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 Post subject: Big Mouth Romney....
PostPosted: Wed Sep 19, 2012 7:06 pm 
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 Post subject: Re: Big Mouth Romney....
PostPosted: Wed Sep 19, 2012 11:14 pm 
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http://www.motherjones.com/kevin-drum/2 ... asury-debt

Italics mine. So is this true? Is the Fed really buying three-quarters of all treasury debt?

The short answer is no. The longer answer is that the Fed has engaged in two rounds of quantitative easing and just recently announced a third. The first one, which started at the end of 2008, mostly involved the purchase of mortgage-backed securities. Purchase of treasury debt was fairly small. The second round, which took place in the first half of 2011, did consist mostly of treasury debt. It amounted to $600 billion, and led to a spate of horror stories about how the Fed was purchasing 61% of all treasury issues. Since then, however, the Fed has maintained a steady level of treasury debt, and the third round of quantitative easing, like the first, is mostly focused on the purchase of mortgage-backed securities. This year, as CNBC reports, the Fed has been a modest player in the market for treasury debt:

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 Post subject: Re: Big Mouth Romney....
PostPosted: Thu Sep 20, 2012 7:21 am 
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From your provided link....

Image

So, the FED has only doubled their holdings since 2004? How comforting. Here is a further explanation of how the FED is monetizing the debt....bolding is mine.

Here is the reality: under ZIRP, all bonds with a maturity inside the guaranteed 0% envelope are essentially cash equivalents. This means all bonds 3 years and less, which as is to be expected for riskless paper, have a coupon of roughly 0% (except Fed counterparty risk of course, because the only reason they should trade above 0% is if the Fed loses control of inflation and ends ZIRP prematurely before its announced end date now sometime in 2015). When the Treasury issues them the buyers takes on ZERO risk, thanks to ZIRP. This is also the reason why the Fed sells $45 billion in short-end paper each month, as part of Twist sterilization. In essence the only debt issuance that matters for the US Treasury is that of longer-dated issuance. This amounts to roughly $45 billion per month in the 10-30 year window, and is virtually all the debt that the Fed monetizes on the long-end as part of Twist. This is also knows as Flow as we have explained repeatedly, but we don't except someone still stuck teaching 1980s economics to understand this (Goldman explained this here)

But this is not news: back in February we noted that Under Twist the fed has monetized 91% of all LT gross issuance.


Image

Between Twist 1 and 2, the Treasury has not auctioned off one dollar of gross LT debt to the private market, as evidenced by the total inventory of 10-30 year paper which has remained fixed at $650 billion. It is this liquidity limitation that forced Bernanke to monetize not more TSYs, but to commence buying Mortgage Backed debt.

The fact that Krugman does not get this simplest fact about the nuances in the Fed's monetization activities demonstrates just how dangerous it is to assume that just because someone has been awarded a Nobel, they automatically are an expert in something, anything, especially involving numbers.

And because we enjoy spreading knowledge, and for the benefit of even the most math-challenged Economics professors, here again is a simple clip showing how Romney is actually lowballing the real number of relevant gross issuance, which is nearly all in the critical 10-30 year ballpark, and where the Fed will soon be virtually the sole marginal market player.




Source:


And also, what do you think of the FED's QE to infinity? You know, buying mortgage backed securities to the tune of $40 billion a month until unemployment improves? And keeping ZIRP in force until 2015 that essentially penalizes anybody who tries to save money, like pensioners?

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 Post subject: Re: Big Mouth Romney....
PostPosted: Thu Sep 20, 2012 7:52 am 
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I think I would look more closely at your sources for confirmation before leaping to a conclusion on the accuracy of an conspiracy theory blog.

From your link:

And that is how the Fed effectively took over control of the United States, as without it, it is game over. This is also why the ongoing presidential election is a farce, and has absolutely no bearing or significance for the future of the US, whose true ruler does not reside at 1600 Pennsylvania Avenue, but instead holds America hostage in a powerful Stockholm Syndrome grip from the deep recesses of the Marriner Eccles building located, paradoxically, on Constitution Avenue.

Don't worry though: like any "true democracy", the real "leader" of the nation will never be eligible for popular vote. Ever.

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 Post subject: Re: Big Mouth Romney....
PostPosted: Thu Sep 20, 2012 10:18 am 
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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
PostPosted: Thu Sep 20, 2012 11:46 am 
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 Post subject: Re: Big Mouth Romney....
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All of what Romney said may not be 100% correct, but what he was correct. The Federal Reserve is just dumping money on the economy and messing everything up. They need to just butt out.


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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
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 Post subject: Re: Big Mouth Romney....
PostPosted: Thu Sep 20, 2012 6:10 pm 
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 Post subject: Re: Big Mouth Romney....
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Wayne, you're so full of kool-aid, it is not worth trying to open your eyes. Just keep plugging your ears and going "lalalalalala, everything is gonna be ok, the gov't says so!"


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