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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: bart13 who wrote (76451)	12/22/2006 2:45:31 PM
From: jimmg	Read Replies (1) \| Respond to of 110194

The SOMA account is the asset side of the Fed's balance sheet and currency is the liability side. All currency (federal reserve notes) is backed by us treasury obligations which are acquired in the SOMA. When the Fed does a coupon pass, it does in fact literally print the currency and distribute it to its member banks. When demand for currency exceeds the supply, the Fed must do a coupon pass to distribute the money into the system. Most bears think a coupon pass is part of the grand conspiracy to screw them out of their righteous profits they are so deserving on their short positions.