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Chart Of The Day: The Fed Now Owns One Third Of The Entire US Bond Market

Tyler Durden's picture


The most important chart that nobody at the Fed seems to pay any attention to, and certainly none of the economists who urge the Fed to accelerate its monetization of Treasury paper, is shown below: it shows the Fed's total holdings of the entire bond market expressed in 10 Year equivalents (because as a reminder to the Krugmans and Bullards of the world a 3 Year is not the same as a 30 Year). As we, and the TBAC, have been pounding the table over the past year (here, here and here as a sample), the amount of securities that the Fed can absorb without crushing the liquidity in the "deepest" bond market in the world is rapidly declining, and specifically now that the Fed has refused to taper, it is absorbing over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week. The total number as per the most recent weekly update is now a whopping 33.18%, up from 32.85% the week before. Or, said otherwise, the Fed now owns a third of the entire US bond market.

At this pace, assuming Janet Yellen keeps delaying the taper again and again over fears of how "tighter" financial conditions would get, even as gross US bond issuance declines in line with the decline in deficit funding needs, the Fed will own just shy of half the entire bond market on December 31, 2014... and all of it some time in 2018.

Source: Stone McCarthy


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Mon, 12/02/2013 - 15:18 | 4207175 fonestar
fonestar's picture

But the dummies on this site still like that bank's paper.

Mon, 12/02/2013 - 15:22 | 4207186 Pladizow
Pladizow's picture

Soooooo, how do you exit a market when you are the market?

Mon, 12/02/2013 - 15:23 | 4207198 NoDebt
NoDebt's picture

Ask Jamie Dimon.  It's a bit expensive.  Good thing the Fed can self-recapitalize or they might have a tough time of it.

Mon, 12/02/2013 - 15:25 | 4207206 hedgeless_horseman
hedgeless_horseman's picture



That chart looks like China's gold holdings.

Mon, 12/02/2013 - 15:26 | 4207210 NoDebt
NoDebt's picture

Yeah, but China can't print more gold.  We can always print more Treasury debt.

Mon, 12/02/2013 - 15:34 | 4207225 nope-1004
nope-1004's picture

The headline on the inter-office emails among the FOMC members reads a bit different.  Goes something like this:  "Fed still doesn't own 67% of all outstanding bonds."

Ones perception is ones reality.

This won't end well.


Mon, 12/02/2013 - 15:43 | 4207260 Occident Mortal
Occident Mortal's picture

Anyone else think Bruno Iksil's IG9 episode was a kind of Gemini Project for the taper?

The deficit is expected to contract significantly over the next 18 months.

The further the Fed goes into USG the more everyone will prepare to short.

Mon, 12/02/2013 - 16:10 | 4207381 zaphod
zaphod's picture


This simply means that the US Gov has not issued enough debt. This is an easily solvable problem.

Mon, 12/02/2013 - 16:19 | 4207417 Winston Churchill
Winston Churchill's picture

Not to worry, the PBOC has a plan to change that shortage of US govt. debt.

Plenty of demand caused by not rolling debt over as it falls due.

How long until the 'market' catches on ?

Mon, 12/02/2013 - 16:43 | 4207527 MillionDollarBogus_
MillionDollarBogus_'s picture

In Rome, the Pope takes a swipe at trickle down economics...

"...In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting..."

Frankie, they are waiting in line at WallyWorld..


Mon, 12/02/2013 - 16:46 | 4207553 Occident Mortal
Occident Mortal's picture

Trickle down economics does not work because by the time the money reaches the poor it has changed hands several times and the ensuing inflation neutralises the new purchasing power before it gets very far down the chain.

Mon, 12/02/2013 - 16:53 | 4207591 negative rates
negative rates's picture

We need a red graph or i'm gonna declaire war.

Mon, 12/02/2013 - 17:53 | 4207824 Manthong
Manthong's picture

Well, I just got a couple of gold fillings (really).

One of these days I will be worth more than a third of the bond market.

Mon, 12/02/2013 - 18:12 | 4207895 I am more equal...
I am more equal than others's picture



My rich fantasy life:

Selectively default on the third that is owned by da goberment.  Justice sues Treasury.  Then Treasury turns the IRS on each Justice appointee and employee.  Invite Hulk Hogan to host the event.  Buy popcorn and sit back and enjoy.  Theater for everyone - drama, comedy, tragedy.

Mon, 12/02/2013 - 20:23 | 4208228 Bill the Cat
Bill the Cat's picture


Mon, 12/02/2013 - 20:31 | 4208248 Ralph Spoilsport
Ralph Spoilsport's picture

Exactly! +1

Mon, 12/02/2013 - 21:06 | 4208364 Son of Loki
Son of Loki's picture


Mon, 12/02/2013 - 16:57 | 4207606 Herd Redirectio...
Herd Redirection Committee's picture

The first spend of newly created money is always the sweetest.  Hence the popularity of the scam.

Mon, 12/02/2013 - 17:22 | 4207710 Yen Cross
Yen Cross's picture

  I can't believe MDB posted that comment. I'm completely flabberghasted! Did you just just get out of the Kool-Aid rehab. for Krugmanomic addiction?

Mon, 12/02/2013 - 17:31 | 4207736 akak
akak's picture

Look more closely at the name: "MillionDollarBogus", NOT "MillionDollarBonus".

Mon, 12/02/2013 - 18:02 | 4207861 infinity8
infinity8's picture

Bah!- he got me!

Mon, 12/02/2013 - 19:43 | 4208128 NoDebt
NoDebt's picture

Yeah- MillionDollarBOGUS is the real deal.  MillionDollarBonus is the bullshitter.

I still can't imagine why Bogus keeps his screen name.  That's gotta get old pretty quick.

Mon, 12/02/2013 - 17:33 | 4207748 OneTinSoldier66
OneTinSoldier66's picture

Take a closer look at that nick.

Mon, 12/02/2013 - 17:40 | 4207768 Yen Cross
Yen Cross's picture

  Thanks fellas. I was caught up in the "rational exuberance" of a down day in the markets.

Mon, 12/02/2013 - 18:05 | 4207870 Herd Redirectio...
Herd Redirection Committee's picture

I think everyone reading the comment did a double-take.

Mon, 12/02/2013 - 19:54 | 4208161 booboo
booboo's picture

This Pope is a certifiable retard statist who wouldn't know a free market economy from a virgin, runs a empire worth billions of looted nazi gold and probably only job he ever had was trading Father Goodknob blow jobs for hersey bars.

Mon, 12/02/2013 - 20:53 | 4208325 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

But he does not read the Koran so he has got that going for him.

Mon, 12/02/2013 - 16:06 | 4207359 LawsofPhysics
LawsofPhysics's picture

Indeed.  Even though the deficit is decreasing, the liabilities and interest must still be funded and serviced.  Good luck to a disfunctional CONgress in that effort when rates return to their historical averages.  Will not happen, the Fed will buy 100%, then 150%, then 300% etc. etc.

Nothing changes until the supply line break in earnest.  My guess is that by that time a family of four with a annual income of $500,000 will be eligible for SNAP.  Go find a survivor of the great depression and let them know that a family of four with a $50,000 income is now eligible for SNAP.  Math is a bitch, "this will not end well" is an understatement.

Mon, 12/02/2013 - 16:19 | 4207420 Occident Mortal
Occident Mortal's picture

The cost of servicing the debt is the same as it was in 2006/2007 even though the national debt has ballooned from $8trillion to $17trillion.

When rates tick up, the deficit will gape forcing the Fed to continue QE.

The snake will eat its tail. And when people realise that the Fed has lost control it will all collapse.

Mon, 12/02/2013 - 16:22 | 4207432 LawsofPhysics
LawsofPhysics's picture

Steady as she goes....

(productive physical assets, cash/coin, and a dependable tribe...)

WWIII is already underway, the shooting simply has not started yet.

Mon, 12/02/2013 - 18:36 | 4207960 WillyGroper
WillyGroper's picture

Productive physical assets?

Would this qualify?

Times are tough.

Mon, 12/02/2013 - 16:53 | 4207598 Diogenes
Diogenes's picture

They lost control years ago. Or rather, they passed the point of no return.

Mon, 12/02/2013 - 20:12 | 4208190 disabledvet
disabledvet's picture

"no good deed goes unpunished." the Government must first blame itself for what happened in 2008 (monetize the debt, pray the dollar doesn't collapse, double top the commodity bubble and rake in the dough on the MBS's through Fannie and Fred...check) then raise taxes (check) then deny the benefit ( to speak.) As Clint Eastwood famously said "NOW we dance." yes...the spread is widening...close to the widest in US financial history actually...but the point of "effecting" that is for the spread to start paying for the my view. there's suppose to be a ton of inflation by my calculation(s) now...or at least a mild inflation that is containable at a certain level...yet interest rates never responded "rationally" to my thesis...while every other asset class sure did. So i took a flier after compounding 30% for four years..."in wonderment" i guess (or just plain curiosity.) Did the Fed disabuse me of my notion that "they really want that gap to be the widest ever"? Nope. In feel like the financial equivalent of "Worf" on Star Trek..."the Next Generation" this year. Just..."out of place" on the Bridge... but still on the Bridge for some reason.

Mon, 12/02/2013 - 16:55 | 4207599 negative rates
negative rates's picture

Show me one place where the deficit is decreasing? Just one.

Mon, 12/02/2013 - 17:38 | 4207763 Oracle of Kypseli
Oracle of Kypseli's picture

The O'bummer's are taking  fewer trips overseas

Mon, 12/02/2013 - 15:36 | 4207236 Antifaschistische
Antifaschistische's picture

Forget the Fed buying for a minute. Who's selling and why?

They're selling because the Fed is clearly paying above (otherwise) market rates. That makes sense. So, the sellers aren't putting their money back into Treasuries. It's going into other asset classes. So, the Fed's action is really pumping the stock market. They way I see it, the Fed won't stop buying Treasuries until the insiders are well prepared to profit from their short positions in the secondary asset classes. 

But the insiders will know exactly when that will happen or won't they get it going both ways.   All the chatter from the Fed about considering to taper is just window dressing to keep the 99.9% thinking they're actually considering it, while the .01% continue to profit off their treasury liquidation and secondary asset class appreciations.

Mon, 12/02/2013 - 16:11 | 4207297 hedgeless_horseman
hedgeless_horseman's picture



Who's selling and why?

United States Treasury Secretary, Jacob Joseph "Jack" Lew, the middle guy in this photo, is the one selling all those treasuries to The Fed, mostly because of deficit spending.

A Jew borrowing all of that money, from a bank controlled by other jews.  I wonder what Jehovah thinks of this.

Deuteronomy 23:19-20 ESV

You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.

"Give me control of a nation's money and I care not who makes it's laws"
— Mayer Amschel Bauer Rothschild

Mon, 12/02/2013 - 19:57 | 4208164 Almost Solvent
Almost Solvent's picture

Look out before they Francis Sawyer your ass - although they did give you the ability to post pictures, so maybe you are juiced in. 

Mon, 12/02/2013 - 20:40 | 4208281 Ralph Spoilsport
Ralph Spoilsport's picture

h_h, the entire argument between you and VD has been deleted apparently. Along with other choice comments from Bay of Pigs and others. Just a heads up.

Mon, 12/02/2013 - 15:24 | 4207204 Headbanger
Headbanger's picture

That's easy!  You clone your self, sell to the other you, repeat ad infinitum and ad nauseam

Mon, 12/02/2013 - 15:49 | 4207281 Martial
Martial's picture

"At this pace, assuming Janet Yellen keeps delaying the taper"....

...forget the taper, what happens when she DOUBLES QE? FED owns ALL treasury market by 2015?

Mon, 12/02/2013 - 16:12 | 4207397 SDShack
SDShack's picture

Actually, they only need to own 51% to effectively control the bond market. Their end game is much closer than most people realize.

Mon, 12/02/2013 - 19:52 | 4208155 max2205
max2205's picture

If the fed increases qe...the up 15% open will be the will be an epic reversal

Mon, 12/02/2013 - 21:22 | 4208404 eclectic syncretist
eclectic syncretist's picture

which would essentially mean it no longer exists


Mon, 12/02/2013 - 16:21 | 4207421 Fukushima Sam
Fukushima Sam's picture

"Soooooo, how do you exit a market when you are the market?"

It's like a financial version of "the stranger".  Sit on your left hand until it goes numb, then have your right hand sell while your left hand buys. 

It's just like you're selling to someone else!

Mon, 12/02/2013 - 16:59 | 4207617 NEOSERF
NEOSERF's picture

And without "allowing" the rate to rise which kills off your exit strategy?  Insanity, this will take 5 years to taper to stop the growth and then what??..Does the Fed hold to maturity??  I guess so.  But without them sopping up everything no one else really wants, you have to create a crisis elsewhere so that these bonds look REALLY REALLY good and creates "flight to safety" to sop up demand

Mon, 12/02/2013 - 15:22 | 4207187 Charles Nelson ...
Charles Nelson Reilly's picture

Nah, I'm off paper... I take pennies now and laser print the bitcoin emblem onto them.  Shit is going to da moon, brah!

Mon, 12/02/2013 - 15:21 | 4207189 InspectorBird
InspectorBird's picture

not that i know of... but i heard some fools are falling for even crazier scam, invisible coins.

Mon, 12/02/2013 - 15:24 | 4207201 fonestar
fonestar's picture

Pretty much everything that exists is invisible.  What is your point?  That human's five senses are limited and so you should limit yourself to them?

Mon, 12/02/2013 - 15:31 | 4207224 InspectorBird
InspectorBird's picture

i bet bitcoin creators are laughing their asses off when they read your comments :) the grin on their faces must be priceless. I mean to run a scam and transfer wealth and at the same time having victims adore, praise and idolize you, that must be the whole new level of thievery.

Mon, 12/02/2013 - 15:41 | 4207252 RmcAZ
RmcAZ's picture

Warren Buffett level trolling

Mon, 12/02/2013 - 15:46 | 4207272 fonestar
fonestar's picture

Actually my OP had nothing to do with Bitcoin.  I was just mentioning the general observation that most stackers continue to drive up dollars, passively transact in dollars and are very much their own worst enemy.

Mon, 12/02/2013 - 16:04 | 4207337 quasimodo
quasimodo's picture

Difference being stackers have something physical to show for it even in if the price is suppressed. You have some digits somewhere in a "wallet"(LOL), and maybe a dick in your hand whilst doing a circle jerk with spyker and a few other trolls. 

you hang out here hitting refresh to be able to say "FIRST!"? Fascinating indeed, along with your fan club of two or three up arrows, one of which probably belongs to you.

Mon, 12/02/2013 - 15:25 | 4207202 Bay of Pigs
Bay of Pigs's picture

How the fuck do you get the first comment on every thread lately?

fonestar = Tyler?

Mon, 12/02/2013 - 15:24 | 4207205 fonestar
fonestar's picture

Fonestar is highly liquid.

Mon, 12/02/2013 - 15:29 | 4207216 fonzannoon
fonzannoon's picture

At what point do we switch from "It's flow that matters" to "it's stock that matters".

My guess is sometime ago.

Mon, 12/02/2013 - 15:35 | 4207235 NoDebt
NoDebt's picture

If the supply is limited or fixed, you look at the stock.  If it's not, you look at the flow.

Is the supply of freshly minted Treasuries (debt) limited?  Depends how you answer that question which one you look at.

Me?  I'm in the "don't worry, they'll make more of it" camp.  

Mon, 12/02/2013 - 15:41 | 4207249 fonzannoon
fonzannoon's picture

I'm lookin at stock my man. They are gaining control by the day. They will own it all soon enough. The more the own the more limited any hissy fit becomes. 

Mon, 12/02/2013 - 15:49 | 4207269 Ham-bone
Ham-bone's picture

Funny to note that all of the Fed's % increases are coming from domestic holders of Treasury debt...while foreign  % holdings continue rising.  Hmmm.  In other words, Fed will eventually remove all domestically held Treasury holdings and replace with "risk" assets...

Domestic total Treasury holdings still bout what they were in '00...while Fed and Foreigners exploding...any hypothesis where this is going???

Mon, 12/02/2013 - 15:50 | 4207289 fonzannoon
fonzannoon's picture

The fed will have full control of the monetary spigot and will eliminate the treasury bond market. That is where it is going.

Mon, 12/02/2013 - 15:55 | 4207310 Bay of Pigs
Bay of Pigs's picture

I don't remember hearing that on the BlowHorn?


Mon, 12/02/2013 - 16:07 | 4207342 Ham-bone
Ham-bone's picture

Fonz - I know that makes sense but the #'s are saying something different...what is happening is the Fed exchanging dollars for Treasury's w/ pensions, insurers, and the like domestic holders of Treasury debt while the Fed and "foreign" interests can't get enough...if the data is to be believed, then none of the Fed's buying is coming from foreigners and all that is happening is the entire removal of domestic Treasury holders...why???  Under what scenario does it make sense that the Fed and Foreigners buy up all Treasury debt and jointly (not Fed alone) own it outright??

Mon, 12/02/2013 - 16:32 | 4207484 madbraz
madbraz's picture

agree, it is idiotic.  It is not supposed to make sense, it's just a "kill the safe haven" and go long risk idea that was probably fed to the mouth of the Fed by the primary dealers.


It may have the opposite effect.  While the paper value of risk assets has risen by some $5 trillion since QEver on the heels of only  $1 trillion in bond purchases, when the flow reverses and the safe haven trade is bid (at some point it will) yields may fall to "recorder" lower levels.


The 30 yr yield touched 2.5% during the 2008 crisis.  It touched 2.5% again in 2012 as operation twist was doing nothing to kill the safe haven trade (as QEs do).  Absent QEver, where does it go?


Down.  A lot.


Mon, 12/02/2013 - 16:45 | 4207545 fonzannoon
fonzannoon's picture

Hambone here is the short answer. all this is being executed according to a grand design of buying all the bonds and then creating two entirely separate streams of money velocity. One for government and one for the financial system.


Mon, 12/02/2013 - 17:10 | 4207658 Ham-bone
Ham-bone's picture

Fonz - if you mean they plan to "retire" all bond debt I kind of get it but I'm just curious what the holders are going to get in return for it???  Guess the Fed and foreign CB's will get some sort of golden parachute...

Mon, 12/02/2013 - 17:58 | 4207848 fonzannoon
fonzannoon's picture

Hambone here is a longer answer from someone that I speak to that used to be on here and still should be.

"really what the Fed has achieved here is like when humans first discovered they could dam up rivers. The Fed has engineered the worlds economic dam with locks and everything. We all thought you could never a tame a river like the markets but the Fed has done it- its a perfect analogy: the primary dealers are the bricks in the dam wall and the hydroelectric mechanism inside the wall is their dividend machine, that little current generated as the water sluices through them at a pace the Fed decides (the 0.25% interest on every dollar printed and not allowed to be released into the economy, in perpetuity) is their reward for holding the line. And for the rest of us, we get exactly as much water as the Fed thinks we can handle without risking flooding, which so far so good as long as commodities rigging holds up, which is fine as long as OPEC is comfortable. The trick of course is to get your water from as close to the Dam as possible before everyone has a

chance to piss in it...

just to add:
Ham-bone is correct btw about buying up the domestic market while foreigners keep buying. That is the foreginers way of buying into the first sip from the money spigot. That is their buy-in to enjoy the fruits of this game. That is why China has so many treasuries and that is what allows it to basically peg its currency to the dollar (because as an exporter it would otherwise have too much money coming home). So China being a primary dealer and all the other countries buying treasuries to a smaller degree are buying a share in the Fed's monopsony. The biggest beneficiary is of course the US gov, which will essentially be able to "borrow" at virtually no interest, followed by the PD's who get the second sip from the spigot.  

Mon, 12/02/2013 - 20:18 | 4208207 gatorengineer
gatorengineer's picture

Let me give you a different take.  Fed has signalled the domestics to get out and suck all of the foreign money in.  Then taper and let the rate hit 6 or so on the 10...  The Chinks are stuck....  hold to maturity at nothing or sell at a huge loss.....  The simple answer is usually the correct one.

Mon, 12/02/2013 - 17:47 | 4207799 Yen Cross
Yen Cross's picture

 @ Ham-bone  I remember your post a few weeks back, Re; foreign buying of U.S. bonds. It was eye opening and showed the global central bank collusion in vivid detail. I don't know who's right or wrong. I've great respect for both Fonz and Yourself.

  I'm still scratching my head on that short term note auction that was canceled earlier today.

Mon, 12/02/2013 - 18:25 | 4207902 Ham-bone
Ham-bone's picture

@ Yen - Fonz or yourself are far more likely to understand where this is going...Fonz's explanation of the buying makes about as much sense as anything...but does lead to a small concern ultimately as the back-ups in actual liquid behind those dams becomes immense and because everybody knows that liquid will never be released (because it would cause the flood of all floods) they all build in the flood zone...ensuring far too much pressure will ultimately be put on the dam(s)...moral hazard writ large.  Human nature and group think coupling to ensure an unbalanced system will ultimately (don't know when???) collapse.

Hell, the commodity space being disconnected from the liquidity house is ultimately so self defeating...lowering exploration, lowering technological drivers to use these resources more efficiently, driving prices down while available resource is likewise made more scarce.  The ultimate snap back from this sort of policy is so economically and societally negative vs. a simple management of ensuring commodity prices rise but in a steady, consistent, unspectacular manner.  The present course seems destined for a sudden crack...likely in conjunction w/ that break in the dam above.

Mon, 12/02/2013 - 19:30 | 4208103 fonzannoon
fonzannoon's picture

Hambone some follow up for you...

" Hambone is making an incorrect conclusion about the waters backing up and threatening to overtake the dam. That is hardly happening. If anything its the reverse, .gov can barely print enough money for the Fed to absorb fast enough (see original chart on the article). If anything, the Fed needs the government to print more money at the moment, which .gov will dutifully do come election time when its time for politicians to promise moar handouts. Get to work Mr. Schumer!

And the second part about the commodity producers is negligible, because in the first place, as long as OPEC is comfortable, so is pretty much everyone, and they are very vocal about maintaining this rigged $100 range. Secondly, only the small commodity producers are totally fucked, the big producers of commodities will be just fine, they can always count on the crony capitalist system of handouts and bailouts to make sure their production isnt impacted to any serious degree, not to mention insider tips from those executing all this to help them keep profits even on their big time futures hedging operations. From now on BHP will simply have to short the shit out of the paper iron and copper market in order to stay profitable. 

Mon, 12/02/2013 - 21:32 | 4208434 The Thunder Child
The Thunder Child's picture

Even though I don't post much as of late it is the sub threads like the one above that always keep me coming back to read the comments for understanding and wisdom, thanks guys!

Mon, 12/02/2013 - 21:40 | 4208445 fonzannoon
fonzannoon's picture

please post more. I've been on here so long I ran out of fart jokes 2 years ago.

Mon, 12/02/2013 - 21:39 | 4208449 Yen Cross
Yen Cross's picture

  I see two perfect gentlemen forging a new constitution in a bunker. ;-)  America is larger then it's self appointed spenders?

    I'm thankful we have Fonz and Ham_Bone to set the record STRAIGHT!

Mon, 12/02/2013 - 18:49 | 4207994 CrashisOptimistic
CrashisOptimistic's picture

Pretty much.  Of course, the other question is if they own it all and are not selling, how can the price experience selling pressure?

Mon, 12/02/2013 - 21:27 | 4208411 eclectic syncretist
eclectic syncretist's picture

the more they own the more irrelavant it becomes

Mon, 12/02/2013 - 15:52 | 4207293 nope-1004
nope-1004's picture

Would be interested to know what percent of "foreign" is Japanese, bought under a quiet US/JP deal to do so.



Mon, 12/02/2013 - 15:58 | 4207309 Ham-bone
Ham-bone's picture





  • GDP $9.5 T
  • Marketable debt = $3.3 T  (blended interest rate of 6.4%)
  • Non-marketable debt = $2.3 T
    • Fed           2% of Notes/Bonds/TIPS ($50 B)
    • Foreigner 30% of Notes/Bonds/TIPS (890 B)
    • Domestic 68%




  • GDP $13.7 T
  • Marketable debt = $5.1 T  (blended interest rate of 5%)
  • Non-marketable debt $4.1 T
    • Fed  4% of Notes/Bonds/TIPS ($200 B)
    • Foreigner  42% of Notes/Bonds/TIPS ($2.2 T)
    • Domestic 54%




  • GDP $16 T
  • Marketable debt = $12.2 T  (blended interest rate of 2.3%)
  • Non-marketable debt = $4.9 T
    • Fed           22% of Notes/Bonds/TIPS ($2.2 T)
    • Foreigner  50% of Notes/Bonds/TIPS ($5 T)
    • Domestic 28%
Mon, 12/02/2013 - 15:48 | 4207284 nope-1004
nope-1004's picture

I think this has been the plan all along.  No change can come about to the currency or interest rates without being the majority owner first, thereby diminishing cause and effect.



Mon, 12/02/2013 - 15:37 | 4207240 Bay of Pigs
Bay of Pigs's picture

I wish I was joking fonz. Seeing this guy spam every thread has me scratching my head. His schtik is getting very old and stale.

Mon, 12/02/2013 - 15:41 | 4207255 fonzannoon
fonzannoon's picture

I know, I used your post to change the subject back to the content of the article.

Mon, 12/02/2013 - 18:12 | 4207893 Herd Redirectio...
Herd Redirection Committee's picture

When in doubt, blame Mossad.

Mon, 12/02/2013 - 15:33 | 4207220 prains
prains's picture

How do you keep it from leaking out your ears?

Mon, 12/02/2013 - 16:23 | 4207435 ElvisDog
ElvisDog's picture

Fonestar is highly unemployed and highly living in his mom's basement......

Mon, 12/02/2013 - 16:57 | 4207607 negative rates
negative rates's picture

Until he isn't.

Mon, 12/02/2013 - 20:55 | 4208329 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Goooey high protein liquid swallowing I bet.

Mon, 12/02/2013 - 15:28 | 4207211 Ralph Spoilsport
Ralph Spoilsport's picture

Like I said earlier, it's Satoshi his own self posting as fonestar, talking his book.

Mon, 12/02/2013 - 15:30 | 4207217 fonestar
fonestar's picture

Yeah, it's only rising because it's a big conspiracy maaaan!!

Mon, 12/02/2013 - 15:35 | 4207234 Ralph Spoilsport
Ralph Spoilsport's picture

You haven't denied that you are Satoshi. There's a conspiracy for ya.

Mon, 12/02/2013 - 15:40 | 4207247 fonestar
fonestar's picture

I do deny it (as if I really need to but that's flattering hahaha...) and will go on to say it's people like yourself that wind up making all conspiracy theories look dumb.

Mon, 12/02/2013 - 15:48 | 4207287 Ralph Spoilsport
Ralph Spoilsport's picture

You bestow too much importance on a humble ZHer having some fun at your expense. You remind me of DCFusor trying to convince everyone here to buy a Chevy Volt.

Mon, 12/02/2013 - 15:52 | 4207303 fonestar
fonestar's picture

Believe me pal, I am happy you people are not buying BTC  :-)

Mon, 12/02/2013 - 16:07 | 4207352 CH1
CH1's picture

I am happy you people are not buying BTC

Agreed. We don't need their endless bitching in the new, clean pond.

Mon, 12/02/2013 - 16:58 | 4207611 ElvisDog
ElvisDog's picture

Exactly, CH1, you and Fonestar can ping-pong bitcoin up to $100K and mutually claim victory......

Mon, 12/02/2013 - 15:28 | 4207212 economics9698
economics9698's picture

He was laid off at the donut shop and picked up this Obama spammer job.

Mon, 12/02/2013 - 15:35 | 4207237 Calmyourself
Calmyourself's picture

fonestar or LTER: Hmm, curiouser and curiouser...

Mon, 12/02/2013 - 16:04 | 4207343 CH1
CH1's picture

But the dummies on this site still like that bank's paper.

I understand that you have been called all sorts of unfair names, my friend, but please pull back from name calling.

Whether or not they "deserve it," it doesn't help. Let arrogant ignoramuses be what they are and judge themselves.

Mon, 12/02/2013 - 17:24 | 4207721 Alexandre Stavisky
Alexandre Stavisky's picture

Treasury issues futurative claims upon the collective surplus of the nation's economic aggregates (very weak is the chain of authority from populace to do so).  Fed prints vast sums of new money and purchases through prime dealers diluting out all other currency holders (eventually).  If you were to sum the treasury holdings of the owners/subordinates of central bank what greater percentage would it really be?

This is foolhardy because all see the trick.  Tax receipts may pay the interest but in open sight is viewed the never-ending and enlarging deficits which surpass revenues.  All view the money creation which pretends purchase but without the filthy process of invention and creation of goods/services to back the new legal tender.

How the system doesn't immediately break down, I don't know.  Some pretend that the LLR will never have to submit their portfolio to real market scrutiny but will allow them to naturally run off.  Some pretend that the extreme intervention is a limited function over time which will be subjected to a "taper" at some future point and normal monetary policy will resume.  Some pretend that employment will revive, that wages will resume in robustness, that the free market will at some future time, "step into the breach".  Some pretend we can have unlimited QE, the state make arbitrary interventions into the free market, whimsical determinations of the price of money; indeed, everywhere dilution without penalty repercussion.  But take the experience of 22+ year Japan.  Every intervention precipitated another larger scale intervention.  Every head-fake attempt to position back to the traditional market was met with further dimunition.

QE is the mort in international MortGage.  It destroys capital. It destroys confidence.  Once embarked upon it cannot be restrained.

Take it to its logical limit: What is to stop the instantaneous creation of infinite money?  There is no restraint, except that those who benefit by this strange priestcraft seek to extenuate their gain through its implementation.  It is a means to create wealth differentials over time to capture the beneficial activity of society and direct it to their good and the public's loss.  Infinite money destroys the system.  Dibs and drabs of QE bursting to the scene over time, carefully propagandized and sprinkled with admonitions of "taper" (which never come true) keep this child's playtoy of an economic system viable.

Can we afford to make the mistake of an economic system that has leapfrogged labour, machinery, factories, thrift and wise husbandry and gone straight to state-sponsored fraud of unbacked money creation?  At what point does national and international repudiation take hold?

Mon, 12/02/2013 - 20:59 | 4208337 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Fantastic post. Thank you.

Mon, 12/02/2013 - 20:40 | 4208278 fxrxexexdxoxmx
fxrxexexdxoxmx's picture


Why all the hate brother? Did your boyfriend not show you who is the top in your realtionship this morning.

Mon, 12/02/2013 - 15:19 | 4207176 Charles Nelson ...
Charles Nelson Reilly's picture

c'mon... exiting that will be a non-event!?!

Mon, 12/02/2013 - 15:21 | 4207191 Headbanger
Headbanger's picture

Yeah just like Hiroshima and Chernobyl and Hurricane Katrina were "non events". Yeah... that's the ticket!

Mon, 12/02/2013 - 15:47 | 4207282 Dr. No
Dr. No's picture

You are correct.  It will be a process.

Mon, 12/02/2013 - 15:19 | 4207181 HedgeAccordingly
HedgeAccordingly's picture

10 and 30 year wil continue to get rocked .. smart $ knows the taper will come.. now they searching for nominal asset value IE .. rational value seeking..

Mon, 12/02/2013 - 15:20 | 4207183 depression
depression's picture

"High Quality Paper"


Mon, 12/02/2013 - 15:28 | 4207213 fonestar
fonestar's picture

"Made of 100% recycled third world nations"

Mon, 12/02/2013 - 15:37 | 4207242 Jesus Christ
Jesus Christ's picture

The US, through the fiat dollar, has indeed turned the whole world into its own personal labor camp. People making stuff for us in exchange for nothing except fiat. Alexander the Great, ancient Rome, etc, etc, have NOTHING on the US empire.

Mon, 12/02/2013 - 15:21 | 4207190 buzzsaw99
buzzsaw99's picture

we had libor fixings with our turkey on thursday. luv those fixings! YUM YUM!

Mon, 12/02/2013 - 15:23 | 4207192 Dr. Engali
Dr. Engali's picture

    "and all of it some time in 2018."


       That's the been the plan all along.

Mon, 12/02/2013 - 15:25 | 4207207 NoDebt
NoDebt's picture

Looking more and more like Japan all the time, wouldn't you say?  I know it's not a perfect analogy, but it's still the closest one I've got to explain where we're headed.

Mon, 12/02/2013 - 15:42 | 4207251 Al Huxley
Al Huxley's picture

Except that the Japanese have to weaken their currency to strengthen their export market, since they still have to at least nominally make some shit and sell it.  Whereas here the USD goes up so its cheaper to buy shit from other countries with all the new debt that's being issued.  So who's smarter?!  Stupid Japanese...

Mon, 12/02/2013 - 15:22 | 4207194 AgLand
AgLand's picture

Shades of the Hunt Brothers...

Mon, 12/02/2013 - 15:22 | 4207195 ToNYC
ToNYC's picture

Time will collapse somehow, on their orderly run-offs absent petrodollar singularity.

Mon, 12/02/2013 - 15:23 | 4207199 screw face
screw face's picture

when was it China got their direct Fed window Pass.

Mon, 12/02/2013 - 15:27 | 4207209 Rainman
Rainman's picture

The rationale is simple. Either this madness continues or a hundred trillion in interest rate derivatives go boom. Now pull my finger.

Mon, 12/02/2013 - 15:33 | 4207233 BandGap
BandGap's picture

So the lesser of two madnesses, that will likely end in boom anyway?

Who is in charge of this shit?

Mon, 12/02/2013 - 15:41 | 4207256 semperfi
semperfi's picture

everything that has a beginning has an end...

Mon, 12/02/2013 - 21:54 | 4208491 besnook
besnook's picture

n+1. this is the qe model. it can go on forever! lol

Mon, 12/02/2013 - 15:29 | 4207219 starman
starman's picture

" high quality colleteral" LMAO!

Mon, 12/02/2013 - 15:34 | 4207232 Calmyourself
Calmyourself's picture

Great, that makes things like our entire financial structure so much more, I dont know, robust yeah thats it..

Mon, 12/02/2013 - 15:49 | 4207244 Quinvarius
Quinvarius's picture

Who needs liquidity when you have an endless printing press bid?  Treasuries are worth whatever the Fed says they are worth.  Stocks are worth whatever the Fed says they are worth.  The only loser is the real economy.  That is the same as it has been for 40 years.  I am pretty sure the COMEX was unable to deliver gold this contract.  But they keep selling contracts anyway.  They put a number on a screen.  If you can't make money selling at that number, close your business.  If you bought something at that number, but it does not exist, close your business. 

Mon, 12/02/2013 - 16:35 | 4207498 ToNYC
ToNYC's picture

Short the w/i all day long when uncle's in the house.

Mon, 12/02/2013 - 15:42 | 4207248 semperfi
semperfi's picture



v.  to absorb over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week

Mon, 12/02/2013 - 15:45 | 4207266 madbraz
madbraz's picture

As per FDIC, banks own only $150 billion in Treasuries and almost $900 billion in agencies.


Banks hate treasuries and short the living Jesus out of them - with the blessing of the FED who lends Treasury collateral to them daily to the tune of at least $25 billion/day - $12 billion in securities lending (+$8 billion rolled over from the day before), $3-8 billion in reverse repo (today was $8billion as POMO was light!) plus POMO.


Who needs to own them when you can borrow them from the FED and pledge them as collateral (and re-pledge) on risky bets, or even short them straight!


Banks hold $270 billion in foreign debt (most likely Deutsche Bank's US subsidiary Taunus).




Mon, 12/02/2013 - 15:51 | 4207294 Clowns on Acid
Clowns on Acid's picture

So Tyler.... when are you coming out with your 2yr's vs 10yr IRS steepener trade ?

Mon, 12/02/2013 - 15:53 | 4207302 DebtSlaveZombie
DebtSlaveZombie's picture

Gold getting slapped around like a little b*tch again today.  The brutal.  Silver nearing its pre-QE2 level.  This really is the sign.  But not the sign you guys are wanting.  Near term its Silver/Gold slam fest.  Gold 1000 and silver 15 soon to come.  That would be the ever symbolic 66.666 gold to silver ratio we were expecting.  But, it's not gonna stop there.  By 2015 we will see Gold 800 and Silver 11.  Why?  Because the markets will destroy anything in its path.  No one wants to hold "flight to safety" assets when there is no risk in the market... at least not yet.  It's sunshine and rainbows till 2016 people.  S&P +20% per year until mid 2016.  Gold/Silver will wash everyone out in the mining and metals game.  Gonna be ugly.  Before it gets ugly.

Mon, 12/02/2013 - 16:01 | 4207338 Bay of Pigs
Bay of Pigs's picture

Wrong. Production costs are well above those levels. Miners can not, and will not, be in business at $800 and $11. That means real physical shortages.

No risk in the market? WTF? Give your head a shake. Sounds like you aren't up to speed on the fraud ridden paper market which is in the process of imploding right now.

Mon, 12/02/2013 - 16:14 | 4207404 Papasmurf
Papasmurf's picture

Mining production costs can go down during a recession.  

Mon, 12/02/2013 - 16:37 | 4207509 Bay of Pigs
Bay of Pigs's picture

What.The.Fuck? Mining costs have increased every year for many years. There is inflation in the pipeline.

Costs are up not down.

Mon, 12/02/2013 - 16:30 | 4207481 Ghordius
Ghordius's picture

nope. gold is the only market of the world where supplier flow is not relevant. there can't be "shortages" as for consumabls

miners could go bust. all of them. the world would not stop. yet this isn't a reason not to stack every month, then after a year they could reopen due to immense price gains

having said that, at 1'150... things could get frantic

Mon, 12/02/2013 - 16:41 | 4207532 Bay of Pigs
Bay of Pigs's picture

Huh? That's ridiculous gibberish. In 2008 we saw massive shortages and delivery delays.

Mon, 12/02/2013 - 17:00 | 4207621 akak
akak's picture

His argument also ignores the case of silver, for which there is most certainly NOT a 50 years' production stockpile, not to mention platinum and palladium, which curiously tend to follow the price movements of gold despite the fact that each metal has an above-ground stockpile of less than ONE YEAR worth of annual production.  Something is not right with this picture.

Mon, 12/02/2013 - 17:21 | 4207708 DebtSlaveZombie
DebtSlaveZombie's picture

Different type of risk.  This is not a free market anymore.  If you play it like that you will get crushed.  You cannot buy anything without first considering global Central Bank intervention.  Everything else is a guess.  This is a global crisis with everyone eating and drinking from the same trough.  You have to remember, the housing bubble started back in the 90's, went 15 years.  Credit bubbles have lasted for decades.  The bond bull has been running for years and years... remember, if the Fed saved Lehman brothers, it may be a different story.  They will not make that mistake again.  They will support EVERY drop in the market.  They are willing to take us to S&P 5000 before letting off the gas.

Mon, 12/02/2013 - 16:09 | 4207377 LawsofPhysics
LawsofPhysics's picture

Optimist.  Wake me when it's under $300 an ounce (the last time I took delivery of physical gold).

Mon, 12/02/2013 - 15:53 | 4207305 Mongo
Mongo's picture

Unwind that bitchez!

Mon, 12/02/2013 - 15:54 | 4207307 RaceToTheBottom
RaceToTheBottom's picture

Robbing John Q to pay Sam.

Mon, 12/02/2013 - 15:57 | 4207320 jrpuffnstuff
jrpuffnstuff's picture

Bitch'n!  Good work Benji!

Mon, 12/02/2013 - 15:59 | 4207329 yogibear
yogibear's picture

Hey Yellen, Fisher, Rosengren, Dudley and Evans go for 100%!!! 

It'll be there soon enough. Money for nothing, checks for free.

One huge fiat, Ponzi game.

Can't wait until the rest of the world refuses the US dollar.

Keep the US sheeple dumb until they try and use it overseas and it's refused.

Mon, 12/02/2013 - 16:04 | 4207339 Pumpkin
Pumpkin's picture

Since the Fed returns its profits after expenses to the treasury, doesn't this mean that this is interest free?  What position does this put the Fed in for an actual loss?

Mon, 12/02/2013 - 17:50 | 4207777 Duke Dog
Duke Dog's picture

Profits ONLY after the 6% statutory Preferred dividends to its shareholders, which are the member banks of the Fed system. I won't tell you which member banks are currently the major "SHAREHOLDERS". Every nationally chartered bank must be a member and State chartered banks can choose whether or not to be and receive the "BENEFITS". Every Member must place a certain percentage of its equity capital into Fed Res Bank Stock, - the statutory 6% dividend is paid on that "required" investment.

However, please differentiate in you mind what so called "ownership" means and goddamned "CONTROL". With the advent of mutual funds/401 plans/IRAs, no individual common person has any voice, if they ever did:). The money mangers/corp execs/board members - all belong to the same fucking club. Guess what - you and I ain't fucking in it, LMFAO.

What a fucking racket!!

Mon, 12/02/2013 - 16:07 | 4207367 FreeNewEnergy
FreeNewEnergy's picture

Here's an idea. UPVOTE FONESTAR. Every time he posts, UPVOTE. Then the fuckwad won't know what to post. Hilarity ensues, eventually, FONESTAR gets bored or believes everyone agrees with him that Bitcoin is the perfect currency.

DO NOT DOWNVOTE FONESTAR. This troll needs feeding until he explodes.

Mon, 12/02/2013 - 16:23 | 4207400 falak pema
falak pema's picture

The demise of the western elitist political class : 

From Maggy to Blair, to Brown, to Cameron, to Boris of London : London Mayor Raises Eyebrows, and Ire -

The same is true in France and in the US; the race to bottom for the politicians in power; as a whole CLASS.

That is the unsavoury cut. They are ALL CORRUPT! 

Its the fall of democracy.

The choice ?   POpulist statist neo fascism OR world transnational Oligarchy corporatism; aka new world order aristocracy.

Mon, 12/02/2013 - 16:16 | 4207408 logicalman
logicalman's picture

I guess they will have to re-invent mathematics when they get to 100%, so they can go even higher!


Mon, 12/02/2013 - 16:53 | 4207548 Wile-E-Coyote
Wile-E-Coyote's picture

RBS/NatWest Bank UK whole computer system down, cash cards don't work, online accounts have no access, and balances can't be even viewed. Total seize up!!!!!!

Mon, 12/02/2013 - 16:48 | 4207561 Son of Captain Nemo
Son of Captain Nemo's picture

Can you say 'Weapon of it's own Mass Destruction' -I knew that you could?

It's a beautiful day in the neighborhood...

Mon, 12/02/2013 - 16:56 | 4207594 virgilcaine
virgilcaine's picture

First rule of the Ponzi market, don't mention Ponzi.


Listen to this local station, commercial free and music from a better time.

Mon, 12/02/2013 - 16:55 | 4207602 Saratoga
Saratoga's picture

So now the Federal Reserve owns 1/3 of the country. Just great.

Mon, 12/02/2013 - 17:23 | 4207709 U4 eee aaa
U4 eee aaa's picture

Don't blame them (much) it was sold to them for a song. Now get back to that TV set!

Mon, 12/02/2013 - 17:04 | 4207639 Cannon Fodder
Cannon Fodder's picture

Sorry all for this most likely very stupid set of questions. I still have a lot to learn.

But, do I understand correctly, that:

* The Fed just prints money out of nothing and then buys the US Gov debt?

* Then the US taxpayer is paying the interest (an ultimately) principle on that debt?

* At some point, for arguments sake, the Fed stopped buy, wouldn't they just have trillions of dollars as assets?

* And they are a private bank? So you have a few unknown people owning a private bank in which the US taxpayer is giving trillions of dollars to? How do the owners of the Fed ever lose? Isn't this the ulitmate get rich scheme? No risk, nearly unlimited wealth?


Mon, 12/02/2013 - 17:20 | 4207703 U4 eee aaa
U4 eee aaa's picture

Yes, you are right. Now try not to go insane watching everyone walk around as if everything is normal

Mon, 12/02/2013 - 18:07 | 4207869 OneTinSoldier66
OneTinSoldier66's picture

It's called... The Matrix. (see the movie series)


Neo wants to know, what is the Matrix? Unfortunately, no one can be told what the Matrix is. You have to see it for yourself.


Cannon Fodder, it sounds like you are starting to step out of living in the illusion known as, The Matrix.

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