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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (10907)	12/14/2008 12:02:24 AM
From: John Pitera	Respond to of 33421

Hi Rich..... a most excellent response! You know your stuff. A central concern to a huge expansion of the monetary aggregates and the Monetary base,... I often simply this situation to those I talk with, that if the 4 or 5 of us are sitting around playing Monopoly and the Banker gives everyone 10 times as much money as they have... what will happen? The price of Boardwalk and Park Place will be bid up; those who have played monopoly to any extent realize you have to buy properties get a group of 3 or so grouped properties and get houses and then hotels on them. You want to be aggressive in Monopoly, but not so aggressive that you have a cash flow blow up and thus have to liquidate assets at poor prices. back to your point.....The NYFED website also shows on the permanent desk a few months ago a sale of treasuries to withdraw 68 bill dollars which could have a multiplier to 680bill I don't believe their is any accurate accounting or auditing of the FED's Books. This year, last year, any year. I'd be pretty interested for anyone to document that this has occurred. I'd give one odds that they can not do it. We had a fairly detailed discussion on this last year and someone came up with the actual disclosure of certain components of the FED's transactions and balance sheets which where proprietary and thus beyond the ability to be audited by anyone including the US Government. It's in there...... we found it last year. It's right there on the official site. Yet it is a privately owned banking consortium.... the NY Times, the bastion of the establishment even was mentioning that a month or so ago. It was in an article posted here on the AIG.... maneuvering...... AIG was front and center in writing these Credit Default Swaps, and thus it really could not go under... unlike Lehman. I still sleep ok each night. John

To: rich evans who wrote (10907)	12/14/2008 3:25:46 PM
From: Hawkmoon	1 Recommendation Read Replies (1) \| Respond to of 33421

a sale of treasuries to withdraw 68 bill dollars which could have a multiplier to 680bill. My thinking is that this is being done to counteract the large increase in the money supply Actually, I'm curious, if the Fed was doing what you say, why the 10 year bond is at such a low rate? Could it be that the Fed is attempting to alleviate the huge surge in demand for T-bonds by selling it's own supply, while then purchasing corporate and mortgage assets and injecting liquidity directly into those non-governmental bond markets. It's pretty apparent, IMO, that the Fed's attempts to purchase T-bills to inject liquidity is not succeeding. There just isn't enough treasury debt available to meet the demand, hence the historically low yields on government treasuries. I personally believe that the velocity factor of money supply is possibly even lower than many of us suspect. And without velocity of monetary transactions, traditional treasury repo transactions wouldn't have much effect, because everyone is heading for he safety of T-bills and that just makes the Fed a rival to the commercial banks. So if the Fed is selling T-bills, it isn't to sop up liquidity. It's likely to finance the purchase of commercial bonds and other distressed assets. Am I screwed up in this line of reasoning? Hawk