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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: RJA_ who wrote (67877)	8/10/2006 9:56:30 AM
From: bart13	Read Replies (2) of 110194

bart13, can you interpret or provide additional information re this graph for us? SOMA is short for System Open Market Operations and is basically composed of treasuries that the Fed has bought over the decades. In very broad terms, when it goes up significantly, in my opinion it indicates that the Fed is "monetizing" the US debt - in other words, buying direct from the Treasury and creating that money out of thin air. The graph shows two rate of change measures of how fast the Fed is doing that monetizing, and shows a relative drop over the last 2-3 years - but is running at about 12% for the last 18 months or so. Here's the Fed's SOMA page: ny.frb.org Did that answer your question?

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