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The Absurdity Continues: Fed Buys 30 Year Bonds Two Hours Before Treasury Sells 30 Year Bonds

Tyler Durden's picture


Yesterday we noted the supreme absurdity of having the Fed buy 10 year Bonds two hours before the Treasury sold 10 year bonds (which obviously priced at terrific terms as there was a $4 billion hole created courtesy of the Fed if only for 2 hours). Today, the lunacy continues. The Fed has just bought $2 billion in 30 year bonds just two hours before the Treasury sells $13 billion in 30 year paper. The ponzi has become so glaring they don't even care to hide it any longer.


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Thu, 06/14/2012 - 11:06 | 2525676 Rainman
Rainman's picture

Gubmint frontrunning itself...luv it !!

Thu, 06/14/2012 - 11:10 | 2525707 BandGap
BandGap's picture

You have to buy the bonds to find out what they are worth.

Thu, 06/14/2012 - 11:16 | 2525751 Pladizow
Pladizow's picture


Thu, 06/14/2012 - 11:27 | 2525818 tocointhephrase
tocointhephrase's picture

Pladizow, dont question it, ZERO!

Thu, 06/14/2012 - 11:30 | 2525832 Pladizow
Pladizow's picture

The question mark provides for diplomacy and a margin of safety?

Thu, 06/14/2012 - 16:18 | 2527099 mkkby
mkkby's picture

I said it a long time ago, POMO to infinity as long as there is a budget deficit.  They'll just be quiet about it.

Thu, 06/14/2012 - 11:32 | 2525834 Chris Jusset
Chris Jusset's picture

We should give credit to the govt: they have absolutely mastered the Ponzi Pyramid Scheme ... they have this down to a science.  And their chief henchman, Ben Bernanke, knows every contour ... every detail of Charles Ponzi's grand architectural marvel.


This is the Ponzi Nation in its full glory.

Thu, 06/14/2012 - 12:52 | 2526166 ejmoosa
ejmoosa's picture

It is important to keep the illusion that there are both buyers and sellers for this junk.  Otherwise, someone may get wise. Without a shill, the gig is up.

Thu, 06/14/2012 - 13:53 | 2526380 MachoMan
MachoMan's picture

If a sucker is born every minute, but you're creating products that need suckers at a greater rate than one a minute, then eventually you run out of suckers... 

Thu, 06/14/2012 - 12:44 | 2526122 BeetleBailey
BeetleBailey's picture

"Backed By The Full Faith and Credit of The United States Government"



Thu, 06/14/2012 - 11:16 | 2525752 Almost Solvent
Almost Solvent's picture

Scratch off treasury bonds??


Hmmm, seems similar to this lottery thingy I've seen at gas stations . . .

Thu, 06/14/2012 - 11:17 | 2525753 jus_lite_reading
jus_lite_reading's picture

And they put Bernie Madeoff away for running a billion dollar ponzi, when this ponzi is in the TRILLIONS?

You can be sure that the winds of risk will blow back to Germany in a big way and their yields will begin to pop. Greece, Spain, and Italy all require bailouts in the immediate future. Who's going to foot that bill? Uncle BEnron Bernank? 


PS. Did anyone catch that Jimmy D was wearing PRESIDENTAL CUFFLINKS at the hearing? Do we know who will take BEnron's place when he "retires?"

Thu, 06/14/2012 - 11:21 | 2525789 Bollixed
Bollixed's picture

"And they put Bernie Madeoff away for running a billion dollar ponzi, when this ponzi is in the TRILLIONS?"

First rule of Gov Club...No competition allowed.

Thu, 06/14/2012 - 11:27 | 2525800 Divided States ...
Divided States of America's picture

They put Bernie Madoff away coz he fucked his own kind....while others like Greenspan, Bernanke, Fink, Benmosche, Blankfein, Rubin, Geisler, Shapiro (the list goes on) run wild raping more hardworking taxpayer money.

Thu, 06/14/2012 - 12:03 | 2525950 tarsubil
tarsubil's picture

It was funny how the media ran all those stories of those poor Madoff investors who were used to a luxurious life style now living middle class. Boohoo for those poor "Italians".

Thu, 06/14/2012 - 12:09 | 2525963 jus_lite_reading
jus_lite_reading's picture

>>"while others like Greenspan, Bernanke, Fink, Benmosche, Blankfein, Rubin, Geisler, Shapiro"<<

I see a pattern here...

Thu, 06/14/2012 - 12:18 | 2526016 tarsubil
tarsubil's picture

Yes, they are all Italian and don't you dare say otherwise.

Thu, 06/14/2012 - 14:33 | 2526575 Divided States ...
Divided States of America's picture

Forgot to add onto the list: The foul-mouth whale carcass, Larry Summers.

Thu, 06/14/2012 - 16:12 | 2527073 rayduh4life
rayduh4life's picture

One of my favorite bumper snickers:

"Don't steal - the Government hates the competition"


Aint it the truth!

Thu, 06/14/2012 - 14:21 | 2526503 tenpanhandle
tenpanhandle's picture

+1 for the tip and link on J.D. POTUS cuff links.  Its all scary as hell!

Thu, 06/14/2012 - 11:17 | 2525755 Zero Govt
Zero Govt's picture

aaah that's price discovery!

Thu, 06/14/2012 - 11:17 | 2525757 AlaricBalth
AlaricBalth's picture

Free money to the Primary Dealers. In this case, probably $1,250,000.00 to the Vampire Squid.

Thu, 06/14/2012 - 11:25 | 2525811 jus_lite_reading
jus_lite_reading's picture

My son had a lemonade stand when he was 5 (now illegal in the USSA).

Nobody bought his lemonade so at the end of the day, I bought all 6 gallons worth. He promised to return to me half the profits to cover the costs of the lemonade. We both became richer off the lemonade stand. We did it every weekend right until he graduated Harvard and MIT. He now runs a central bank. I never understood what he does but he told me "it's like selling lemonade, dad."



Thu, 06/14/2012 - 12:04 | 2525951 JackT
JackT's picture

Thanks for this ^

Thu, 06/14/2012 - 12:31 | 2526071 jus_lite_reading
jus_lite_reading's picture

Youre welcome... I could add this now that I was thinking about it...

"After weeks of knowing that I was going to buy his lemonade, he simply stopped selling lemonade and went directly to me for the money. We still split the profits and we both felt much richer afterwards."

I could go on and on with this one. Thanks Ben, for the inspiration!!


Thu, 06/14/2012 - 12:41 | 2526112 Convolved Man
Convolved Man's picture

In technical parlance,


the FED is "priming the pump."

Sun, 06/17/2012 - 00:42 | 2533192 cannonfodder
cannonfodder's picture

or pimping the prime.

Thu, 06/14/2012 - 11:06 | 2525678 bigwavedave
bigwavedave's picture

TD. By xmas they will be buying them AT the auction not before.

Thu, 06/14/2012 - 11:30 | 2525828 SV
SV's picture

Tyler,  how bad is the SOLVENCY of these Primary Dealers when they have to be given the money up front before the auction?  Maybe someone (TD) can opine on how much that cash they will buy them as collateral at the Fed window for using to get more money to buy that 30yr paper.

Thu, 06/14/2012 - 11:07 | 2525680 VonManstein
VonManstein's picture

just had my silver fingers burned

Thu, 06/14/2012 - 11:37 | 2525806 hedgeless_horseman
hedgeless_horseman's picture



just had my silver fingers burned


"[J]ust...," as in recently? 

How is that? 

You must have been selling silver at a loss (low) to buy dollars (currently high). 

Why would you do that? 

The idea is to buy low, and sell high.

Thu, 06/14/2012 - 12:06 | 2525961 JackT
JackT's picture

hell, if I had any I'd just wait as in a long time.  I'm still pissed about my dad's uncle's brother's boat sinking.

Thu, 06/14/2012 - 17:00 | 2527227 VonManstein
VonManstein's picture

The statement does not suggest i sold anything, just that paper silver gets mighty hot at times.

Thu, 06/14/2012 - 11:07 | 2525681 pupton
pupton's picture

So is this what "they" mean when they say "printing money"?

Not even hiding it at all!

Thu, 06/14/2012 - 11:31 | 2525826 Never One Roach
Never One Roach's picture

But when the Fed buys a Treasury bond it creates the money to buy it…and thus the money supply increases. It’s called “monetizing the debt” – or converting debt into currency.

Read more: Fed Begins Buying U.S. Treasuries "Unfortunately by increasing the supply of dollars, each dollar is worth less. The U.S. government also increases its debt burden, raising concerns for foreign investors. This is compounded by the fact that the Fed’s purchases of Treasuries will drive down bond yields, reducing the attractive of dollar denominated investments."
Thu, 06/14/2012 - 11:51 | 2525911 aztec two step
aztec two step's picture

There are no extra dollars here. This is Twist not QE. The size of the Feds balance sheet remains the same. A little bit of knowledge can be a dangerous thing.

Thu, 06/14/2012 - 12:19 | 2526021 AlaricBalth
AlaricBalth's picture

True. Fed is lengthening the maturies on its portfolio. This is intended to effect rate structure, not to provide reserves.

Thu, 06/14/2012 - 11:07 | 2525685 dannyboy
dannyboy's picture

Tyler, when do you think this will pop?

Thu, 06/14/2012 - 11:23 | 2525797 Spitzer
Spitzer's picture

Schiff was 2 years early on the housing bubble collapse predictions. He's been three years early and counting on the bond bubble.

Thu, 06/14/2012 - 11:41 | 2525871 bdc63
bdc63's picture

... and 5 years and counting early on his prediction of hyperinflation, dollar collapse, and CNBC going off the air ...

Thu, 06/14/2012 - 11:48 | 2525900 fonzannoon
fonzannoon's picture

I hope he is right about cnbc first

Thu, 06/14/2012 - 12:14 | 2526000 Spitzer
Spitzer's picture

Yeah. He didn't think the majority of people would be retarded enough as to pile into the dollar when the US economy was collapsing.

Did people pile into the Ruble when the Soviet Union fell ? Nope.


Thu, 06/14/2012 - 12:40 | 2526106 i-dog
i-dog's picture

They piled into the rubble when the Berlin Wall fell. Doesn't that count?

Thu, 06/14/2012 - 12:47 | 2526141 Dumpster Fire
Dumpster Fire's picture


Thu, 06/14/2012 - 16:24 | 2527114 mkkby
mkkby's picture

The US economy and the USD are the worst in the world... except for all the others.

Thu, 06/14/2012 - 11:25 | 2525807 Tortfeasor
Tortfeasor's picture

It's not about the stock, it's the FLOW!

Thu, 06/14/2012 - 12:12 | 2525992 Offthebeach
Offthebeach's picture

You see, there's plenty of action in the Treasury market. Kind of like Cash For Clunkers for Treasuries. Everything is fine, we're winning in. Vietnam, Urban Renual and HUD are bringing back our cities, Head Start is rolling out one genius after another, President Kennedy OS's Fitness program will whip us into shape,'s gone.

Thu, 06/14/2012 - 11:08 | 2525690 EZYJET PILOT
EZYJET PILOT's picture

Bernanke, Jamie the Demon, Blanfein, you rotten devil possessed moldy bits of shit on my shoe!

Thu, 06/14/2012 - 12:07 | 2525970 Peter Pan
Peter Pan's picture

What is the difference between a banker and a wanker?

A wanker knows what he is doing.

Thu, 06/14/2012 - 11:08 | 2525691 evolutionx
evolutionx's picture

PyraMMMid: Is Global Finance a Ponzi Scheme?

What's the difference between today's global finance system and a Ponzi scheme? This is the question that a 56-year-old veteran Russian financial scammer has been asking his victims.

Thu, 06/14/2012 - 11:08 | 2525693 Snakeeyes
Snakeeyes's picture

This is absurb. 

Senators Demint and Lee are trying to get The Fed to discuss capping the portfolio and reserves. They won't, of course. But they have a point. This is getting out of hand.

Thu, 06/14/2012 - 11:34 | 2525847 azzhatter
azzhatter's picture

The same Demint that was publicly fellating Jamie Demon yesterday?

Thu, 06/14/2012 - 12:20 | 2526024 SWCroaker
SWCroaker's picture

Are they going to model it after our "debt ceiling', you know, one of *those* kind of caps?

Thu, 06/14/2012 - 11:08 | 2525694 101 years and c...
101 years and counting's picture

these auctions all settle tomorrow.  possible the first time they have ever settled in the same week as the auction.  why cant they wait until mon/tues like they do EVERY OTHER TIME???

Thu, 06/14/2012 - 11:12 | 2525711 bdc63
bdc63's picture

THAT is an interesting observation ... 

Thu, 06/14/2012 - 11:26 | 2525815 Tortfeasor
Tortfeasor's picture

Something wicked this way comes.


Thu, 06/14/2012 - 11:33 | 2525845 pods
pods's picture

Maybe they are getting ready for Margin Call Monday?

Thu, 06/14/2012 - 11:52 | 2525919 aztec two step
aztec two step's picture

Because every single coupon auction settles on the last day of the month or the 15th since time immemorial. If you followed the market you would know that.

Thu, 06/14/2012 - 11:09 | 2525695 Spitzer
Spitzer's picture

RobotTrader bought some 30 year bonds too I would imagine.

Bubble ? nah

Thu, 06/14/2012 - 11:09 | 2525696 slaughterer
slaughterer's picture

Get them 30 years while they are hot.  Next week they will be even more expensive.  

Thu, 06/14/2012 - 11:12 | 2525698 Dr. Engali
Dr. Engali's picture

It may be too glaring Tyler but they have twisted this madness to a point where people are too stupid to figure it out.

Thu, 06/14/2012 - 11:12 | 2525722 farmerjohn2112
farmerjohn2112's picture

I'm a college-educated professional who's been reading ZH for two evers... seriously, can someone explain this?

Thu, 06/14/2012 - 11:16 | 2525748 LULZBank
LULZBank's picture

You apply for a loan... to yourself... and then you give yourself some money. Its that simple.

Thu, 06/14/2012 - 14:32 | 2526572 tenpanhandle
tenpanhandle's picture

I've been doing that for years - it's how I get my drinking money.   Shhhh!  Don't tell my wife.  She'll make me pay it back.

Thu, 06/14/2012 - 11:16 | 2525750 CommunityStandard
CommunityStandard's picture

All you really need to know is Fed purchasing keeps rates artificially low.

Thu, 06/14/2012 - 11:44 | 2525793 Dr. Engali
Dr. Engali's picture

The fed bought 30 year paper on the open market ahead of the issuance to set the rate for the auction.

Thu, 06/14/2012 - 12:13 | 2525997 SV
SV's picture

Dr. - I would say there's more to it than that.  The settlement date is pushed forward, their pushing forward their own purchasing.  This (as I commented above) reeks of a solvency problem to get things square.  If it is to be in-front of "this weekend" then you could read this as a loud telegraph, much louder than OANDA.

Thu, 06/14/2012 - 12:42 | 2526114 Dr. Engali
Dr. Engali's picture

I agree with that, I'm just trying to keep things simple. By buying a mere $2 billion on the open market, the Fed is signaling at what rate they're going to monetize.

Thu, 06/14/2012 - 11:25 | 2525808 ghengis86
ghengis86's picture

The FED is monetizing US debt; that is to say the Fed is creating money out of thin air (electronic credits) and using them to buy US Treasuries. The Fed can't buy directly from the US Treasury (semantics only) so they buy the UST's in the market from the primary dealers. The primary dealers are flush with this new 'cash' from the Fed, and two hours later use it to buy more UST's. Flipping the UST's to the Fed bets the dealers a nice little profit, the Fed can deny direct purchases of US debt and Uncle Sam can spend to infinity.

Have you really been reading ZH for two years? There were plenty of POMO flip articles and if I could follow them, you should have no problems.

Thu, 06/14/2012 - 12:00 | 2525937 eclectic syncretist
eclectic syncretist's picture

A minor point here.  The giveamint can't spend to infinity.  There is a limit.  No one knows exactly where it is, only that we are day by day getting closer.

Bursting of the Mississippi bubble was initiated when unsustainable inflation caused some large investors to cash out their paper into gold and silver.

"In an effort to slow the run on the Bank Royale, officials resorted to various
nefarious schemes. These included counting the money out slowly and only in small
denomination coins, inserting clerks in the line who would return the money they
withdrew, and by shortening banking hours. At one point the bank refused to accept
anything but 10 livre notes. None of these expedients were able to build confidence or
to slow the panic-stricken investors for long. In a last-ditch effort to restore confidence
in the bank, Law ordered the public burning of bank notes as they came in for

Today's banks, and today's Fed and USTreasury are generating the same distrust that brought down John Law's scheme, IMHO

Thu, 06/14/2012 - 11:53 | 2525915 Sophist Economicus
Sophist Economicus's picture

"...Every stabilization attempt taken by the Federal Reserve authorities is, despite their good intentions, stymied from the outset.    They are stymied for the simple reason that the Reserve system is a "creature of Congress" that can set down the law.   In any case, the central bank cannot let the credit of the over-indebted national administration go to pot, which is what would happen if the"printing press" would cease to support a prodigal Treasury.   This is called Treasury-Federal Reserve-cooperating-in-managing- the-national debt.   What is being managed is a progressive inflation , imposed by the Congress."


-Melchior Palyi   1961


Same as it ever was

Thu, 06/14/2012 - 11:12 | 2525699 Cognitive Dissonance
Cognitive Dissonance's picture

"The ponzi has become so glaring they don't even care to hide it any longer."

Actually it has progressed to the point where they MUST expose the (precarious) underpinnings of the Ponzi to those who directly support the Ponzi. It is no longer enough to hope that the Fed will support the dying system. Now the Fed must be seen actually manipulating it. Soon even that will not be enough.

Once the IV drip was started, there was no turning back. Now it is only a question of how long the patient remains alive as ever increasing amounts of morphine are pumped into the system.

Thu, 06/14/2012 - 11:14 | 2525734 LULZBank
LULZBank's picture

There was a popular demand for more transparency.

Thu, 06/14/2012 - 11:46 | 2525890 Al Huxley
Al Huxley's picture

Good one!

Thu, 06/14/2012 - 11:19 | 2525777 I Am The Unknow...
I Am The Unknown Comic's picture

palliative care that is hardly palatable

Thu, 06/14/2012 - 11:48 | 2525895 kraschenbern
kraschenbern's picture

The IMF published a working paper on monetary easing last November.  Seems related to this discussion.

Thu, 06/14/2012 - 11:50 | 2525905 Element
Element's picture

Eurothanasia may be the best option then?

Thu, 06/14/2012 - 12:01 | 2525945 jus_lite_reading
jus_lite_reading's picture

Hey CD, what do you think about this story I wrote on the STD MB?

Think of [insert corrupt nation/bank name here] as a single organ in a terminal cancer patient on life support awaiting a blood donor to supply AB- blood transfusion. One by one, the organs begin to fail and there is little hope for the patient. But one day, a psychopathic "doctor" (Harvard and MIT educated) walks in and says "I have a solution I have been using on other patients in the same situation. They're not alive but they're not dead either... yet!" The family, desperate to keep their beloved brother alive allow him to perform this procedure. The "doctor" then pumps the patient with a solution of water, sodium and a bunch of unproven and dangerous stimulants, thinning the blood to a blood count of less than 400 but giving the patient enough "energy" to open his eyes and move his hands. "Its a miracle!" the family screams.

The following day, the "doctor" declares that the patient is cured and his cancer is in remission, despite him knowing the truth that the cancer has spread. A celebratory dinner follows. 

The following day, the patient is in worse shape. Yellow patches cover the body, indicating liver damage. Worse still, thrombosis shows up all over the patients extremities. Determined to keep the patient alive as long as possible so as to collect more money from their insurance, the doctor triples the amount of his concoction. The patient opens his eyes but is not able to move his hands. "No problem," the doctor declares. "I'll give him more stimulants!"

The patient attempts to speak a mumbled word but its unintelligible. Little do they know, the patient is in extreme pain and wants to die but is unable to express it. A blank stare follows. The doctor attempts another round of his special concoction.

This time, there is no response. The patient falls into a coma but still alive with the assistance of the life support machines. Determined to keep the patient alive until he can make $400k on this procedure, he increases the dosage by 6000 times, overloading the kidneys and intestines to the point of failure.

After a painful and depressing week, the patient dies...

Thu, 06/14/2012 - 12:16 | 2526006 WillyGroper
WillyGroper's picture

I believe that is the current state of our medical system if you do not have your directives in order & on file with ur Dr.

Thu, 06/14/2012 - 12:19 | 2526019 Cognitive Dissonance
Cognitive Dissonance's picture

I feel the patients pain.

Thu, 06/14/2012 - 11:09 | 2525700 battle axe
battle axe's picture

QE3, coming to a street corner near you, any day now. Who cares about little stuff like a huge monster deficit...../sarc

Thu, 06/14/2012 - 11:12 | 2525712 EZYJET PILOT
EZYJET PILOT's picture

No, QEXYZ will be announced in the autumn, not before.

Thu, 06/14/2012 - 11:12 | 2525715 El Oregonian
El Oregonian's picture

The only thing missing is The Fed's top hat and magician Ben pulling money out of it... TADA! MAGIC!!!

Thu, 06/14/2012 - 11:12 | 2525720 LULZBank
LULZBank's picture

This is called leading by example ...

Thu, 06/14/2012 - 11:15 | 2525726 dwdollar
dwdollar's picture

Must keep the illusion that our paper is safer than their paper. Pay no attention to that man behind the curtain!!!

Thu, 06/14/2012 - 14:12 | 2526461 Doug_Canada
Doug_Canada's picture

Our paper is safer than their paper. It is backed by a fuck big economy. And the whole world knows that. Which is why this can be done without a haircut of any kind.

Thu, 06/14/2012 - 11:13 | 2525728 youngman
youngman's picture

"The ponzi has become so glaring they don't even care to hide it any longer.".....yep....scary huh!!!!!!

Thu, 06/14/2012 - 11:14 | 2525732 Hedgetard55
Hedgetard55's picture

At least Ben kept his promise. He is not monetizing the debt.

Thu, 06/14/2012 - 11:14 | 2525733 Black Friday
Black Friday's picture

Financial masturbation at its finest.

Thu, 06/14/2012 - 11:22 | 2525792 Cognitive Dissonance
Cognitive Dissonance's picture

The ultimate boner.


Thu, 06/14/2012 - 11:46 | 2525889 Bastiat
Bastiat's picture

It suffers the inevitable fate of all boners.

Thu, 06/14/2012 - 12:07 | 2525969 12ToothAssassin
12ToothAssassin's picture


Thu, 06/14/2012 - 12:45 | 2526133 Bastiat
Bastiat's picture

That has some less happy endings. 

Thu, 06/14/2012 - 11:32 | 2525833 Uncle Remus
Uncle Remus's picture

Sans the happy ending I suspect.


Wait - is that a cock ring around Bennies neck?

Thu, 06/14/2012 - 12:52 | 2526164 12ToothAssassin
12ToothAssassin's picture

No, but he does wear a tie to keep the foreskin from covering his face. Dont forget to tip the waitstaff, youve been a lovely audience!

Thu, 06/14/2012 - 11:31 | 2525837 Abraxas
Abraxas's picture

Masturbation is harmless (I can vouch for this). This is more like a rape then masturbation.

Thu, 06/14/2012 - 11:14 | 2525735 scatterbrains
scatterbrains's picture

The way I see it the daily rsi SPY signal has been satisfied just as all the weak hands have or are now covering into the weekend. Once they've all moved aside it's time for the larger weekly signal to take hold.. or so I'm thinking


Thu, 06/14/2012 - 11:14 | 2525736 Never One Roach
Never One Roach's picture

U.S. Foreclosures Rise as Banks Get Back to Business Reuters

Thu, 06/14/2012 - 11:16 | 2525746 killallthefiat
killallthefiat's picture

The primary dealers get paid a premium and the treasury then offloads at bargain prices.  Whatever.  I did like the article on ZH yesterday about the irrelevancy of the banks.  They don't lend.  They are just a Ponzi. 

I can't wait until this is over. 

ZHers need to be extremely careful though of what they wish for: gold standard and austerity are around the corner

Thu, 06/14/2012 - 11:26 | 2525817 youngman
youngman's picture

I have been doing AUSTERITY all my life......I am OK....

Thu, 06/14/2012 - 11:16 | 2525749 I Am The Unknow...
I Am The Unknown Comic's picture

Draghi to Ben:  Sorry Benny Boy, all our money is tied up right now with our own crap.  You're just going to have to take out your own garbage.  XOXOXO Mario

Ben to Hu:  Hey buddy, I've got some great 30 year stuff to sell you...

Hu to Ben:  Soon I have Brooklyn Bridge to sell you

Thu, 06/14/2012 - 11:17 | 2525756 slackrabbit
slackrabbit's picture

Its easy everyone, just watch the link and all will be explained



Thu, 06/14/2012 - 11:18 | 2525762 the not so migh...
the not so mighty maximiza's picture

What a confidence builder

Thu, 06/14/2012 - 11:19 | 2525767 Lost Wages
Lost Wages's picture

"Heyyyyyyyyyyyyyyy!" -The Ponz

Thu, 06/14/2012 - 11:23 | 2525773 dwdollar
dwdollar's picture

Does China give them a thumbs up or thumbs down over the super secret private line on what garbage they're willing to buy beforehand so Ben knows what to absorb?

Thu, 06/14/2012 - 11:20 | 2525779 Winston Smith 2009
Winston Smith 2009's picture

Please explain exactly what they are doing when they do this.  What are they accomplishing or trying to accomplish?  What is going on?

Thu, 06/14/2012 - 11:29 | 2525825 Irwin Fletcher
Irwin Fletcher's picture

Check out the Wiki entry for Monetizing Debt. The key observation of this article is that it used to be somewhat secretive, but now it's not.

Thu, 06/14/2012 - 11:20 | 2525784 Texas Ginslinger
Texas Ginslinger's picture

Its clear that the Euro was designed to fail in that they don't have a similar process in place.

The Fed can keep buying T-bills at near zero rates for a very long time...apparently...

That is a beautifull thing.

Thu, 06/14/2012 - 11:21 | 2525786 aztec two step
aztec two step's picture

This blog has been charging collusion and conspiracy on the buybacks since their inception. Your comnentary on the topic is ludicrous and demonstrates an ignorance of fixed income market trading. You are like a pitbull with its jaws around a victim's ankle. You dont give up which is not an admirable trait in the context of the market.

Thu, 06/14/2012 - 11:24 | 2525801 homersimpson
homersimpson's picture

Then explain to us what it really is, Sherlock.

Thu, 06/14/2012 - 11:31 | 2525827 dwdollar
dwdollar's picture

A Fed summer hire doing his/her PR work?

Thu, 06/14/2012 - 11:40 | 2525865 pods
pods's picture

Market.  Haha.

Good one! 

Thu, 06/14/2012 - 12:46 | 2526138 ITrustMyGut
ITrustMyGut's picture


back to the 8balls and hookers, and tranny midgetpron for you, sir

Thu, 06/14/2012 - 11:21 | 2525787 Boilermaker
Boilermaker's picture


Thu, 06/14/2012 - 11:25 | 2525814 JustObserving
JustObserving's picture

They do not try to hide the manipulation of gold and silver on a daily basis either.  The criminals are running the markets.  The investigation of silver manipulation by the CFTC is three and a half years old and not over yet.  There seems to be no urgency or even effort in prosecuting fraud such as MF Global where no one has been charged yet.

How long this corrupt, controlled charade will go on?

Thu, 06/14/2012 - 11:44 | 2525883 scatterbrains
scatterbrains's picture

Which leads me to wonder if any bloggers out there are keeping a macro fraud historic timeline kinda thing...  not that I could bare to read it but something to point sheeple to from time to time as they rise from their slumber.

Thu, 06/14/2012 - 12:27 | 2525906 moonstears
moonstears's picture

I have a time machine. Sept 2016, CFTC finds there's indeed no evidence of manipulation, and indeed in light of the recent prices of metals(since circa 6/2015), the point is moot as PHYSICAL metal's rarely available and no longer traded in old USD, anyway. Oh and FB is hitting NEO$ 1500.00 (approaching the NEO$2000 OZT of silver price, a sterling spoon's about NEO$500 and few have NEO$25,000 for a gold necklace). Govt coupons for rationed canned goods and dry beans are a better value anyway, or the heathcare clinic front of line vouchers bring a nice premium in NEO$ to barbarous metal as well. If I remember correctly, Yahoo! said it was those dastardly Chinese who screwed us all and made the old USD so worthless so quickly. But the NEO$ digital stopped the decline (granted the 8 old USD for 1 "NEO$" was not too popular, but the Chinese shut up 'cause 8's "lucky"?! For who?!). Treasury Sec Dimon didn't even see it coming!

Thu, 06/14/2012 - 11:28 | 2525821 Bastiat
Bastiat's picture

Getting a little spastic and smelling like desperation.

Thu, 06/14/2012 - 11:34 | 2525850 Uncle Remus
Uncle Remus's picture

They let people tour the oval office these days?

Thu, 06/14/2012 - 11:33 | 2525840 Mark123
Mark123's picture

I thought that operation twist was all about the Fed buying up all of the long dated treasuries from the primary dealers, who would then buy the newly issued long dated treasuries (a wink wink deal).


The incremental new borrowing would be financed by primary dealers buying short dated treasuries risk-free as the Fed promises to keep interest rates at near zero till mid 2014 (another wink wink deal).


What is not covered under this deal will be picked up by surplus exporters (mostly China) who must buy to offset their trade imbalance.


So, although this is blatant, what is the big deal with them buying just before an auction?

Thu, 06/14/2012 - 11:44 | 2525879 CommunityStandard
CommunityStandard's picture

As a financial advisor, if I bought bonds two hours before I allowed a client to buy bonds, it would be frontrunning, thus illegal.

Thu, 06/14/2012 - 11:50 | 2525903 Mark123
Mark123's picture

Yes, but in this case the client is a primary dealer, which is a non-arms length entity with the Fed (in my books).  Talk about incest.


Clearly, the Feds commitment to keep low rates for a couple of years combined with their buying long term paper is just a way to expand their balance sheet using the balance sheets of their crony primary dealer's balance sheets.


It makes me sick.

Thu, 06/14/2012 - 11:50 | 2525904 Dumpster Fire
Dumpster Fire's picture

Isn't the "client" in this instance selling them?

Thu, 06/14/2012 - 11:57 | 2525928 CommunityStandard
CommunityStandard's picture

Only after buying them first.

Thu, 06/14/2012 - 11:34 | 2525846 SmoothCoolSmoke
SmoothCoolSmoke's picture

The pump on the SP makes no sense to me with Greece/Egypt looming this weekend.......... unless they are going to dump it all before the close Friday.

Thu, 06/14/2012 - 11:50 | 2525902 scatterbrains
scatterbrains's picture

I don't think there is anyone left in the market. This is just weak hands running for the hills with a little NY Fed HFT action chasing them out.

Thu, 06/14/2012 - 11:37 | 2525856 Bartanist
Bartanist's picture

I know how to decrease the deficit by about $5 trillion. Have the Fed sell the bonds they hold back to the treasury for $1.

Then the farce will be complete.

Thu, 06/14/2012 - 11:42 | 2525876 pods
pods's picture

As will our debt based money system.

It would be a spectacular implosion though.  


Thu, 06/14/2012 - 16:34 | 2527148 mkkby
mkkby's picture

They already rebate the interest, so there would really be no point.

Thu, 06/14/2012 - 11:39 | 2525863 chanxmanx
chanxmanx's picture

I've never seen this happen before, this is hilarious! lol. 

Thu, 06/14/2012 - 11:41 | 2525867 Mark123
Mark123's picture

OT, but I just love the mental gymnastics the media goes through to try and justify markets that are manipulated.  this today from Reuters (notice it does not even make any sense)

Stocks Up in Volatile Trade Ahead of Greek Vote

ReutersU.S. stocks rose in a volatile session on Thursday, with investors brushing off a weak read on the labor market as uncertainty ahead of elections in Greece continued to be the overriding factor in equities.

Thu, 06/14/2012 - 11:53 | 2525918 Al Huxley
Al Huxley's picture

Ha Ha - so according to Reuters, 'investors' are positioning themselves for a potential black swan and high volatility over the weekend by bidding up stocks - presumably this is a conservative and considered move into that traditional safe haven that is the equity markets.

Thu, 06/14/2012 - 11:44 | 2525882 MFL8240
MFL8240's picture

Interesting how this crime circus is ignored by the media circus.

Thu, 06/14/2012 - 11:47 | 2525891 Dumpster Fire
Dumpster Fire's picture

Fed printers humming 24/7 and yet we appear to be headed into a deflationary shithole.  Can someone explain how this is possible?

Thu, 06/14/2012 - 11:56 | 2525924 Doug_Canada
Doug_Canada's picture

Liquidity Trap. When there is no demand there is virtually no limit on monitary policy inposted by Inflation. No demain = no inflation no matter how much you print. This is why government spending is such a good idea to get out of this mess. Simple Macro 101.

Thu, 06/14/2012 - 12:18 | 2526015 Dumpster Fire
Dumpster Fire's picture

Why not suspend all taxation and just raise federal spending by 100%?  Or 200%  Everyone could buy all the thingamajigs they want.

Thu, 06/14/2012 - 12:25 | 2526050 Doug_Canada
Doug_Canada's picture

Does that kind of "nobody works for a living but me bull shit help?. If you are an adult you deal with global economic events like an adult. If spending is too hot you pore interest rates on them to cool them off if demand is too low you reduce interest rates. When you can't reduce them anymore it means demain is so depressed that no one will spend even if they have money to spend. So to rasie demand you spend. THe original question was why does this spending via creation of new money by the Fedc not cause inflation. I explained that.


Holy shit I thought this was a hard core economics site.

Thu, 06/14/2012 - 12:33 | 2526081 Dumpster Fire
Dumpster Fire's picture

I didn't junk you but was upset at the harsh tone you used :(

Thu, 06/14/2012 - 12:37 | 2526094 Doug_Canada
Doug_Canada's picture

I didn't mean to be a dick but I can see I can come off that way. Sorry.

Thu, 06/14/2012 - 13:00 | 2526197 ejmoosa
ejmoosa's picture

Imagine a bar fully stocked before a party. Trucks outside loaded to replace what is consumed. Everyone's completely sober yet there has never been more alcohol on the shelf.  


The bar opens soon.  Sobriety will be a thing of the past.

Thu, 06/14/2012 - 11:47 | 2525894 ParaZite
ParaZite's picture

Pumped and dumped like a prom date. 

Thu, 06/14/2012 - 12:00 | 2525935 xcehn
xcehn's picture

People I know that made light of those warning about systemic collapse are now finally showing dread as their normalcy convictions are increasingly severely undermined.

Thu, 06/14/2012 - 12:36 | 2526091 Doug_Canada
Doug_Canada's picture

So if we are on the edge of a "systemic collapse" then why is the whole world happy to buy these bonds at near 0%. And no it is not just the Fed buying them. Market forces would move them up if there was a feeling of risk. There are lots of reasons to think that it is a mistake to keep adding money to a banking system that is not pushing the money out to where the economy needs it. Systemic risk of too high a debt is not one of them at this time... and it is the market- not me- saying this.

Thu, 06/14/2012 - 13:03 | 2526210 Chump
Chump's picture

You are a double-talking buffoon.  If the market is so wise when it comes to rates on our debt, then the market is also wise when it's telling us there is no aggregate demand.  You can't have it both ways.  And for you to discount the fact that the Fed is the single largest owner of US debt is simply ludicrous.  Some market there, when one single entity can swoop in at any time, create money out of thin air, and fill in for any lack of demand that appears.  Did you just skip over the recent articles where the Fed has been buying whatever bills and notes the Treasury happens to be offering that day?  Do the words 'Ponzi scheme' register with you?

Systemic risk of too high a debt is not one of them at this time...

An unproven assertion, and abject stupidity to boot.  The fallout when our rates do rise and our debt does become a systemic risk (we're already there, incidentally) is the absolute end of the entire web of the financial system.  You're essentially saying, "hrm, well, we're not there yet, so party on Garth."  We've been following your prescription for 4 years now and we are worse off than ever.  We teeter on the edge of the abyss and have to deal with folks like you saying, "just give it one more push, all together now."  STFU and GTFO.

Thu, 06/14/2012 - 13:54 | 2526379 Doug_Canada
Doug_Canada's picture

Well look it is you again. Always start your posts with a personal attack- nice. YOur a classy guy.


"is also wise when it's telling us there is no aggregate demand. " It is, there is a huge reduction in Demand by the private sector. 

I don't discount it is the singel largest holder of US Debt. A- it tells us that the country is not owned by external powers and B- Just becuase it holds the most doesn't mean that the rest of the wrld would ten agree to pay the price we thought it should be worth.


It is no t a Pozi scheme when you control the currentcy. That is what Monitary policy is all about. It is also why Spain is fucked.


BACK to SCHOOL. You are a county. You have a down turn. You pump out cash to stimuate the economy. The world at some point says you have done too much and two thinkgs happen A. Your have to give higher rates to sell your Bonds and B, your currency becomes devalued. Unlit these start to happen anyone who says you have done too much is WRONG.


Your like a guy under Niagra Falls who is sure that the water will run out any minute. Show me a drop in the water level in the river above or shut up.



Thu, 06/14/2012 - 15:46 | 2526956 Chump
Chump's picture

Are you vying for resident parody troll?  You have a long way to go before you top MDB, and he's even been off lately.

Apparently you don't understand the role that the Fed is filling by buying our debt.  61% of all Treasury offerings in 2011 is a simply mind-boggling amount to purchase.  So much so that to say, as you did previously, that our rates are somehow determined to be fair by the market is beyond laughable.

It is no t a Pozi scheme when you control the currentcy. That is what Monitary policy is all about. 

After doing a quick translation from drooling Canuck to English, I've determined that you don't know what the fuck you're talking about.  This very post, which you apparently didn't read, is all about how America's Ponzi scheme is currently running, unmasked.  Fed buys a shitload of bonds that are about to be offered by the Treasury, Treasury sells same duration bonds.  Derp derp, Ponzi scheme.  MMT and keynesian clowns may cry foul at such a serious accusation, but it's on you to explain your stance.  All other thinking people can see it for what it is: utter bullshit.

Your have to give higher rates to sell your Bonds and B, your currency becomes devalued. Unlit these start to happen anyone who says you have done too much is WRONG.

Derp derp again, why do you have to give higher rates when your CB is filling in for demand?  I thought that was "Monitary policy" or something.  "Your currency becomes devalued."  No shit!  Welcome to ZH, where currency devaluation world-wide is discussed quite frequently.

And even that chart is meaningless since, again, ALL CBs are actively devaluing.  Why else would Krugman et al call for a push for higher inflation other than to devalue our currency, and thus our debt?

I would answer your last challenge but your analogy is asinine.

Seriously, come armed with some decent arguments that haven't been debunked over and over at this site and I won't lead my responses to your comments by calling you a buffoon.  As it is, your solution has been and still is actively in place and being pursued right this very minute, yet we are in even more dire straits than we were in 2008.  Until you can show us how doing more of the same will be helpful without resorting to generalities and meaningless platitudes, STFU and GTFO.

Thu, 06/14/2012 - 16:43 | 2527178 Lednbrass
Lednbrass's picture

I think Chump nailed you there- you seem to operate under the illusion the the "whole world" is lining up to buy our debt, they are most certainly not.

Take a look at how much the Fed has bought, this cuts the legs of your argument clean out from under you. The demand is entirely artificial, false, fake, phony- use whatever descriptive term you like.

To flip it around, if true demand is as you claim, why has the Fed deemed it necessary to purchase such a vast amount? If everyone wants it, what purpose is served by not selling it on the open market and why then was the POMO program instituted?


Fri, 06/15/2012 - 10:43 | 2529273 Doug_Canada
Doug_Canada's picture

How much they buy is not the question. The question is how much those bonds sell for on the open market. There are tons of extrnal counter parties. 


This is the only way fed can make money. Without power to create 1s and 0s for SOMTHINKG ie bonds they could not make cash.


I am just saying the signs that a country has done too much of this are not present. That is all I am saying.


Can we not agree there are estabished signs of when a counrty has created too  much cash? And that those signs are not present.

Thu, 06/14/2012 - 12:00 | 2525938 erheault
erheault's picture

You dont seem to understand that when down is up that means that the sideways movement has begun so that will lead to up is down only when the slide is in orbit with the movement of the sideways slide toward down reverts to a double down on the up side of the down cycle of sideward movement. Does this help explain the US governments involvement in the bond/stock market it is plain as day to Big Ben.

Thu, 06/14/2012 - 12:05 | 2525955 spanish inquisition
spanish inquisition's picture

Liquidity churning?

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