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

To: rich evans who wrote (10920)	12/14/2008 4:58:36 PM
From: Stoctrash	Read Replies (1) \| Respond to of 33421

Velocity is dead and that goes hand-n-hand w/ consumer spending. You can't have one w/o the other.

To: rich evans who wrote (10920)	12/14/2008 6:35:14 PM
From: Hawkmoon	Respond to of 33421

Fed can do its buying or loaning by simply crediting the seller with a credit in its account at the bank thus creating money. I guess what I'm trying to say is that the Fed is trying to help meet the demand for Treasuries, which is driving the yields down to historical lows, by selling it's available supply. They might be able to buy treasuries, and thus "create" money, but selling them equates to monetary destruction and that's not reflected by the facts on the ground, IMO. I don't recall where I read it, either here or on another thread, but I recall that there were allegations of heavy naked shorting taking place in the treasuries market due to lack of supply. Really the only way to resolve this demand/supply equation is for additional debt to be issued by the government. It's really the only way to increase yields (induce reinflation) until demand is satisfied by supply and money reallocates to other asset classes (equities and real estate). That's really the only reason I can see that explains why the Fed would be selling treasuries with yields so low. Thus, it seems that the cash they "drain" from those seeking the safety of treasuries would have to then be provided to those sectors desperate for the cash normally provided by those who are trying to hide in the treasury markets. Hawk