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It's Official - The Fed Is Now Buying European Government Bonds

Tyler Durden's picture


As if the 'risk-less' dollar-swaps the Fed has extended to any and every major central bank were not enough, William Dudley just unashamedly admitted that the Fed now holds 'a very small amount of European Sovereign Debt'. Explaining this position, as Bloomberg notes:


Dudley, testifying to a House panel, noted that he doesn't see more efforts by the Fed to buffer the US from Europe's tempests and believes European banks are deleveraging in an orderly manner. So not only is the US taxpayer bailing out Europe via the IMF (as we noted here a week ago using Greece as an intermediary) and the Fed is providing limitless USD swap lines but now we join the ECB in monetizing European government bonds - something we warned might happen back in December 2010. As for being a small amount - wasn't MF Global's holding relatively small too? And aren't we getting a little full from all this buying?


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Tue, 03/27/2012 - 11:33 | 2294377 Capitalist
Capitalist's picture

Fed also buying tungsten.. I wonder why?

Tue, 03/27/2012 - 11:37 | 2294402 kaiten
kaiten's picture

So that they can convert it into gold. ............. On paper, at least.

Tue, 03/27/2012 - 11:43 | 2294439 WestVillageIdiot
WestVillageIdiot's picture

I believe this is all part of their double-secret mandate that they have withheld from the public, for our own good, of course. 

This is a trial balloon.  If they receive no punishment then they know they have the greenlight to expand teh program at any time.  They can just say, "hey, nobody told us to stop back in March 2012".  It is all so simple.


Tue, 03/27/2012 - 11:47 | 2294460 Tom Servo
Tom Servo's picture

Just the tip!

I promise!

Tue, 03/27/2012 - 11:52 | 2294483 MillionDollarBonus_
MillionDollarBonus_'s picture

This idea has been in the mix for some time, and I have complained about the lack of decisiveness of Fed officials on matters of such importance. This move demonstrates confidence, firmness and a desire to proactively solve the underlying issues in today’s global economy. The Greek CDS trigger was a truly disastrous event for American primary dealer institutions and other SIFIs since it incurred them with large liabilities. Bernanke recognizes that this has set a president for a series of cascading credit events across Europe which together could be apocalyptic for the balance sheets of our most important American financial institutions. Hence the Fed is being vigilant and taking the necessary steps to promote stability and monetary union across Europe.

Tue, 03/27/2012 - 11:53 | 2294496 Tom Servo
Tom Servo's picture


Tue, 03/27/2012 - 12:00 | 2294529 MillionDollarBonus_
MillionDollarBonus_'s picture

This may be boring to you. But it is actually of grave importance to our financial system as we know it today. You're probably one those libertarians that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions. People like you just make me sick.

Tue, 03/27/2012 - 12:03 | 2294548 knukles
knukles's picture

Have you considered capitalizing upon your ruminations whilst enlightening mankind by ghost writing for Paul Krugman? 

Tue, 03/27/2012 - 12:05 | 2294557 nope-1004
nope-1004's picture

MDB:  precedent, or president?

Are you voting for Precedent Obama?  And did you pass grade 8?


Tue, 03/27/2012 - 12:37 | 2294704 SilverTree
SilverTree's picture

!!! Just get me within range !!! 500 yards will do !!!

Tue, 03/27/2012 - 13:18 | 2294860 Bay of Pigs
Bay of Pigs's picture

"world class institutions"

MDB's sarc is actually starting to grow on me. Is that you Hamy?

Maybe ZH has multiple personality disorder trolls? 

Wed, 03/28/2012 - 11:38 | 2297436 MeelionDollerBogus
MeelionDollerBogus's picture

ok take a look: MillionDollarBonus_

vs Joe Weisenthal of Business Insider.

do you see the similarity here?

Tue, 03/27/2012 - 13:09 | 2294815 optimator
optimator's picture

I'll bet he doesn't have any capitol to invest! 

Tue, 03/27/2012 - 12:07 | 2294559 francis_sawyer
francis_sawyer's picture

You got the 'GRAVE' analogy right... Context was a little off tho... & btw... "MILLION" dollar bonus doesn't buy much these days... Might want to upgrade to a "T"

Tue, 03/27/2012 - 12:13 | 2294586 bobola
bobola's picture

Not boring to me.

I just click your red arrow and move on.

Tue, 03/27/2012 - 12:54 | 2294772 azzhatter
azzhatter's picture


Tue, 03/27/2012 - 12:13 | 2294592 Tom Servo
Tom Servo's picture

You were almost entertaining, about 2 months ago.  Diminishing returns....

Tue, 03/27/2012 - 12:26 | 2294650 Missiondweller
Missiondweller's picture

I don't understand the down votes. Doesn't anyone wonder why the CDS trigger on Greek bonds ended up being a "non-event"?



Tue, 03/27/2012 - 12:34 | 2294687 maxmad
maxmad's picture

It became a "non-event" because they said it was a non-event... The ISDA that is.... So because a murder says he didn't do it, do you just let him go????

Tue, 03/27/2012 - 12:55 | 2294774 azzhatter
azzhatter's picture

How does Dimon's jizz taste?

Wed, 03/28/2012 - 12:47 | 2297641 Cadavre
Cadavre's picture

Ask the Mohel in attendance at his bris!

Geithner and co-play thing queen for a day, the Berskank, appear to be fastidious neat-niks!

As the Zap COmix hero Capitan Piss Gums sang while burping up the chaff from a close encounter with his cabon boy's drooling zipper dragon (again):

   Over the teeth

       And through the gums

         Into the tummy

                Yumy Yum Yum

Let me see if i got this straight

1) FED Buys Euro Bonds

2) Expiration short squeeze date approaches

3) FED converts Euro Bonds to USDs


Makes perfect sense

Tue, 03/27/2012 - 12:57 | 2294781 OldPhart
OldPhart's picture

You are getting really good at this bullshit, really.  Keep practicing and you could be the next White House speech writer.

Tue, 03/27/2012 - 12:58 | 2294786 surfersd
surfersd's picture

Methinks that your parents dropped you on your head to many times.


Tue, 03/27/2012 - 13:07 | 2294806 optimator
optimator's picture

Hey, I found JP Morgan Chase, but couldn't find Meryl Lynch anywhere as no one ever heard of them.

Tue, 03/27/2012 - 15:05 | 2294833 jus_lite_reading
jus_lite_reading's picture

>>"that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions."<<


^^THIS GUY^^ really is funny! You will be getting your day, boy!!

I will say this--- what the Fed is doing is not a surprise to any of us.

Tue, 03/27/2012 - 13:44 | 2294881 cranky-old-geezer
cranky-old-geezer's picture



You're probably one those libertarians that use the services provided by world class institutions such as JP Morgan, Bank of America and Meryl Lynch every day but then scornfully criticise these very institutions.

Those "world class institutions" are looting the economy dry, preventing any sort of economic recovery, while they party high gambling with people's wealth, paying huge bonuses, and Bernanke is the one giving them trillions of dollars of people's wealth via his printing press.

They're not "world class institutions". 

They're pirates looting America dry with Bernanke's full cooperation.

And no, I don't do business with any of them, and no I'm not libertarian either.  I'm an American getting pretty damn tired of watching the value of dollars in my pocket drop as Bernanke runs his printing press giving my wealth to those pirates.

Tue, 03/27/2012 - 13:45 | 2294944 WhiteNight123129
WhiteNight123129's picture

MDB you should start a blog called "ad absurdum".

Tue, 03/27/2012 - 20:30 | 2295445 VegasRage
VegasRage's picture

I have a BofA account and a Merrill Lynch account. I use my Merrill Lynch account to exit my vested options in a company I own shares in as fast as possible. Not because I think the company is in bad shape, but rather the underlying system is in very bad shape. I then transfer my funds into my BofA account where I use that to do wire transfers into hard assets I take possession of.

Yes I scornfully criticize BofA for the massive derivative positions it holds and the bail out it begged for and received. I also criticize the FED for the huge injection of liquidity BofA got. I criticize BofA for buying US treasuries with the money and collecting huge interest and then paying off its bail out with that money at tax payer expense. IF they, and the rest of the bank and trading scums were ACTUALLY responsible entities; I would keep my money in them, I would invest in equities with them, I wouldn't feel the need to pull all my cash out of them now while I still can.

You know what makes me sick? People like you who kiss Paul Krugman's erroneous ass and carry all these worthless slobs water.

Tue, 03/27/2012 - 18:34 | 2295855 Umh
Umh's picture

Can you get sick faster! Can you get sick worse! Oh just get sick!

Wed, 03/28/2012 - 02:15 | 2296574 MeelionDollerBogus
MeelionDollerBogus's picture

The only thing I'm using Bank of America for is BAC put options.

Thanks to the possibilities of market-magic from the Fed I have not only puts but also calls for strangle-positions on both JPM and Intel.

Due soon but curious to see if a sudden market reversal will pay off my vxx call. Sold the Put already. You ought to be able to see how well that turned out.

MDB, how do you live with yourself defending Bank of America all the while it's stolen customer homes, customer funds & broken laws very frequently, like perjury? - Matt Taibbi - fraud the secret to Bank of America's success

Tue, 03/27/2012 - 11:59 | 2294532 espirit
espirit's picture

Yep, hide the pickle.

Tue, 03/27/2012 - 12:29 | 2294660 Fidel Sarcastro
Fidel Sarcastro's picture

Just by reading the title of Tyler's post one would know that MillionDollarFuckTard would be out in force to give Bermonkey a hug.  

Tue, 03/27/2012 - 11:58 | 2294504 Paul Atreides
Paul Atreides's picture

Your most important American Financial institutions have become weaponized and that IS why they are too big to fail...

Tue, 03/27/2012 - 11:55 | 2294506 Schmuck Raker
Schmuck Raker's picture


You meant, "our most 'beloved' American financial institutions." Right?

Tue, 03/27/2012 - 12:05 | 2294555 ShankyS
ShankyS's picture

It's the old reverse Ponzi trick!

Tue, 03/27/2012 - 12:06 | 2294564 ShankyS
ShankyS's picture

TD - you wasted a good caption contest photo. What are they saying hiding their mouths behind those napkins? 

Tue, 03/27/2012 - 12:10 | 2294573 V in PA
V in PA's picture



Bernake - If MDB screws up the propaganda on this one, he's fired.

Timmy - Yeah, no shit.

Tue, 03/27/2012 - 12:37 | 2294703 maxmad
maxmad's picture

Timmy;  "Yeah now that Robo is gone, who do we have left?"

Wed, 03/28/2012 - 02:11 | 2296569 MeelionDollerBogus
MeelionDollerBogus's picture

I'm starting to seriously question if MillionDollarBonus_ is also Joe Weisenthal of Business Insider.

Tue, 03/27/2012 - 13:01 | 2294788 Money 4 Nothing
Money 4 Nothing's picture

They kept their napkins over their mouths for a while so they could talk without anyone reading their lips or overhearing.

Tim, Do you think anyone will notice that bond thing?

Ben, I'm not sure, but we will know by tommorow..

Tim, Eat your Penis Pilaf and keep your head down, people are starting to look over here.

Tue, 03/27/2012 - 13:03 | 2294802 optimator
optimator's picture

"Even I get tired of nothing but lox and bagels at these meetings?"

Tue, 03/27/2012 - 12:00 | 2294540 Chump
Chump's picture

You're still off your game dude.

Oh, and you meant "precedent."

Tue, 03/27/2012 - 12:07 | 2294553 V in PA
V in PA's picture

Bernanke recognizes that this has set a president for a series of cascading credit events


That was on purpose wasn't it. You're talking about Obama. Bernake has set the President. At least the TOTUS (aka MDB) now admits it.

Tue, 03/27/2012 - 12:14 | 2294594 beaker
beaker's picture

Give me a hit of that before you throw it away....

Tue, 03/27/2012 - 12:19 | 2294617 New American Re...
New American Revolution's picture

"Bernanke recognizes that this has set a president"???   Do you mean precedent, or do you really mean Bernanke picks the President, who then picks Bernanke, and then Bernanke comes and saves the world from whoever it is that is skull fucking us all?   So many questions, so few answers, and inquiring minds want to know.   But it sounds like your complaints have been heard, and I think by the god that Goldman Sachs works for, thank you mutherfucker.   Where before they were just shaking us by our heels, now they're turning out pockets inside out while we're upside down...   And you think he's doing a great job?   Well, good things don't hurt, so shove this one up your ass. 

Tue, 03/27/2012 - 13:39 | 2294926 The Continental
The Continental's picture

Apparently, you've gotten far more than the tip.

Wed, 03/28/2012 - 02:08 | 2296566 MeelionDollerBogus
MeelionDollerBogus's picture


yer gonna force me to make shit up for you.

How about this?

Bernanke seems to like a light touch but if we want to truly further the solid but slow recovery of the world, not just America, it's time we get all the central banks together, issue SDR's and dollars at sufficiently high rates to fully recapitalize every part of the finance sector, of the efforts to spread democracy to underprivileged Muslim nations (which is the most effective way to thwart terrorism) by ensuring more cost+Plus contracts go to Raytheon and STOP WORRYING about silly budget deficits and ... finally bite the bullet and admit we have too much of a danger of deflation.


Inflation is already very low so if we can't stem the bleeding we risk gas and oil prices dropping to dangerously low levels.


Now you see what I did there mini-B?

I wasn't gonna write this shite for ya but come on ... YOU CAN DO EEEET.

Tue, 03/27/2012 - 12:01 | 2294535 knukles
knukles's picture

Oh uh, yeah, ummmm  to answer that question more directly, we hold

Chickenshit 3's of '07, that's 2107
Indacrapper 12's of 30
Updarear 17's of 3000
Apissload of zero coupon perpetuals
Holyshit 12's of 13 and
Whatthefuckisthishit 7's of 09


So yeah, I mean we didn't mislead you, the Swaps Are Riskless based upon our own judgement, it's the collateral that's fucked.  OK?

Tue, 03/27/2012 - 12:05 | 2294560 Hippocratic Oaf
Hippocratic Oaf's picture

3's of 2107? Can I get in on that?

They're at a premium, right?

Tue, 03/27/2012 - 12:31 | 2294654 knukles
knukles's picture

Senator, I'm afraid that was a one time offer made to us by the ECB with respect to the PSI in exchange for funds matched by the monies expropriated from private accounts by the Bank of Greece for which we are acting as custodian for the Rothschilds interests in the City of London.  We purchased the obligations at a dollar price of 122 1/2+ 1/164th  and in our judgement as a category 3 asset, shall be holding them at the greater of cost or market value in compliance with Generally Accepted Don't Bullshit A Bullshitter Bookkeeping Principles.


big toothy grin from ear to ear expressing a serious whatddyagonna do about it, huh attitude, mutherfucker, 'cause if you ask one more question I'll cut your Caymans and Luxembourg account payments off, asshole

Tue, 03/27/2012 - 12:35 | 2294690 Hippocratic Oaf
Hippocratic Oaf's picture

+1 knuks

Tue, 03/27/2012 - 13:18 | 2294861 Carl Spackler
Carl Spackler's picture

Nice !

Love the Luxembourg and Caymans references in the fine print.

Tue, 03/27/2012 - 12:13 | 2294590 Ignatius
Ignatius's picture

While they're at it, why not buy the missing portion of the MF Global customer accounts on the thought that JPM will be good for it at some point... the Fed appears to have 'the funds', and it's a relatively trifling amount....

Tue, 03/27/2012 - 13:09 | 2294816 oogs66
oogs66's picture

Haven't they said testified that they didn't buy European debt?

Tue, 03/27/2012 - 12:23 | 2294630 SHEEPFUKKER

Full employment, price stability..............and buying Euro bonds. 

Tue, 03/27/2012 - 23:27 | 2296384 boogerbently
boogerbently's picture

Did the 5 big US banks buy EU debt with bailout $$$ ? (they own like 97% of it)

Their irresponibility knows no limit.

Tue, 03/27/2012 - 11:37 | 2294413 LongSoupLine
LongSoupLine's picture



How much ya wanna bet they're not eating iPads in that photo?

Tue, 03/27/2012 - 11:41 | 2294423 francis_sawyer
francis_sawyer's picture

They're wiping my sperm off their lips... I jacked off in the cream of mushroom soup...

Tue, 03/27/2012 - 11:56 | 2294458 hedgeless_horseman
hedgeless_horseman's picture



Tyler, how goes that class action lawsuit with the Pressman Hotel over the urine content of their soup?

Tue, 03/27/2012 - 12:38 | 2294713 sunaJ
sunaJ's picture

An AAPL a day keeps the muppets away.



Tue, 03/27/2012 - 11:44 | 2294444 vast-dom
vast-dom's picture

This is all completely disgusting and more importantly ILLEGAL! Taxation without Representation is when taxes go to bullshit like this (and remember when gov organization prints as the fed does it is essentially more regressive taxation much worse than say sin tax since it's essentially forced sin tax on all of your purchasing and your entire life). 

Tue, 03/27/2012 - 11:50 | 2294478 WestVillageIdiot
WestVillageIdiot's picture

Laws only count if there is a mechanism by which they can be enforced.  Does that apply here? 

Tue, 03/27/2012 - 12:07 | 2294502 Ghordius
Ghordius's picture

eh? illegal? anyway, legal or not, it's standard practice for Central Banks. it's called FX reserves... of course the accumulation of FX reserves is something that usually all the other Central Banks do - the FED did not need it during the gold standard and did need it even less since the dollar is the global reserve currency - hence the trillions of USTs on the balance sheet of the Chinese, Japanese and european central banks...

of course, IF the dollar loses the reserve currency status it will need more FX reserves...

Tue, 03/27/2012 - 12:37 | 2294709 sun tzu
sun tzu's picture

Yes, it is illegal under the Federal Reserve Act of 1913. The fact that other central banks do it does not matter. They operate under the laws of those countries. 

Wed, 03/28/2012 - 07:21 | 2296717 Ghordius
Ghordius's picture

utterly bullocks. I went through the Act and some summaries of the 200 laws regulating the FED. Not illegal. Just a question of politics involved. FX operations are usually directed by the Treasury and executed by the NY-FED, that's all. The whole debate of legality/illegality is centered on the open market transactions through the Primary Dealers.

The FED/Treasury complex holds FX-reserves in the form of foreign bonds since the times where you had to hold some of the reserve currency bonds for Central Banks operations - of course between 1913 and 1945 those were the British Pound Sovereign Bonds.

Tue, 03/27/2012 - 12:27 | 2294651 Gully Foyle
Gully Foyle's picture


Another sign pointing to One World Government, One World Bank and One World Economy.

Tue, 03/27/2012 - 12:35 | 2294695 Chupacabra-322
Chupacabra-322's picture

"Fed now holds 'a very small amount of European Sovereign Debt".


should really say, "Fed now holds a very, very, very immense amount of European Sovereign Debt."

Tue, 03/27/2012 - 12:47 | 2294750 Esculent 69
Esculent 69's picture

He's buying back the salted gold bars that Clinton unloaded on the world market

Tue, 03/27/2012 - 12:57 | 2294780 Peter Pan
Peter Pan's picture

Buying tungsten is a good start on the way to ridding the system of paper. This is a small step in the right direction by the Fed and an acknowledgment that gold might just be better than paper.

Tue, 03/27/2012 - 23:30 | 2296389 boogerbently
boogerbently's picture

1)  Run the price of gold up.

2)  Link currency to gold.

Tue, 03/27/2012 - 13:14 | 2294843 Money 4 Nothing
Money 4 Nothing's picture

Make more Gold bars?

Tue, 03/27/2012 - 13:56 | 2294969 The trend is yo...
The trend is your friend's picture

Bernank is looking for rumplestiltskin to solve the world's debt problems by spinning straw into gold.  If anyone sees him or has his cell phone please forward it to the Bernank ASAP.

Tue, 03/27/2012 - 14:11 | 2294999 jus_lite_reading
jus_lite_reading's picture

Does "very small amount" on a scale of quadrillions mean hundreds of billions? I bet you it does...

Oh and BY the BY, this is for Million Dollar Retard... the system that you belong to or want to belong to is fighting to stay alive... all those caught on the wrong side will end up as examples.

The pen has hit the paper...

Tue, 03/27/2012 - 16:40 | 2295552 MiddletonRobert3
MiddletonRobert3's picture

my roomate's sister makes $85 hourly on the computer. She has been fired from work for 6 months but last month her paycheck was $16158 just working on the computer for a few hours. Read more here .....

Tue, 03/27/2012 - 18:38 | 2295869 Umh
Umh's picture

Does it have a web-cam:)

Tue, 03/27/2012 - 22:00 | 2296234 StychoKiller
StychoKiller's picture

Trying to find a more "flexible" partner?

Tue, 03/27/2012 - 11:33 | 2294378 the not so migh...
the not so mighty maximiza's picture

This violates the Federal Reserve Act.

Tue, 03/27/2012 - 11:35 | 2294395 fatsak
fatsak's picture

They are really getting brazen lately, they really don't care and are now just showing everyone their cards.  What are you going to do about it attitude?

Tue, 03/27/2012 - 11:45 | 2294454 WestVillageIdiot
WestVillageIdiot's picture

Rules are for suckers. 

Does anybody have any doubt that Bernanke, and his handlers, think they are above all laws?  They are the alpha.  They are the omega.  They are everything.  Just ask them.

I still say in 2009 the new system began.  It is the system of unlimited printing.  There is no regulator on their HP 92000 Laserjet.  There is only one way forward and that involves a ton of toner.  Just don't get any on your shirt.  It is a bitch to get off.  Don't use water.  You have to vacuum it. 

Tue, 03/27/2012 - 11:50 | 2294471 Dr. Richard Head
Dr. Richard Head's picture

With attitude, I shit into a box, maked it AAA, and threw in a 100 Trillion Zimbabwe note.  I will be taking this thing up to the Cleveland branch of the Fed and applying for a swap line with this as collateral.  I am willing to bet I could get a billion for it, park it in short term treasury, and collect a nice interest payment on that.

Tue, 03/27/2012 - 12:14 | 2294593 MonsterBox
MonsterBox's picture

@fatsac  "Brazen"? this is just a warm up.  wait until after the election when the Obamination has more "latitude"

or the USS Enterprise is bombed/sunk   or   the Media gets race riots begun in Fla

any red flag will do. 

Tue, 03/27/2012 - 12:29 | 2294662 Gully Foyle
Gully Foyle's picture


""Brazen"? this is just a warm up.  wait until after the election when the"

The next administration solidifies the groundwork for further incursions into the One World Government realm.


Tue, 03/27/2012 - 11:36 | 2294401 LongSoupLine
LongSoupLine's picture

...and the Federal Reserve Act violates everything.

Tue, 03/27/2012 - 14:33 | 2295062 fockewulf190
fockewulf190's picture

This shit keeps up there is going to be a million "minute" man march on DC soon enough.

"The beauty of the second amendment is that it will not be needed until they try to take it." -Thomas Jefferson

Tue, 03/27/2012 - 18:34 | 2295854 Cathartes Aura
Cathartes Aura's picture

never going to happen, act accordingly.

Tue, 03/27/2012 - 11:36 | 2294403 Seize Mars
Seize Mars's picture

This violates the Federal Reserve Act.


Well yeah, but in turn the Federal Reserve Act violates the US Constitution. So, no problem there, as the government and its cronies have no problem with breaking that law.

Tue, 03/27/2012 - 11:48 | 2294464 WestVillageIdiot
WestVillageIdiot's picture

What the fuck is this "constitution" thing you keep speaking of?

Is that the outdated document that died at Fort Sumter?  Is that what we are talking about? 

That was for The Republic.  We stopped being a Republic because Lincoln, and his masters, hated the Republic.  Got it?


Centralization, bitchez.

Tue, 03/27/2012 - 11:51 | 2294484 Dr. Richard Head
Dr. Richard Head's picture

Constitution? It is what I used to wipe my ass with while I put together some more collateral for a Fed swap line I for which I am applying.

Tue, 03/27/2012 - 11:42 | 2294422 Gene Parmesan
Gene Parmesan's picture

Here's the text (I think):


Every Federal reserve bank shall have power:

Purchase and Sale of Obligations of United States, States, Counties, etc., and of Foreign Governments


  1. To buy and sell, at home or abroad, bonds and notes of the United States, bonds issued under the provisions of subsection (c) of section 4 of the Home Owners' Loan Act of 1933, as amended, and having maturities from date of purchase of not exceeding six months, and bills, notes, revenue bonds, and warrants with a maturity from date of purchase of not exceeding six months, issued in anticipation of the collection of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivision, or municipality in the continental United States, including irrigation, drainage and reclamation districts, and obligations of, or fully guaranteed as to principal and interest by, a foreign government or agency thereof, such purchases to be made in accordance with rules and regulations prescribed by the Board of Governors of the Federal Reserve System. Notwithstanding any other provision of this chapter, any bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by the United States as to the principal and interest may be bought and sold without regard to maturities but only in the open market.
  2. To buy and sell in the open market, under the direction and regulations of the Federal Open Market Committee, any obligation which is a direct obligation of, or fully guaranteed as to principal and interest by, any agency of the United States.


Does this mean they can buy <6 month paper?

Tue, 03/27/2012 - 11:57 | 2294522 gatorengineer
gatorengineer's picture

I think the optimal words are "fully guaranteed".....  I wonder if they are buying CDS's on the paper to demonstrate confidence to the CDS Ponzi (oops I mean market)

Tue, 03/27/2012 - 12:01 | 2294523 gatorengineer
gatorengineer's picture

deleted double post

Tue, 03/27/2012 - 12:09 | 2294579 MachoMan
MachoMan's picture

This drafting sucks shit through a straw...  a colon and parenthetical numbers or at least semi colons after each permitted action should be included...  it's just one giant run-on sentence.  As a result, once you get past reclamation districts, it's not really clear what it says.

I think it would help clarify things if you would bold the phrase "and obligations of" and leave "or fully guaranteed as to principal and interest by" unbolded.  It should also be noted that there appears no six month limtation on the foreign government obligations...  (notice how it's included for each and every other class of bond/obligation purchase).

Clearly, a foreign government isn't going to guarantee an obligation of a united states' state agency...  so, I don't think that's a reasonable interpretation...

Seems to me like it's a retreat on this issue and make sure this is actually the law and it was properly enacted, etc...  (all of which are long shots).

Tue, 03/27/2012 - 13:22 | 2294866 Gene Parmesan
Gene Parmesan's picture

I agree entirely, but particularly with your first paragraph. Makes you wonder whether confusion and room for competing interpretations was the intent.

The way the bolding is (now permanently) set in the post is probably the lesser of all of the evil interpretations. I think your suggested arrangement, which is far, far broader, is how they would argue it though.

Tue, 03/27/2012 - 18:35 | 2295859 MachoMan
MachoMan's picture

I think you have to give ties to the runner...  in this case, if it is a plausible interpretation of the statute, then the FED can't be held accountable...  [this is also why government should NEVER intrude in these matters because the drafting is incredibly technical and the people working for the government cannot draft shit...  most of whom have proven this fact by being run out of private practice]. 

Tue, 03/27/2012 - 11:43 | 2294432 DormRoom
DormRoom's picture


Tue, 03/27/2012 - 11:53 | 2294499 oddjob
oddjob's picture

Your best post ever, congrats.

Tue, 03/27/2012 - 11:45 | 2294449 Cow
Tue, 03/27/2012 - 11:46 | 2294453 vast-dom
vast-dom's picture

violates is too kindly put -- this rapes and pillages Fed Res Act as well as all other gov acts and standards and practices. But alas, it shall all be corrected with due time. 

Tue, 03/27/2012 - 11:57 | 2294521 urbanelf
urbanelf's picture

How does this violate the Federal Reserve Act?  All it is is a QCMMPEFEOS, Quantitative Currency Manipulation Market Purchase Exchange Foreign Easing Operation Strategy.  It's what Thomas Jefferson was talking about in the Ghettiesburg Address.

Tue, 03/27/2012 - 12:03 | 2294546 WestVillageIdiot
WestVillageIdiot's picture

I thought it was mentioned during George Washington's "axis of evil" speech when he begged the people to allow him to keep his dog Checkers.

Tue, 03/27/2012 - 12:03 | 2294534 Money 4 Nothing
Money 4 Nothing's picture

Call Eric Holder!!

New Rules:

Purchase and Sale of Cable Transfers, Bank Acceptances and Bills of Exchange

Any Federal reserve bank may, under rules and regulations prescribed by the Board of Governors of the Federal Reserve System, purchase and sell in the open market, at home or abroad, either from or to domestic or foreign banks, firms, corporations, or individuals, cable transfers and bankers' acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank.

We lose again via inflation.


Tue, 03/27/2012 - 12:04 | 2294549 WestVillageIdiot
WestVillageIdiot's picture

How many times can we call Eric Holder a "douche bag"?

Tue, 03/27/2012 - 13:10 | 2294823 ParkAveFlasher
ParkAveFlasher's picture

how many zeroes are there in a "milliard"?

Tue, 03/27/2012 - 13:31 | 2294904 Carl Spackler
Carl Spackler's picture

Nine, but I digress.


Anyway, Mr. Holder is unavailable right now. 

His -ahem- Justice Department representatives are busy arguing that the penalty for not buying health insurance IS both a tax and, at the same time, NOT a tax.

Do we have clearance Clarence ?

What's our vector Victor?

Tue, 03/27/2012 - 15:05 | 2295166 Shitters_Full
Shitters_Full's picture


Tue, 03/27/2012 - 12:00 | 2294539 Sudden Debt
Sudden Debt's picture

They already violated 7 billion people worldwide so why would a piece of paper matter...

Tue, 03/27/2012 - 12:18 | 2294614 Abitdodgie
Abitdodgie's picture

Who cares, I mean its not like America is going to do anything.

Tue, 03/27/2012 - 12:19 | 2294616 FlyoverCountryS...
FlyoverCountrySchmuck's picture


Don't you know that rules and laws no longer apply to DEMOCRATS, silly?


Tue, 03/27/2012 - 12:35 | 2294692 Milton Waddams
Milton Waddams's picture

"Unusual and exigent circumstances existed", thusly declaring themselves above the law.

Tue, 03/27/2012 - 12:40 | 2294719 Chupacabra-322
Chupacabra-322's picture

Yes, it absolutely does.  Congress can now move forward and revoke it's Charter.  Yea, right. 

Tue, 03/27/2012 - 12:57 | 2294784 azzhatter
azzhatter's picture

The jackoffs like MDB don't care about laws

Tue, 03/27/2012 - 13:00 | 2294794 Peter Pan
Peter Pan's picture

They have been violating the constitution ever since they displaced gold and silver and you are worried about the Federal Reserve Act?

Tue, 03/27/2012 - 13:10 | 2294818 Dingleberry
Dingleberry's picture

Laws, like taxes,  are for the little people.

Tue, 03/27/2012 - 18:37 | 2295865 Cathartes Aura
Cathartes Aura's picture

laws are just words until they're enforced.

Tue, 03/27/2012 - 14:14 | 2295008 jus_lite_reading
jus_lite_reading's picture

You see, this is actually good news for those who stand for justice, for several reasons. The least of which is this indicates that the pressures are far too high and the game too deep... we are very close to seeing the second reiteration of Lehman on a global scale...

Tue, 03/27/2012 - 23:31 | 2296390 boogerbently
boogerbently's picture

Ha Ha

Good one!

Tue, 03/27/2012 - 11:34 | 2294379 Lost Wages
Lost Wages's picture

Prudent investing on the part of Bernanke! Doesn't reek of cronyism at all!

Tue, 03/27/2012 - 11:33 | 2294382 doomandbloom
doomandbloom's picture


Tue, 03/27/2012 - 11:34 | 2294385 LongSoupLine
LongSoupLine's picture



Bullish!!  This should be good for another 200 point DOW boner up the keester.

Tue, 03/27/2012 - 11:34 | 2294388 hairball48
hairball48's picture

Pigs at the public trough

Tue, 03/27/2012 - 11:35 | 2294389 Jim B
Jim B's picture

Out of control!  

Tue, 03/27/2012 - 11:35 | 2294391 Gene Parmesan
Gene Parmesan's picture

It's outrageous that it takes what appears to be a slip-up for this fact to come to light.

Tue, 03/27/2012 - 11:35 | 2294392 WALLST8MY8BALL
WALLST8MY8BALL's picture

FED = Fueling Eternal Debt!

Tue, 03/27/2012 - 11:45 | 2294446 pods
pods's picture

Fleecing Everyone Daily

Tue, 03/27/2012 - 12:05 | 2294556 WestVillageIdiot
WestVillageIdiot's picture

Not "Everyone".  Just everyone that isn't a Fed good 'ol boy.

Tue, 03/27/2012 - 12:40 | 2294720 tocointhephrase
tocointhephrase's picture

Free Easy Dough

Tue, 03/27/2012 - 11:46 | 2294455 Money 4 Nothing
Money 4 Nothing's picture

FED = Fucking Economy Dummy! Not the DOW = Despot Occupants Winning

Tue, 03/27/2012 - 11:35 | 2294393 Comay Mierda
Comay Mierda's picture

the dollar is dead in 2012. and when the derivatives implode timmay and his butt buddy bernank will be bailing out the whole world with dollars. why do you think stocks are rocketing up? everyone wants out of paper

Tue, 03/27/2012 - 11:36 | 2294397 Cdad
Cdad's picture

Excellent!  The thing that will raise the maximum amount of outrage against the Fed is confirmed.

As for the excuse, of managing reserves, pfffft.  Just more smoke and magic from the counterfeiters. 

Tue, 03/27/2012 - 15:35 | 2295271 sun tzu
sun tzu's picture

The Fed's new mandates:

1. Make sure the stock market keeps rising

2. Enrich the Wall Street bankers

Tue, 03/27/2012 - 11:38 | 2294417 LawsofPhysics
LawsofPhysics's picture

If the Fed (a private bank) now owns the world, why isn't everyone in the world demanding a complete audit.  I mean, if what the Fed is doing is not criminal, then why wouldn't those private entities and names behind the Fed (collecting all that interest) be willing to show themselves in the light of day?

Tue, 03/27/2012 - 11:47 | 2294461 francis_sawyer
francis_sawyer's picture

At some point the Fed won't give a FF about being audited or not...

This is the final phase of the game... Flood the world with infinite amounts of worthless money... Meanwhile, hold on to as much of it as you can to fill your personal bunkers with gold & critical commodities... Try to keep the sheeple as distracted & entertained in the process & you have a good chance of hoarding most of the loot when the end finally does come...

Let them wander around starving for a bit of time... Then when they can't take it anymore, skip on it with THE SOLUTION... (a new central banking system based on GOLD, which they have stockpiled in mass quantities)...

Tue, 03/27/2012 - 11:54 | 2294491 LawsofPhysics
LawsofPhysics's picture

yes, many have said that the greatest transfer of wealth the world has ever seen will occur when gold is once again re-valued. Of course, might want to check the physical compostition of certain stashes.  History is littered with governments that tried to physically manipulate gold holdings to make them look bigger than they were by variuous physical manipulations of the metal.  And yes they will always care, hence there will never be an audit. Some big players got burnt by MF-global.  Players, that could easily fund private armies with significant firepower.

Tue, 03/27/2012 - 12:12 | 2294584 francis_sawyer
francis_sawyer's picture

I'll say one thing... Despite the daily bash that goes on here at ZH (vis-a-vis "kicking the can")... I can honestly say that having been thoroughly UNPREPARED for most of my adult life for what is to come... I'm actually grateful for the extra time that "kicking the can" is providing me in getting myself as ready as possible...

I only regret my "weak spot" for white water rafting trips...

Tue, 03/27/2012 - 11:38 | 2294418 The Big Ching-aso
The Big Ching-aso's picture



"I'm trying to keep it down."

"Me too."





Tue, 03/27/2012 - 11:39 | 2294420 Jason T
Jason T's picture

Ron Paul : )  

Tue, 03/27/2012 - 11:39 | 2294421 dannyboy
dannyboy's picture

Is anyone really suprised?

Tue, 03/27/2012 - 11:49 | 2294474 Money 4 Nothing
Money 4 Nothing's picture

I'm shocked! I'm totally and completely shocked!!!

Tue, 03/27/2012 - 12:06 | 2294565 WestVillageIdiot
WestVillageIdiot's picture

Gambling is not allowed at Bushwood.

Tue, 03/27/2012 - 11:39 | 2294424 TruthInSunshine
TruthInSunshine's picture

Let's see.


The Non-Federal Reserve-less Non-Bank, which has done an illegal end run around the prohibition against buying U.S. Treasuries from the U.S. Treasury by buying said Treasuries in the "secondary markets," and whose balance sheet has risen from 360 billin to 3 trillion USD in the last 4 years (that balance sheet expansion being a massive factor for inflationary forces/U.S. currency debasement) is now also buying foreign government sovereign debt...


Is there anyone who is going to call a spade a spade, and even ask our check-and-balance arm of government that exists in the form of the judiciary, whether The Federal Reserve is acting in conformity with our laws?

Tue, 03/27/2012 - 11:47 | 2294462 pods
pods's picture

I think you know that answer all too well TIS.


Tue, 03/27/2012 - 12:05 | 2294554 Schmuck Raker
Schmuck Raker's picture


Nobody Dares Ask Anything

Tue, 03/27/2012 - 14:30 | 2295054 FreeNewEnergy
FreeNewEnergy's picture

Thank you, ZH. This article served to get my drinking started a little earlier than normal today.

The Bloody Mary 12-Step Program®


...for those of us who have been to AA and found it not quite our style.


My name is X-Man and I could be an alcoholic, but I've chosen not to because I hate joining groups and going to meetings. I do like to drink, on occasion, moderately, or maybe not so much, but only when there's time, which is always.


I don't think alcoholism is actually a disease or a disorder. Rather, I believe that it's another stupid idea from people with no sense of decency, adventure or desire to have any fun at all during the course of one's life, but rather impose their will - like we asked (we didn't) - upon others because of some overriding moral compass that tells them puritanical behavior is best for all.


The people who drink alcoholic beverages (we are legion, by the way) and those who casually imbibe spirits without regard to their health and general welfare should be able - as adults - to do as they please, without some nagging Nanny nincompoop telling us that such activities will lead to loss of income, love and/or life. The world is full of people who drink, drank, have drunk, are still drinking at all levels of expertise without suffering in the least. Maybe a bit of a hangover or temporary memory loss, but really, should we have to remember every damn little thing we've ever done?

There are 12 steps to making one of the most delicious Bloody Mary's you've ever had. This small guide takes you through the steps, one by one.


1. Get a glass, preferably a tall, 12 to 16 ounce tumbler.

2. Fill glass about 3/4 full with ice.

3. Add vodka (or gin, your choice); 1 to 3 shots depending on your particular level of drinking expertise.

4. Dash of pepper.

5. Dash of garlic-pepper spice.

6. Dash of celery salt.

7. Splash of hot sauce

8. A healthy dose of Worsteshire sauce

9. 1/2 teaspoon of horseradish

10. Splash of orange juice

11. Fill remainder of glass with tomato juice.

12. Squeeze in a wedge of lime (or lemon, your choice, but really, lime is better, honest.)


There's more, but I'm busy drinking...

Tue, 03/27/2012 - 22:42 | 2296318 tom a taxpayer
tom a taxpayer's picture

My preference is make step 2 (adding ice) the last step. Mixing all the ingredients is easier and more thorough without the ice in the glass, especially thick things like horseradish. The disadvantage to adding the ice as last step is that the mixture tends to splash outside the glass as ice is plopped into the glass. So, I use a tong to lift first ice cube into glass. Then I use tong to add each ice cube by placing it (carefully, gently) on top of previous ice cube in glass. After the ice cubes are placed in the drink, I give it final stir. It is more trouble to do make Bloody Mary this way, but for me the mix is better, plus I got nothing better to do than to take more time constructing the Perfect Bloody Mary.

Tue, 03/27/2012 - 11:40 | 2294425 Olympia
Olympia's picture

Global Debt Crisis

The greatest private fraud of human history.
Who are the great fraudsters who are becoming the murderers of the human kind? How does the economy "illness" threaten Democracy and the freedom of people?

By knowing what happened in indebted Greece, where loan sharks created “bubbles” and the current inhuman debt, one can understand the inhuman plan in total ...understand where this plan started just to bring all states at the same end ...understand how this type of plans are established...


Tue, 03/27/2012 - 11:41 | 2294426 Dr. Engali
Dr. Engali's picture

This thing can't collapse fast enough. I'm tired of these people getting away with the constant bullshit.

Tue, 03/27/2012 - 13:36 | 2294919 resurger
resurger's picture

Alas, It's the new "Normal"

Tue, 03/27/2012 - 11:41 | 2294431 YesWeKahn
YesWeKahn's picture

When Bernanke says "small", it is 1 trillion.

Tue, 03/27/2012 - 11:52 | 2294488 Money 4 Nothing
Money 4 Nothing's picture

That is small.. in comparison

Tue, 03/27/2012 - 12:34 | 2294684 WoodMizer
WoodMizer's picture

It's just a mint; look it's wafer thin.

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