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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (1800)	5/24/2003 2:36:54 PM
From: UnBelievable	Respond to of 4905

But In The Short Term The Fed Intervenes in that market buying long term paper and keeping the rate low. Presently prices may be high based on the expectation of such intervention alone. It is inflationary because the dollars that the Fed is using to buy treasuries are new dollars and are being created without reference to any real wealth. Therefore the pool of claims on wealth (dollars) has increased but the wealth hasn't. As awareness of the negative real interest rates associated with treasuries (and therefore all debt rates directly or indirectly based on treasuries) the flow of private (real) capital into debt will decrease. The endgame is when there is no private investment and the Fed is first the only lender, and ultimately the only owner of everything.

To: NOW who wrote (1800)	5/24/2003 3:12:37 PM
From: UnBelievable	Read Replies (1) \| Respond to of 4905

Right Now It Is Mostly Japan That Is Buying Long Term Paper As a place to put all of the dollars they are accumulating on behalf of their FX interventions intended to support the dollar and weaken the Yen (buying dollars). From Dow Jones newswire: Participants said strong Asian central bank buying early Friday continued the trend seen recently. Indeed, Federal Reserve custody holdings of U.S. securities on behalf of foreign central banks for the week ended May 21, released late Thursday, surged to $20 billion compared with a weekly average of $2.5 billion over the past year. The $20 billion in securities includes $18 billion in U.S. Treasurys and $1.4 billion in agencies. And participants say it largely reflects the Bank of Japan's recent aggressive intervention in the foreign-exchange market. "The Treasury market's buyer of last resort is foreign central banks," said Marcel Kasumovich, head G10 foreign exchange strategist at Merrill Lynch in New York. "Asian policy makers don't want their currencies to strengthen versus the dollar."