US Bond MKT Primary Dealers.. This is Big..

Summary Fed bought nearly all of last weeks 7 yr Treasury Issuance…

zerohedge.com/article/feds-u … me-exposed

chrismartenson.com/blog/fed- … tion/23880

market-ticker.org/archives/1304- … vered.html

acrossthecurve.com/?p=7671

“I am not sure where to begin here. A blogger named Chris Martenson wrote a story which alleges that the Federal Reserve System is secretly monetizing the debt. The Zero Hedge Blog links to the story and describes it as a phenomenal piece of investigative reporting. The story also received coverage at the high profile left wing/progressive blog the DailyKos. The author there was nearly apoplectic”

So nobody ( read China) is that interested in US sovereign debt any more !

This is the next phase in the meltdown of the dollar and the collapse of the American economy,to prevent rates from rising and impacting the housing market further,the Fed must keep long term interest rates low.These auction failures are the market correcting the long term instabilities in the US economy,as the markets are now under complete government control,the Fed now has to become the buyer of last resort.Of course it is not buying them with real money,it is just - via the treasury- printing it.Faber,Schiff and the Pin have been predicting this for years.Now it is finally happening.

From Ixus:Britain trending towards hyperinflation(thepropertypin.com/viewtopic.php?f=19&t=16035&p=284086#p284086)

Hyper Hyper!

Zerohedge gives an explanation of this article by Chris Martenson:
The Fed Buys Last Week’s Treasury Notes
Denninger is on the case now:BLATANT Monetization Uncovered

Essentially:
FED issued $28 billion in 7 year bonds last week.
Primary dealers (operating for the FED) bought $10 billion of these.
5 days later, the FED repurchases 47% or $4.7 billion.

This is monetisation, or printing money out of nothing. It’s a balance sheet operation that makes money out of thin air.

Another thing to look at is would the demand for bonds have been as strong if the FED didn’t do this?

EDIT: The proof is in the CUSIPs on Martensons post. Same ID’s.

Comprehensively shot down here nakedcapitalism.com/2009/08/ … on-in.html

Shot down my hole. He nitpicks at some of the article but fails to address the central question. The US government needs to borrow more and more money. Forigeners are less and less interested in lending it. The Fed is buying some of it up to keep the yields down and rig the market. Soon the only buyer will be the Fed. RIP US Dollar.

I think lots of people are missing the point. To me the significance is not that the bond was bought, but that it was offerred for sale. I don’t buy the talk about the recent issue being more liquid. US government bonds are long on liquidity. I also don’t buy the talk about the primary dealers having lots of the seven year available versus other bonds. So what are they up to? In theory, recent bond issues should be better to keep, with the reduction in price (better yield) of recent times. To my mind it is symptomatic of primary dealers that know that higher yields are coming. So the recent issue is recycled quickly to avoid taking a loss on it in the expectation that there are better yields round the corner. It’s not much different from the unlimited repo that the ECB is doing to facilitate euro government bond issuance with the difference being that it is outright purchases, so is expansion of money supply.

I don’t think there is a conspiracy at the Fed, this is what they said they would do. I do think the primary dealers think rates are going to rise…

Thats because China is buying up all the zinc, coper and gold buillon that it can find so when the next collapse in the markets comes late this year, it wold be left holding all those worthless toilet paper, i.e. US Dollar and treasury bonds…