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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (5343)	3/21/2008 2:21:37 PM
From: Real Man	Respond to of 71456

Right, some acceleration in MZM and M2, and I used to think USD was not a carry trade funding currency, which now yields less than Swiss Franc. The Fed is not actually printing so far - the effect is likely from what they printed earlier, as funds seek safety in cash.

To: Tommaso who wrote (5343)	3/21/2008 9:06:09 PM
From: Real Man	Read Replies (1) \| Respond to of 71456

The same old article on German hyperinflation usagold.com "The mechanism of inflation was simple. The government issued paper promises to pay, and the Reichsbank issued money on the security of these promises. When a government spends more than its income, it must borrow. If it merely borrows money from its citizens by selling them bonds, there need be no inflation. Instead of that money being spent or invested by the citizen, it is borrowed and spent by the government, but the total amount of money is not increased. When the government needs more money than its people are able or willing to lend it, it monetizes the debt. That is what happens in this country when the government runs a big deficit. The Federal Reserve (our central bank) "buys" as many bonds as necessary to stabilize the market. It prints money on the security of these bonds. Despite the facade of the government supposedly "borrowing," the net result is the creation of printing press money. (Actually these days the money is created in the form of new bank deposits--checkbook money--but the net result is exactly the same as if bills were printed.)" We can see enormous FED activity on treasury auctions recently, as I posted before. However, since the size of SOMA has not increased, folks conclude that this activity corresponds to a replacement of maturing T-bills and bonds, not printing. However, I remain suspicious, as the Fed does not leave all the tracks, and tracking various ways of printing is not easy at all nowadays. However, with various secretive TAFs tracking printing becomes a lot of work. For example, if the Fed organized another lending facility for 200 billion, but drained the old lending facility for 100 billion, the net result is printing 100 billion dollars. So far what I hear is that they have simply drained SOMA to put it in TAF, pretty much nothing printed, but I haven't seen actual numbers.