Russ Winter joins Lee Adler to discuss the current state of the market and address the question of when the price will be paid.
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5 Comments
Households own $500B in Treasuries… BS! A total Ponzi scheme.
http://www.zerohedge.com/article/sprott-calls-fed-ponzi-scheme-half-trillion-treasury-purchasers-are-unaccounted
In a ponzi economy, phony wealth does get created. It seems logical to me that when the jig is up, and the central bank offers to buy your junk, you sell all your junk to them, and you would go and park your accumulated ponzi wealth in risk free treasuries.
When ponzy finance collapses, normally the wealth goes poof.
This time, the Fed has given it more permanent life.
So I disagree with the thesis that household category could not buy Treasuries in this size.
I agree with the notion that it is the Fed that monetized that wealth. I just think it is indirect, since the Fed bought the trash and the GSE guaranteed MBS trash and the
so called “household” sector swapped into the full Treasury guarantee paper. Why would anybody expect that not to happen?
We have known about quantitative easing since February. So there is no big revelation in any of this is there? Are the numbers bigger than QE ? Nobody said that, did they ?
DB-
I agree completely with your take on this. There are some websites that specialize in the subject of much ado about nothing.
I avoid them.
Lee, maybe on Wednesday’s audio, you could comment on the CD issuance the Fed proposes.
Typical central banking would just sell the QE securities to undo QE. I know why they cannot sell junk. However, they could sell the Treasury portion of QE, instead of issuing CDs. So why issue CDs ?
Sorry- I missed your question until just now, and am in the process of posting today’s podcast. I did address this to some extent in yesterday’s Wall Street Examiner Professional Edition Fed Report.
The obvious answer is that they can’t sell the paper because it would cause a crash in the stock market by forcing the Primary Dealers to buy the paper the Fed is selling. The next alternative is to bypass the PDs and deal directly with that trillion in excess bank reserve liability on the Fed’s balance sheet by keeping it there by auctioning term deposits to the banks at an interest rate they would need to keep the funds there, rather than deploy them as loans.
Sick.