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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (2584)11/25/2003 9:36:18 AM
From: russwinter  Read Replies (2) of 110194
 
There really is only one group of people in control of US interest rate levels, beyond about six months. About 85% is determined Asian central bankers, and the other 15% by the Fed. Here are the datapoints that support my theory:

Taking the last eleven weeks (Sept. 10 to Nov. 19) since the G7 meeting reset the yen, foreign central banks (mostly the BOJ) have purchased $60.955 billion in US debt (treasuries and agencies). The US Fed has purchased (monetized)$8.082 billion. Combined that's roughly $69 billion ($6 1/4 billion / week), or 30% of the $20 billion weekly (and rising) twin account balance and fiscal deficits that must be borrowed somewhere.

I suppose it could be argued that if the Asian central banks decide to raise US interest rates, then the Fed will offset that by monetizing more themselves? But right now the Asians hold the chips in this game by a score of 85 to 15.
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