Sunday, August 16, 2009

Our Zimbabwe moment and by the way, the fed has started monitizing our debt.

This is an interesting read. Essentially the treasury sold 7 year bonds at a bond auction this last Wednesday and Thursday to 'primary buyers' to the tune of 14 + billion. Then a short time later the fed bought it back from them with printed money. I guess they want to do this on the sly so they wouldn't have to report it. This sounds very sneaky.

Here is a pertinent quote:

The Fed pretty clearly pre-arranged, either explicitly or by "suggestion", that the Primary Dealers take up the auction with the promise that The Fed would immediately monetize half what the Primary Dealer's took!

Folks, this is beyond bad - it is pernicious and outrageous conduct by The Federal Reserve in conspiracy with the Primary Dealers, both of which are now desperately trying to prop up the US Government Bond Market through subterfuge rather than just buying up the bond issue from Treasury when originally put to the market!

Also an interesting article about our coming 'Zimbabwe Moment'