patrick.net

smaulgld says

Now the Fed is saying they are no longer going to buy T bonds- who then will?

No one.
They only time the Feds will stop buying is when it is no longer necessary to buy T-bonds.
Also indicates interest rates are likely to rise.

Strategist says

No one.

They only time the Feds will stop buying is when it is no longer necessary to buy T-bonds.

Also indicates interest rates are likely to rise.

Correct and a quick look at the market with China and Russia no longer buying, it would seem they need to keep buying!
Some how they have managed to taper their purchases because "Belgium" has bought 200 billion in four months!

smaulgld says

Strategist says

No one.

They only time the Feds will stop buying is when it is no longer necessary to buy T-bonds.

Also indicates interest rates are likely to rise.

Correct and a quick look at the market with China and Russia no longer buying, it would seem they need to keep buying!

Some how they have managed to taper their purchases because "Belgium" has bought 200 billion in four months!

You guys worry too much about everything.
If I worried so much I would want to get paid for it.

Strategist says

You guys worry too much about everything.

If I worried so much I would want to get paid for it.

Takes the same amount of time to analyze as it does to cheerlead.

I like puzzles. In many of my blog posts I questioned who would buy the T bonds if the Fed decided to stop QE. I had no answer. The Belgium buyer is inexplicable and unanticipated.

Ron Paul weighs in on Belgium's purchases of Treasuries
http://www.ronpaulchannel.com/video/rons-gold-update-gold-benefits-uncertain-dollar/

Strategist says

Uncle Sam has a debt load of $17 trillion. The usual suspects will keep buying. Any shortage will be made up by the Federal Reserve printing press.

Every ponzi scheme has a greater fool.

The fed doesn't want to become the bond market. What it wants is people to buy those bonds but they require interest income. If they do another QE it'll last for a year and to unwind it it'll take another year. So it'll be 2017 when they fully stop and that is way past 2015.

Companies and pension funds that rely on long term assets like bonds will show losses. Pensions will try to increase their fees to hide it and companies will either use their sales or go into more stocks.

The problem is that they have a tolerance of risk. Pension funds know that many of their retirees do not want a lot of risk. That is why someone can choose from low risk to high risk on a retirement account.

So after 6 years of a low rate environment, stocks don't provide the return they need and they can't go all into stocks so the losses accumulate and when rates rise, the damage will stay for at least 10 years.

But if they wait after 2015, then the actuaries will have to tell the pension system they can't keep promises so remember actuaries operate on a 6 year cycle where they give pensions that long to formulate their promises. So if they miss and make mistakes, they have 6 years to make it up. That is why pensions don't behave like stocks where as when stocks fall, it doesn't reflect into the pension immediately unless it went down like 2008.

So after 2015, Fed Reserve knows pensions will have to admit the damage Bernanke caused and will retirees just accept that?

Now if they ignore this and restart QE, then we are fully Japan!

Now because Janet Yellen is very mysterious in her guidelines of QE and for her to restart will make her more mysterious opposing Bernanke at first having guidelines and becoming less and less clear as seen to his last QE and if they do another QE, they'll be like the Bank of Japan and will they just pump without a clear reason, where their own policies trap themselves.

Instead history has shown bankers have the final say and actually favor deflation when the schemes get out of control. The Fed has allowed things to fail in the previous depression and I believe they'll quit and go dormant to restart their scam later on. This way they don't become trapped by their policies and have their member banks buy things at pennies on the dollar and also reduce competition.

The Bank of Japan was never international and basically serves to protect the Japanese economy. The fed is international and its main interest is the dollar being the world reserve currency.

Bonds is the Fed's main vehicle to have the dollar as the main method thus the bank of Japan gets trapped because their interests isn't people holding their money, because it's mainly Japanese citizens that do. It's politically been captured for decades. The Fed was never politically captured and just serves the government as a customer rather than as a master.

So with history it stands to reason that the fed will pull the plug....the circle jerk is FINISHED!

Bubbabear says

Now if they ignore this and restart QE, then we are fully Japan!

there is no other way

smaulgld says

Strategist says

You guys worry too much about everything.

If I worried so much I would want to get paid for it.

Takes the same amount of time to analyze as it does to cheerlead.

I like puzzles. In many of my blog posts I questioned who would buy the T bonds if the Fed decided to stop QE. I had no answer. The Belgium buyer is inexplicable and unanticipated.

Look at it this way.....Who was buying them before we had the great recession?

Strategist says

is inexplicable and unanticipated.

Look at it this way.....Who was buying them before we had the great recession?

China was increasing its purchases in 2004-2007
The Fed wasn't buying much and the deficit wasn't as great so there wasn't as great a need to sell T bonds

smaulgld says

Strategist says

is inexplicable and unanticipated.

Look at it this way.....Who was buying them before we had the great recession?

China was increasing its purchases in 2004-2007

The Fed wasn't buying much and the deficit wasn't as great so there wasn't as great a need to sell T bonds

EXACTLY. We will soon reach that stage.

APOCALYPSEFUCKisShostikovitch says

Yams.

Long yams.

Yam prices are rising

Strategist says

smaulgld says

Strategist says

is inexplicable and unanticipated.

Look at it this way.....Who was buying them before we had the great recession?

China was increasing its purchases in 2004-2007

The Fed wasn't buying much and the deficit wasn't as great so there wasn't as great a need to sell T bonds

EXACTLY. We will soon reach that stage.

When the government balances the budget? That is when there is no need to issue tbonds

smaulgld says

Strategist says

smaulgld says

Strategist says

is inexplicable and unanticipated.

Look at it this way.....Who was buying them before we had the great recession?

China was increasing its purchases in 2004-2007

The Fed wasn't buying much and the deficit wasn't as great so there wasn't as great a need to sell T bonds

EXACTLY. We will soon reach that stage.

When the government balances the budget? That is when there is no need to issue tbonds

EXACTLY! and we'll never ever reach that stage.

Bubbabear says

EXACTLY! and we'll never ever reach that stage.

Yes we will, when the country collapses the assets will be sold off for the current market price/barter and that will be that

indigenous says

Bubbabear says

EXACTLY! and we'll never ever reach that stage.

Yes we will, when the country collapses the assets will be sold off for the current market price/barter and that will be that

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.
Sick sick sick.

Strategist says

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.

Sick sick sick.

the "country" hit an all time high?-that is like saying casino profits are up so the country is doing well- there is a severe disconnect between the health of the economy and the stock market

bootleggers made a lot money during the depression

Strategist says

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.

Smell the coffee!

smaulgld says

Strategist says

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.

Sick sick sick.

the "country" hit an all time high-that is like saying casino profits are up so the country is doing well- there is a severe disconnect between the health of the economy and the stock market

The stock market is forward thinking. It generally precedes the state of the economy 9 months in advance. What the stock market is telling us today is that good times are ahead.

Strategist says

It generally precedes the state of the economy 9 months in advance. What the stock market is telling us today is that good times are ahead.

yes in February 1929 as the stock market was booming it was "sending a signal" that good times in October were ahead!

Strategist says

smaulgld says

Strategist says

The country just hits an all time high in the S&P 500, and you guys think the country is collapsing.

Sick sick sick.

the "country" hit an all time high-that is like saying casino profits are up so the country is doing well- there is a severe disconnect between the health of the economy and the stock market

The stock market is forward thinking. It generally precedes the state of the economy 9 months in advance. What the stock market is telling us today is that good times are ahead.

Corporation buybacks, Ya Boy we're really cooking!

bgamall4 says

Treasuries are the backing for our currency, making our currency less fiat than some people think.

Correct they create a collateral and I believe the Fed's willingness to print dollars to buy more actually provides further backing, when they stop the backing is gone

Since this conversation is somewhat morphed into a forecast.

Does this graph say recession at the end of this year?

http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1224040&page=bond&sQuote=0&symbChange=aaaaa~0&time=10yr&freq=1mo&DrawChart.x=13&DrawChart.y=8&startdate=&enddate=&type=64&compidx=aaaaa~0&comp=Enter+a+symbol&ma=1&maval=100&lf=1&lf2=4&lf3=1024

Who will buy the bonds?

Did you guys notice that the gov borrows a LOT less than it was in 2009?

Did you guys notice that the debt to GDP may well shrink this year, since less debt is emitted than the nominal growth of the economy.

Did you guys notice that the more the fed buy bonds, the more money there is in the economy, chasing yields, even as low as bonds?

Not only that, but the bonds held by the fed are part of the base money. This money can multiplied by bank lending, and chase more bonds.

China and Russia sell things for dollars? This means they essentially give them away for free.

You're thinking about this debt like something that has to be paid back. When did the gov EVER paid back the bonds held by the fed?

You should think of the fed as a black hole where debt disappears.

This is not the government going bankrupt, this is in fact cleaning the gov balance sheet.

Heraclitusstudent says

Did you guys notice that the gov borrows a LOT less than it was in 2009?

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Perhaps less than 2009 when the nearly one trillion was pumped in for the stimulus, but more than 2008 and before. The cumulative debt has grown to about 17 trillion from 11 trillion or so and the unfunded liabilities continue to grow.

--------------------------------------------------------------------------------

Did you guys notice that the debt to GDP may well shrink this year, since less debt is emitted than the nominal growth of the economy.

--------------------------------------------------------------------------------

Since there is no GDP growth so far this year the debt to GDP is a meaningless measure. Over the past five years the gdp growth has been about a trillion and the QE 4 Trillion so GDP growth unfortunately has been paid for with printing money

Heraclitusstudent says

You should think of the fed as a black hole where debt disappears.

This is not the government going bankrupt, this is in fact cleaning the gov balance sheet.

a good way of looking at it. But it is a non productive dilutive process.

indigenous says

Since this conversation is somewhat morphed into a forecast.

Does this graph say recession at the end of this year?

http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1224040&page=bond&sQuote=0&symbChange=aaaaa~0&time=10yr&freq=1mo&DrawChart.x=13&DrawChart.y=8&startdate=&enddate=&type=64&compidx=aaaaa~0&comp=Enter+a+symbol&ma=1&maval=100&lf=1&lf2=4&lf3=1024

No it does not.
The 10 year has been dropping for more then 30 years a reflection of inflation.

http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1224040&page=bond&sQuote=0&symbChange=aaaaa~0&time=all&freq=1mo&DrawChart.x=76&DrawChart.y=8&startdate=&enddate=&type=64&compidx=aaaaa~0&comp=Enter+a+symbol&ma=1&maval=100&lf=1&lf2=4&lf3=1024

Strategist says

The 10 year has been dropping for more then 30 years a reflection of inflation.

the ten year has been more of a function of Fed "policy" than the market but then again by now they are the same thing

Strategist says

No it does not.

The 10 year has been dropping for more then 30 years a reflection of inflation.

I was referring to the fact that the 10 year had gone up at the end of 13 this might indicate a recession a year later i.e. the end of 14

The Professor says

There is a difference between worried, and aware and prepared.

and you can't be prepared unless you analyze what is going on!
Worrying and cheerleading aren't analysis and are not a substitute for preparation.

indigenous says

Strategist says

No it does not.

The 10 year has been dropping for more then 30 years a reflection of inflation.

I was referring to the fact that the 10 year had gone up at the end of 13 this might indicate a recession a year later i.e. the end of 14

It was probably indicating the end of recession fears and the prospects of growth. The stock market seconded that.

Strategist says

It was probably indicating the end of recession fears and the prospects of growth.

Last year the stock market was up huge-but the first quarter this year the GDP was flat

The Professor says

Strategist says

"Belgium" has bought 200 billion in four months!

You guys worry too much about everything.

If I worried so much I would want to get paid for it.

There is a difference between worried, and aware and prepared.

Anyone that has looked at the history of fiat currencies knows that the printer prints more and more until ultimately the fiat paper is worthless. As dollars approach infinity value of dollar approaches zero. Confidence will be lost before infinity.

Right now the record high stock market indicates the markets are confident that will not happen. They are still concerned about deflation. Not saying it could not happen in the distant future, but there is no sign of it on the horizon.

Strategist says

Right now the record high stock market indicates the markets are confident that will not happen

Markets were confident during most of 1929 too- the stock market especially a manipulated one is not a good predictor of the future of the economy

Strategist says

It was probably indicating the end of recession fears and the prospects of growth. The stock market seconded that.

Bond prices are a known and acceptd indicator of the future economy.

indigenous says

ond prices are a known and acceptd indicator of the future economy.

used to be you could look at bond prices, the price of gold and make assessments, today prices are as the Fed dictates them

smaulgld says

today prices are as the Fed dictates them

that has been the case since the FED controls interest rates. Does that make the graph less prescient?

indigenous says

smaulgld says

today prices are as the Fed dictates them

that has been the case since the FED controls interest rates. Does that make the graph less prescient?

yes, before QE, the Fed controlled the fed funds rate which set the tone for market driven interest rates.
Since they have poured into the bond market buying MBS's and T-Bonds by the trillions they have become in effect THE market for those securities and therefore are setting and ensuring the rates they set rather than influencing interest rates.

Are China and Russia the fabled bond vigilantes? I don't think China can run a massive trade surplus with the USA and not hold Treasuries.

The Professor says

Heraclitusstudent says

This is not the government going bankrupt, this is in fact cleaning the gov balance sheet.

Interesting analysis.

Does the bankruptcy of the Federal Reserve mean all of our, and the worlds', Federal Reserve Notes will be worthless?

What is needed is to open the Fed up to competition. Right now, we have a corrupt monopoly.