[seldom_seen]

Fed to Buy $300 Billion of Longer-Term Treasuries

March 18 (Bloomberg) -- The Federal Reserve said it will buy $300 billion in Treasury securities and acquire more mortgage and agency debt in an effort to bolster housing and hasten the end of the recession.

http://www.bloomberg.com/apps/news?pid= ... refer=home

I remember a nice sunny day in July 2007. I was eating lunch and reading a WSJ that was left on the table. An article mentioned that Bear Stearns had halted redemptions on one of their hedge funds. "That does not sound good," I thought.

Look how far we've come baby. The fed is now going to "buy" billions of treasuries. Back in September the Fed "borrowed" 100 billion from the Treasury. Maybe they've invented the first perpetual motion machine?

[eastbay]

I think it might be fun to ponder where the FED will get $300,000,000,000 to use to buy some government paper.

[AAA]

I will be happy if the Fed keeps bumping up stock prices so I can take some profits.

People better take advantage of the Feds move whether it is selling some investments that you have recently bought, refinancing your mortgage, or buying a doomstead while mortgage rates are near all-time lows.

[ubercrap]

Um, am I mixed up, or um, is this extremely serious? I guess I could put it this way, I hope this doesn't mean what I think it means...

[sameu]

hmm isn't this one of the things that are in fact a mayor red alert

[Tyler_JC]

The 10 year treasury yield fell 35 basis points (.35%) in 3 minutes.

The total decline in a 15 minute period was 50 basis points (.50%).

The dollar index fell 3% in one day. This is a multi-trillion dollar market. A 3% move means hundreds of billions of dollars of change in value. It's crazy.

That kind of move usually takes months, not minutes. It is completely unheard of. Or rather, it was before the Fed started intervening as much as it is.

[ReverseEngineer]

Money for nothing and your checks for free!

Reverse Engineer

[Daniel_Plainview]

Pandora's printing press has been unleashed. Today's it's a mere $300 billion; at the next Fed meeting it will be $600 billion ....... and then $1 trillion ......

Both the US and UK are f#cked.

[Thralen]

Heck with finding $300,000,000,000 to buy government paper. The total buy announced was $1.2 Trillion... Where's the rest of it coming from?
"Federal Reserve to Buy $1.2T in Bonds, Mortgage-Backed Securities"
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031802283.html?hpid=topnews

Thralen

[sameu]

correct me if I'm wrong, but this is naked printing, right?

[gnm]

correct me if I'm wrong, but this is naked printing, right?

Oh they're naked alright - look how fast the dollar fell.

Its one big circle jerk now....



-G

[Daniel_Plainview]

Heck with finding $300,000,000,000 to buy government paper. The total buy announced was $1.2 Trillion... Where's the rest of it coming from?
"Federal Reserve to Buy $1.2T in Bonds, Mortgage-Backed Securities"
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031802283.html?hpid=topnews

Thralen

The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.

The Fed also said it will buy $300 billion in long-term Treasury bonds, a step it had previously considered but had been reluctant to act on. That move will lower long-term interest rates for the U.S. government directly and, Fed officials hope, will indirectly lower borrowing costs for businesses and individuals.

The Fed is like a kid in a candy store; but where is the money going to come from?

[mefistofeles]

I am absolutely stunned. At this point paper could become just that paper. I knew this would happen but I thought it would have to be a real emergency for anything like this to happen.

I certainly society was having problems but this insanity,its certainly great for everything that I own but this means that hyperinflation will be a near certainty.

[Prince]

I've lost track on how many 100s of billions and now trillions of dollars the Fed has 'injected' since September. Does anyone know? I think it's at least 2T now... and this is on top of the bailouts/stimulus.

[Jotapay]

correct me if I'm wrong, but this is naked printing, right?

Yes. Completely. They are printing with reckless abandon now. Holy shit, God help us.

Gold, gold, gold. It seems like commodities are about to get really expensive now.

Also, if you've kept up with this news, the Chinese have been selling their long term US-debt and getting into short term (10-year and shorter) T-bills. The treasury was probably having an impossible time finding buyers for the long term debt, but they had to finance themselves somehow. So the Fed conjured up the money to buy the T-bills. I think the wheels have pretty much come off the bus at this point. They have nothing left except to print hundreds of billions of dollars.

[retiredguy]

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

[kublikhan]

I've lost track on how many 100s of billions and now trillions of dollars the Fed has 'injected' since September. Does anyone know? I think it's at least 2T now... and this is on top of the bailouts/stimulus.

If you add everything up, it is around 9.7 trillion. Adding in this new $300 billion, bumps it up to a cool $10 trillion.

Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort.

The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.

U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs

[Tyler_JC]

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

I assume you meant $50.

And if you look at the low versus high, it was a $70 swing.

If you were playing in Euros, however, the move was basically non-existent.

[Prince]

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

Looking at the Kitco charts, gold was about ~ $890 before the Fed report, and within minutes jumped to $940.

[Cynus]

Don't forget that the Fed also announced that it's going to buy up an an additional $750 billion of agency mortgage-backed securities today.