[deMolay]

This means that the Chinese have quit buying Obama's asswipe. Get ready for the inflation ride.

[dunny]

When the pommies announced this last week that they HAD to do this I was pretty surprised. I thought it would take months before the USA would maybe start doing it too.

Jack's quote about the hot buttered popcorn is starting to resonate.

This show's surprises keep getting better and better.

What will next week bring?

Mick.

[SchroedingersCat]

I think there is still quite a bit of deflation left that will absorb this printing for a while. Once the debt is deflated the inflationary rebound is going to be horrible. Unless you're solid in commodities right now...

[Jotapay]

I think there is still quite a bit of deflation left that will absorb this printing for a while. Once the debt is deflated the inflationary rebound is going to be horrible. Unless you're solid in commodities right now...

Check. I saw this coming quite a while back.

[smallpoxgirl]

This is a very normal activity by the fed. They regularly buy treasuries using created money. Controlling whether they're buying more treasuries, or letting the treasuries they have expire is one of the biggest tools they use to control the money supply. You can argue that the money supply is too big or too small, but getting upset about the fed buying treasuries is just silly.

[Jotapay]

This is a very normal activity by the fed. They regularly buy treasuries using created money. Controlling whether they're buying more treasuries, or letting the treasuries they have expire is one of the biggest tools they use to control the money supply. You can argue that the money supply is too big or too small, but getting upset about the fed buying treasuries is just silly.

So this is normal operations. Nothing to see here, move along. No reason to get concerned.

For some reason, I'm just a tad bit more f'ing concerned about this. Maybe it has to do with this graph. Each new dollar of debt the USA borrows now only contributes 6 cents to GDP. Do you see an event horizon approaching?



Since something like 25-35% of our GDP depends on debt (borrowing from foreign countries), our GDP-generation from borrowing is going to go negative at some point, it seems. And that point is not too far off.

[seldom_seen]

Federal Reserve plan stuns investors

The last time the central bank attempted to bring down yields on long-term securities through direct intervention came during the ill-fated Operation Twist in the 1960s. Recent comments by Ben Bernanke, Federal Reserve chairman, and William Dudley, New York Fed president, did not suggest that Treasury purchases were imminent.

A swollen Fed balance sheet runs the risk that the US central bank may find it difficult to manage down the money supply when the economy turns, raising the possibility of inflation.

Gold surged in response to the Fed’s announcement, rocketing from a session low of $884.10 a troy ounce to a high of $942.90, a jump of 6.6 per cent.

http://www.ft.com/cms/s/0/15eb2de2-13d8 ... fd2ac.html

Bernanke snuck up on the market today and zapped it with a defibrillator.

[smallpoxgirl]

So this is normal operations. Nothing to see here, move along. No reason to get concerned.

Yep. Fed has bought treasuries on a regular basis ever since there's been a fed. I couldn't begin to tell you how much they normally buy but they certainly do buy treasuries. If you want something to freak out about, freak out about the ballooning of the M2 and it's inflationary potential. link

[Voice_du_More]

Inflation is already in motion. This not so deep deflationary trend is almost spent now. Next comes the uncomfortable truth of Ben's statement that the downturn will end by 2010. How would he know that???? So, they know that deflation has tapped down oil, but now oil needs to come up a bit to make sure there is enough investment to avoid a real crunch in supply something like ten years out so it's time to grease the wheels of lending again and start inflating the bubbles. The housing market will bottom out this June as the government sweeps in to buy the bad assets and keep them permanently off the books...

At some point all the games have to end. All we are seeing really is an overcorrection from a resource imposed limit to growth. The fact that people in the market are always inflating and deflating bubbles they feel will benefit them does not change the underlying forces at work. Oil depletion is marching on and humanity is continuing (in the large) to tolerate the notion that self-interest alone will figure it out in the end.

I expect the dollar to drop in the coming months against the Euro from around .80 at it's high to .72, and maybe even lower. Wrapping around into next spring we will be approaching a rapid devaluation of the US dollar into record low territory. oil on the other hand will flirt in the $85-$105 range this summer, drop a bit in the fall and then next year average in record territory due to the falling dollar and continued concern about supply which will not be honestly discussed (some Saudi will say it was because the six month drop in prices now shut in so many oil projects. If you believe that I have a bridge to sell you, it's called a bridge to nowhere.)

During that year housing will make something of a comeback but Ben won't let it get out of hand this time. So then sometime in 2010 we will start to get a glimpse of what the world will look like when the engine of the world throws a push rod and one of the pistons starts clanging.

Note I may be slow on the timing. There could be a sudden hyperinflationary spike this summer. Not that it would matter to the powers that be, their agenda is much bigger than a few recessions, or a few tent cities, or even a few AIGs.

There are people in this world for whom power is not a way of life, it is life, and they will do anything to get it and anything to keep it.

[ReverseEngineer]

This is a very normal activity by the fed. They regularly buy treasuries using created money. Controlling whether they're buying more treasuries, or letting the treasuries they have expire is one of the biggest tools they use to control the money supply. You can argue that the money supply is too big or too small, but getting upset about the fed buying treasuries is just silly.

NORMAL? Right, every day the Fed buys $300B in Treasury Trash!

Even in the MSM, they disagree this is "normal".

While we knew the Fed could buy Treasuries, and indeed thought that at some point they would buy them, we -- like others -- were taken aback by today's ramping of the printing press," wrote analysts at UBS.

Reuters

Its not "silly" to get upset that the Fed is buying treasuries, because that is exactly WHY the money supply is increasing at a ridiculous rate. Its one in the same thing. The Fed is throwing toilet paper down the CDS drain as fast as they can, but all its going to do is clog the toilet here.

The thing is, this isn't even the Beginning of the End, just the End of the Beginning (thank you Winston Churchill). Without the Chinese buying Treasuries, the ONLY buyer now is the Fed, and they will have to buy TRILLIONS more in the coming months if they are going to keep playing this game. On average, I'd expect another Trillion$ Obamout about once a quarter here over the next year. Commercial Real Estate is coming soon of course.

So far, I'm not seeing any jump in real productivity anywhere, though with all this funny money being pumped into the system it has to exit somewhere so I'd figure the stock market to start rising here, since not every penny will go to resolving a CDS contract. The money will bounce around some through equities and commodities. I'd be real careful about shorting anything now, stock prices probably will inflate here. This will be taken as a sign the whole business is WORKING, and after being so dejected I can see Bulls running around betting the new money on their favorite stocks. Unless they get the money into the hands of the people though, the consumer economy won't reinflate too soon. There still doesn't seem to be a method for that one worked out.

Quantitative Easing is the name of the game here now, they will keep printing to keep the systems floating. However, I just don't think after the 10th Trillion in this game it will keep working. Gotta be a Sudden Stop event here at some point.

Reverse Engineer

[deMolay]

Like I said the Chinese won't buy Obama's asswipe anymore. The Fed has to buy it, to keep pumping Obama's dream. This will devalue the currency and cause rampant inflation. Because the money will be worth less, it will take more US greenbacks to make the same purchase. It is already being denounced as inflationary by the Asians. They are saying 40% drop in the value of the dollar coming very fast. This is Mugabe Economics. The only way out is to balance the books. That means letting bad business fail, drastically cutting waste of tax dollars on useless government programs and cutting taxes so citizens will spend. Government will have to shrink in size and scope by at least 40-60% in spending and programs. Liberal ideology has hit the wall. And smallpox the US Gubmint has not intervened like this since the 1960's. In less than 1 year Obama has increased the money supply more than all Presidents stretching back to George Washington combined. The USA is toast. There are a couple of ways to destroy a country. One is militarily the other is to destroy the currency.

[pedalling_faster]

Did you see what happened to gold at the news? Up $5 in less than a half-hour.

gold fell from $920 to $890 yesterday. then ended the day at about $950.

silver followed along, percentage-wise.

[sjn]

I think there is still quite a bit of deflation left that will absorb this printing for a while. Once the debt is deflated the inflationary rebound is going to be horrible. Unless you're solid in commodities right now...

Check. I saw this coming quite a while back.

You weren't alone. I've been saying this is what would happen for years here. It was always a matter of time before this action was taken; the belief system of those with (and behind) the levers of power demanded it. Anybody who looked at Benanke's academic work should have known what path would be taken.

I gave it less than a 50% chance of happening last year, although I was prepared to go out on a limb in the Oil Price Challenge just for fun!

[smallpoxgirl]

NORMAL? Right, every day the Fed buys $300B in Treasury Trash!

Even in the MSM, they disagree this is "normal"

You kill me. From your Reuters link:

Treasury yields stayed sharply lower in Asia on Thursday, after plunging by the most in 26 years the previous day when the Federal Reserve staggered markets by saying it would start large-scale buying of long-term government debt.

The Fed has traditionally bought short term T-Bills. That's why for months there's been a huge disparity between short-term treasury yields and long-term. Short term T-Bills have had yields near zero and on a couple of occasions they actually had negative yields. Meanwhile longer term securities were returning at a decent rate. A couple of months ago the fed started talking about buying longer term treasuries to try and even out the yield curves. I suppose if you're heavily invested in 30 year T-Bills, this may be a very upsetting move to you. I'm not, so I don't especially care.

And yes, the M2 is increasing. The dollar index, though is still holding fairly strong. We got into a pretty steep deflation from August to November, so increasing the money supply was probably the right move. The $20 million question is whether we can corral that pony before we run into inflation, but that's been done to death in a dozen other threads.

[ubercrap]

This is a very normal activity by the fed. They regularly buy treasuries using created money. Controlling whether they're buying more treasuries, or letting the treasuries they have expire is one of the biggest tools they use to control the money supply. You can argue that the money supply is too big or too small, but getting upset about the fed buying treasuries is just silly.

I'm not exactly up on all of what transpires at that level , but I think you are essentially right. I think that given all of the other factors involved, I will go ahead and worry a bit.

[jupiters_release]

Now KD is starting to sound like a peakoiler!

quote:

That's a minimum; if you can in fact have enough available to be able to execute a "bug out" plan where you are able to become effectively self-sufficient on short notice (a couple of months maximum) if necessary, that's even better. Yes, we're talking chickens, goats, enough arable land to grow what you need to survive (bartering for what you don't have with what you do) and the means to defend it.

bold = LOL

http://market-ticker.org/archives/879-B ... Mouth.html

[Jotapay]

Good grief.

[gnm]

Great - so after a collapse we'll have a bunch of moron traders trying to play farmer. Like its possible to become self-sufficient in months.... I'm guessing 'ole Karl doesn't have much dirt under his fingernails.

I do, I just planted another 6 trees in the orchard....

-G

[smiley]

This is a very normal activity by the fed. They regularly buy treasuries using created money. Controlling whether they're buying more treasuries, or letting the treasuries they have expire is one of the biggest tools they use to control the money supply. You can argue that the money supply is too big or too small, but getting upset about the fed buying treasuries is just silly.

The fed has bought treasuries in the past, but the amount and the time in which they are going to buy them now is way beyond anything they have done before. They are going at it Japanese style.

This is not normal and a dollar drop of 5% in 24hrs is ample proof that the rest of the world does not consider this business as usual.

Although I do not reccommend to get "upset" about it, (as there are much greater things in life than watching the ticker at CNBC, and the fate of the Mogambo should serve as a warning to us all,) it certainly wouldn't be silly to poor yourself a good glass of single malt and ponder on what might be considered a very significant day by future historians.

[Jotapay]

Although I do not reccommend to get "upset" about it, (as there are much greater things in life than watching the ticker at CNBC, and the fate of the Mogambo should serve as a warning to us all,) ...

Eh? What happened here? The Mogambo Guru?