[RT] Re: [TimeandCycles] Fed Pumping Bond Prices, RealTraders Email List Archive

Because, as I mentioned in another response, the Fed has not actually (yet) printed money without a corresponding debt issuance/assumption in some respect (at least as far as I know) and deflation is still here. Gold is probably holding up as well as it has due to concern for inflation/hyperinflation and possible political and monetary instability, but not yet due to inflation or hyperinflation. When the Fed can no longer create more money through its normal methodologies and no one is willing to take on our debt, then the 64 trillion dollar question is posed to the US Gov, default or print.

--- On Tue, 11/25/08, RajaCar <koesje1958@xxxxxxcom> wrote:

From: RajaCar <koesje1958@xxxxxxcom>
Subject: Re: [TimeandCycles] Fed Pumping Bond Prices
To: TimeandCycles@yahoogroups.com
Date: Tuesday, November 25, 2008, 2:29 PM

Good observations Bob,

All this creation of Money out of thin Air to bailout all the Banks they prefer and their Cronies should be highly Inflationary. I wonder why Gold hasn't moved much higher.

Ian

--- On Tue, 11/25/08, Bob Carver <bcarver@xxxxxxcom> wrote:

From: Bob Carver <bcarver@xxxxxxcom>
Subject: [TimeandCycles] Fed Pumping Bond Prices
To: TimeandCycles@yahoogroups.com
Date: Tuesday, November 25, 2008, 11:19 AM

I've been doing some research on what the Fed is up to and it looks like this is the plan:

The Fed is in panic mode. They are massively expanding the money supply (printing money), pushing excess funds to the banks with the help of the Treasury. Since the banks don't want to make loans with the money, they're buying government bonds all the way out to 30-years duration, which is pushing long term interest rates lower.

There's no way to tell when the Fed will end this policy. And, since the Fed can create as much money as they want, any trader shorting the bond market is simply sacrificing his account to the gods of the Fed until they do end the policy. "Don't fight the Fed." They can print money and you can't (legally, that is).

As one article I read pointed out, this could result in interest rates going close to zero for long term bonds, then create a massive collapse in the dollar, interest rates soaring into the hundreds of percentage points and hyperinflation like Wiemar Germany. This would obviously cause an Inflationary Depression which the Fed would be powerless to stop.

They may be creating the end game for the United States here as no one will want to hold dollars, everyone who has their wealth in dollars would be toast and the former nation becomes an ancient ruin. Or, maybe we sell it to Japan and they turn the country into a park.

It appears the Fed is doing a "Hail Mary" pass to save the system. Those usually don't work. This will go down as either the biggest economic blunder in history, or a miraculous save.

--Bob Carver
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded---here and there, now and then---are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as "bad luck." (Robert A. Heinlein)
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