On Mar 25, 2009, at 10:24 AM, Charles Bennett wrote:
"The Federal Reserve starts purchasing long-term Treasuries today,
aiming to bring down borrowing costs by employing tools last used in
the 1960s."
"“Clearly the Fed has credibility and buying power at the moment, so
they can force prices up” on Treasuries, said Jay Mueller, who
manages about $3 billion of bonds at Wells Fargo Capital Management
in Milwaukee."
WTF!! The FED *IS* the Treasury, is US..
That is exacly the same as me "loaning" myself $100 by taking it out
of my wallet, putting in my pocket, and claiming that I have $200
in assets
since I have $100 and I'm OWED $100... Of course, keeping it to
scale, in their case they intend to then go spend 3000 dollars, mark
the 200 as GDP and the rest as deficit so our kids can pay the loan
later.
Ehh not exactly. The Fed is not the US Treasury when it comes to
securities. Securities like this are floated by the Dept of Treasury
not the Federal Reserve. Remember technically the Federal Reserve is
not fully a US Gov't entity. It's more like having your wife loan you
some cash. They are doing this to try and drum up some more volume
and confidence. Things have been relatively slow lately.
The Fed was actually considering floating their own bonds back in
December. I guess that did not fly, I recall there was talk if they
even could do so legally.
Funny thing unrelated. The Treasury is releasing all sorts of new
bonds now as well. There is a 7 year bond now. There is talk of a
four year and a one year even.
--Larry
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