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
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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.

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