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

To: Real Man who wrote (16918)	1/29/2009 8:34:00 AM
From: carranza2	1 Recommendation Read Replies (1) \| Respond to of 71456

More from Jesse: Sounds like the Fed is herding foreign CBs into Treasuries, taking GSE stuff off their hands, accomplishing indirectly what would cause a furor if it did it itself: The Fed Statement Good News! The Fed stands ready to buy Treasuries, but not yet so don't worry about monetization. Will they or won't they? Oh by the way: The Federal Reserve continues to purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand the quantity of such purchases and the duration of the purchase program as conditions warrant. As you may recall, the foreign central banks have been dumping Agency debt en masse and using the proceeds to buy Treasuries, generally in the five to ten year duration of the curve. So the Fed is buying those Agencies, but not buying Treasuries which would be monetization right? But somehow buying Agency debt is not monetization if it is the foreign central banks who are buying the Treasuries, right? If the Fed uses its Balance Sheet to buy financial assets at above market prices, essentially providing a subsidy to the holders of those assets, this is not inflationary since that debt already existed, right? Oh, as long as it is at a loss, because as everyone can figure out buying them at 1000 times more than they are worth or marked on the holder's books would surely be inflationary, right? If the Fed buys my stamp collection at 1000 times it true value, that would be inflationary unless they sterilized the transaction. Is the Fed sterilizing all their transactions? Hah! Will they or won't they indeed. They already are, indirectly. More misdirection from the transparent Fed. From Tinker, to Evers, to Chance.