now owns a third or 32.47% of all 10 Year equivalents, up 32.22% from the prior week, and rising at a pace of 0.3% per week.


Second, the Fed is now monetizing a record 70% of all net US 10 Year equivalent issuance.


That is all.

Source: Stone McCarthy and RBS

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 11/14/2013 - 12:11 | 4154177 fonzannoon
fonzannoon's picture

Yellen answering the big gold question right now.

Funny she may get tased after the meeting for that one.

Thu, 11/14/2013 - 12:15 | 4154185 hedgeless_horseman
hedgeless_horseman's picture



The Fed is now monetizing a record 70% of all net US 10 Year equivalent issuance.

So, Bernanke lied to the United States Congress under oath?

“We’re not going to monetize the debt,” Mr. Bernanke declared flatly

So, it is ok to lie to congress while under oath, because nothing will happen to you if you do.  Do you hear that, Janet?

Thu, 11/14/2013 - 12:15 | 4154203 EscapeKey
EscapeKey's picture

Oh no, I think it was Fisher who clarified: "...because the purchases are 'temporary'".

Of course, when 80% of the balance sheet is "temporary", one starts to question whether they buy their own official lines.

Thu, 11/14/2013 - 12:20 | 4154218 hedgeless_horseman
hedgeless_horseman's picture



"This separation of government from people, this widening of the gap, took place so gradually and so insensibly, each step disguised (perhaps not even intentionally) as a temporary emergency measure or associated with true patriotic allegiance or with real social purposes. And all the crises and reforms (real reforms, too) so occupied the people that they did not see the slow motion underneath, of the whole process of government growing remoter and remoter.

Thu, 11/14/2013 - 13:57 | 4154229 Looney
Looney's picture

Mr. Chairbitch will save us all! Listening to her testimony feels like my teeth are being pulled by a crowbar. ;-)


Thu, 11/14/2013 - 12:23 | 4154232 EscapeKey
EscapeKey's picture

I prefer this part:

"What happened here was the gradual habituation of the people, little by little, to being governed by surprise; to receiving decisions deliberated in secret; to believing that the situation was so complicated that the government had to act on information which the people could not understand, or so dangerous that, even if the people could not understand it, it could not be released because of national security. And their sense of identification with Hitler, their trust in him, made it easier to widen this gap and reassured those who would otherwise have worried about it.

Now, what's on CNBC or Fox News. I want to understand why the TPP negotiations take place in private, and no doubt they can tell me why.
Thu, 11/14/2013 - 13:20 | 4154591 Buckaroo Banzai
Buckaroo Banzai's picture

"And their sense of identification with Hitler, their trust in him, made it easier to widen this gap and reassured those who would otherwise have worried about it."

It seems quite unlikely that the entire German population trusted Hitler in the 1930s-- or even a majority of it. The Nazi party didn't get anywhere near a majority of the vote in the 1932 elections.

A more likely explanation is that Hitler got a pass from non-supporters because he actually made things better for everyone in Germany before he got them into WW2. There is a big difference between "trusting" someone, and choosing to look the other way because your material situation is getting meaningfully better.

Obama is doing it a different way. His base of support is in the swelling ranks of the FSA. The problem of course is, Obama is playing a Zero Sum game; for every new "taker" that Obama creates, a "maker" is getting the shaft. I don't see how Obama re-creates Hitler's success using that formula. We need to look at other historical analogues for guidance.

Thu, 11/14/2013 - 13:25 | 4154628 EscapeKey
EscapeKey's picture

Obama's not the creator. He's the creation. In a few years, you'll get a new creation, full of refreshingly new rhetoric.

Thu, 11/14/2013 - 13:36 | 4154675 hedgeless_horseman
hedgeless_horseman's picture



It seems quite unlikely that the entire German population trusted Hitler in the 1930s-- or even a majority of it.

The author is not arguing that.  Read the book.

Is it me, or is the level of fallacious argument on this site increasing?

Thu, 11/14/2013 - 13:39 | 4154712 Bearwagon
Bearwagon's picture

No, it's not just you.

Thu, 11/14/2013 - 13:55 | 4154778 Buckaroo Banzai
Buckaroo Banzai's picture

I am only responding to the quote that was cited. If you have different information to bring to bear, then cite it, instead of simply criticizing me for not reading the book.

Thu, 11/14/2013 - 13:45 | 4154736 Bearwagon
Bearwagon's picture

He didn't have a majority, but "Stahlhelm", "DNVP" and "Zentrum" willingly supported him when they were told so by big industrial and financial elites. After he was declared chancellor, the enabling act of 1933 was passed and there were no more elections till WW2 was over.

Thu, 11/14/2013 - 14:01 | 4154814 Buckaroo Banzai
Buckaroo Banzai's picture

Agree with everything you say. The quotation cited implies that the german people as a whole supported Hitler. I simply questioned that choice of words. I'm sure plenty of Germans supported him, I'm just questioning how many actively supported him, and how many simply went along to get along.

It's a pretty important distinction.

Thu, 11/14/2013 - 15:24 | 4155147 Bearwagon
Bearwagon's picture

The election results tell a bit:,_March_1933
You are correct, the distinction is important - but not that easy to determine.

Thu, 11/14/2013 - 15:01 | 4155056 daveO
daveO's picture

Hitler payed for it all by not paying war reparations, if I remember correctly. That'd be like BHO defaulting on our debt. Interest rates would neccessarily skyrocket. Never gonna happen. His banking 'puppet masters' would kill him.

Thu, 11/14/2013 - 13:13 | 4154553 Urban Redneck
Urban Redneck's picture

For those inclined to READ THE BOOK

Thu, 11/14/2013 - 13:56 | 4154788 New England Patriot
New England Patriot's picture

Well ain't nobody else gonna buy them. 

Thu, 11/14/2013 - 13:03 | 4154498 ChanceIs
ChanceIs's picture

So ... like .... ummmmmm ...... Dude .... like buy a vowel .....  Ummm ... didn't you like .... watch Roger Clemens .... like .. take it up the poop shoot ... like when he lied to Congress about ... like ... taking ... like ... steroids.  And then there was ... ummmm ... like when Congress .. like cut off Jon Corzine's left one ... like when he said he ... like .. didn't know where the $1.6 billion went.  Congress doesn't take s*&t from anybody.  No how. No way.  Bernanke is like ... sooooo hosed for that little fib.  You can take that to the Federal Reserve.

Jon Corzine's favorite R&R lyric:

She's so fine, there's no telling where the mopney went.

In all seriousness, rate this post up or down according to whether the Pubs will follow through and get Eric Holder impeached (and convicted).  Hey!!!  I can't prosecute HSBC - it will upset the financial system.

Thu, 11/14/2013 - 12:12 | 4154187 Pladizow
Pladizow's picture

How do you exit a market when you are the market?

Thu, 11/14/2013 - 12:16 | 4154193 Headbanger
Headbanger's picture

Good question!   But the answer is very very bad.

Yellen and the Fed have run out of gas as a recent ZH guest article explained.

So it doesn't matter what she says now.  She can't do anything except take the fall for all the bullshit these past five years.

Thu, 11/14/2013 - 12:31 | 4154279 FL_Conservative
FL_Conservative's picture

Might want to ask JPM about that one.

Thu, 11/14/2013 - 13:06 | 4154511 Buckaroo Banzai
Buckaroo Banzai's picture

So a little quick math here:

0.3% per week * 52 weeks/year = 15% per year

They already own 32% of all 10Y, so that leaves 68% to go

So in about 4.5 years, the Fed will own every 10Y bond.

Assuming, of course, the rate of purchase does not increase. Which it almost certainly will.

Martin Armstrong's Sept 2015 call of complete system reset is looking better and better.

Thu, 11/14/2013 - 21:21 | 4155913 socalbeach
socalbeach's picture

From the 2nd graph, they're "only" monetizing 70% of new issuance.  So if the Fed keeps QE constant at $85b/month, and new issuance doesn't drop, they could end up owning at most 70% (if durations don't change).

If everything stays the same, the exact formula is,

Fed(t) / Total (t) = (1.72+t*0.02446) / (5.2972 + t*0.03494)

where from the graph it looks like current Fed holdings are $1.72 trillion.  t = # of weeks from present. As t gets larger the max value is 0.7 (0.02446 / 0.03494).

In 4.5 years (234 weeks), Fed would end up owning about 55% of total.

Thu, 11/14/2013 - 12:15 | 4154202 Dr. Engali
Dr. Engali's picture

There is no intention of exiting.

Thu, 11/14/2013 - 12:23 | 4154242 max2205
max2205's picture

Amazingly they bought all those bonds and the 10 yr rate has doubled.....

Thu, 11/14/2013 - 12:25 | 4154249 EscapeKey
EscapeKey's picture

I don't know, but it sounds as if it might be worth sticking around for the fireworks.

Thu, 11/14/2013 - 12:40 | 4154341 wagthetails
wagthetails's picture

when they confiscate all cash and investments over $100k, they will do so with making you take Treasuries.  fixed. 

your friendly government thanks you for your ignorance and if you just let us look at your medical records we'll be able to increase your medical service. 

Thu, 11/14/2013 - 13:05 | 4154508 ChanceIs
ChanceIs's picture

Hmmmmm.  Try...

What is the sound of one hand clapping?

or maybe...

If a tree falls in the forest and nobody is around, did it make any sound?


Thu, 11/14/2013 - 13:29 | 4154652 WOAR
WOAR's picture

You may not hear the tree, but anybody can walk by and watch it die.

Thu, 11/14/2013 - 13:47 | 4154745 Bearwagon
Bearwagon's picture

New version: If gold is moved from one vault into another and nobody is around, does it make any sound?

Thu, 11/14/2013 - 12:14 | 4154189 Dr. Engali
Dr. Engali's picture

Clearly she went off the ranch with that one. She needs a few more uhhhhs and uhmms before she answers trick questions. She needs some more time practicing with the Bernank.

Thu, 11/14/2013 - 12:17 | 4154214 fonzannoon
fonzannoon's picture

It's like he knew she dropped the ball and tried to help her back into the role of "we don't understand gold".

I was hoping it would go off the rails and turn into this.

Thu, 11/14/2013 - 12:22 | 4154235 Dr. Engali
Dr. Engali's picture


Thu, 11/14/2013 - 12:12 | 4154186 Pairadimes
Pairadimes's picture

It's good to know that this has absolutely no adverse impact whatsoever on capital formation.

Thu, 11/14/2013 - 12:13 | 4154188 Cdad
Cdad's picture

Ummmm....watching this is the rock that the criminal syndicate known as Wall Street intends to stand on for the next 5-10 years?  Eh.....really?

Thu, 11/14/2013 - 12:27 | 4154258 Spitzer
Spitzer's picture

There was one hell of a shit fight on Schiff radio this morning. Peter vs Economist defo worth a feature

Thu, 11/14/2013 - 12:16 | 4154207 yogibear
yogibear's picture

This lady seems pretty dense.  She's been pushed up the promotion ladder.  Guess Obama needs someone that easily manipulated.

Thu, 11/14/2013 - 12:16 | 4154212 no more banksters
no more banksters's picture

"If one take a look at the data, can see that the share of the US government debt held by the "Federal" Reserve reached record levels in 2011, reaching 11.2% of GDP, the highest since 1940 onwards, and possibly the historically higher. In 2012, this rate was also high at 10.6% of GDP. Only once this figure reached such levels, in 1946, i.e. shortly after the end of WWII, when it reached 10.7% of GDP."

Thu, 11/14/2013 - 12:32 | 4154287 EscapeKey
EscapeKey's picture

In the meantime, they've busy bees "readjusting" and adding "tangential" wealth - and other made up statistics - to official GDP figures.

Notice how these adjustments only ever work in one direction. And when CPI figures are adjusted, they will be adjusted down. Obviously.

Thu, 11/14/2013 - 12:17 | 4154217 CHX
CHX's picture

No Tylers, I remember distinctly Bernanke saying that the FED did NOT monitize the debt. /sarc

Thu, 11/14/2013 - 12:18 | 4154220 BandGap
BandGap's picture

So let's be clear on this - the Federal Reserve is moving to literally own all the US debt, now and in the future. Correct?

Knowing this, how would any bank, as part of the Federal Reserve, ever move to change anything when they literally have the US by the balls?

Is it clear to the public that all of the candy is coming from banks who have the green light to print as much as they like?

This is completely insane.  

Thu, 11/14/2013 - 12:21 | 4154231 Cdad
Cdad's picture

It is not insane.  It is a fascist coup....ongoing...unchallenged...well, briefly challenged last night in the #AskJPM tweet stream.


Thu, 11/14/2013 - 12:21 | 4154233 fonzannoon
fonzannoon's picture

"So let's be clear on this - the Federal Reserve is moving to literally own all the US debt, now and in the future. Correct?"


They want to own the money supply spigot as well.

Thu, 11/14/2013 - 12:24 | 4154245 Dr. Engali
Dr. Engali's picture

Wait a second...she just said QE helped stock prices. McKinsey said that it didn't. I'm so confused.

Thu, 11/14/2013 - 12:26 | 4154253 fonzannoon
Thu, 11/14/2013 - 12:24 | 4154246 ebworthen
ebworthen's picture

So why doesn't the FED just pay my mortgage and other bills?

Oh...right!  I'm not a banker.

Thu, 11/14/2013 - 12:31 | 4154276 ChaosEquilibrium
ChaosEquilibrium's picture

Why is the CAC40 up OVER 1% today?


Rational 'markets'!????  FUCK YOU.....this goes DOWN VERY VERY BADLY!!

Thu, 11/14/2013 - 12:47 | 4154397 Flakmeister
Flakmeister's picture

And it doesn't matter as long as dollars are accepted for oil....

Till then, party on dude, the asteroid ain't here yet...

Thu, 11/14/2013 - 13:06 | 4154509 forrestdweller
forrestdweller's picture

There is no bubble.

There is no inflation.

There is no currency debasement.

There was never a crisis.

Thu, 11/14/2013 - 13:08 | 4154528 Buckaroo Banzai
Buckaroo Banzai's picture

We have always been at war with Eastasia.

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