Bloomberg Article

101
Mon, Dec 3, 2012 - 12:31pm

In order to ensure that everyone sees this, I thought I should give it a dedicated thread.

The full article, posted by Bloomberg at 4:20 am EST today, is linked below. Here are the two, opening paragraphs. Please read and consider: 

Even as U.S. government debt swells to more than $16 trillion, Treasuries and other dollar fixed- income securities will be in short supply next year as the Federal Reserve soaks up almost all the net new bonds.

The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.

Note the certainty and matter-of-fact quality of the writing. To quote: "...the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in MBS it's purchasing..."

Will add. 

Will.

Did I miss something? When was this formally announced? Of course, I've tried to tell you that this was coming. I did so as early as September 18: https://www.tfmetalsreport.com/blog/4202/brass-tacks. But so far, this had all been speculation. We know that Operation Twist will end this month when The Fed runs out of short-term maturities to swap for long-term securities but we've yet to see the formal announcement that The Fed would continue with Twist's $45B/month, thereby making QE∞ $85B/month. However, here it is in print, from Bloomberg, via The Fed's own Primary Dealers.

Now some of the statements of the article are totally bogus, like the claim that the deficit will fall and the U.S. government will only need to borrow an additional $950B in fiscal 2013. This is complete nonsense as we know that they already had to borrow $120B in October 2012 alone, UP from $98B in October 2011. Regardless, the main point is the bald-faced quality of the opening paragraphs. QE at a minimum of $85B/month is a done deal. The official announcement from The Bernank will certainly be forthcoming.

https://www.bloomberg.com/news/2012-12-03/treasury-scarcity-to-grow-as-fed-buys-90-of-new-bonds.html

And remember, the charade of $40B in MBS and $45B in Treasuries is just that...a charade. It's all Treasuries, it's just that some are bought directly by The Fed and and some are bought on behalf of The Fed, by the PDs. The Fed buys $40B/month of mortgage backed securities (MBS) from the Primary Dealers. The PDs, in turn, take those funds and buy Treasuries. It's as simple as that. $1,020,000,000,000 in "Fed Cash" to fund the U.S. government deficit for fiscal 2013.

Have you added to your stack today??

TF

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  101 Comments

ggnewmex
Dec 3, 2012 - 12:34pm

First

That NICKEL article in the previous thread was fantastic,,,, MUST read stuff.

It is something I "worry " about, that the regulators will simply say, "OH WELL, all contracts null and void"

THey are all crooked anyway, ( generally speaking) so why not help the cause, who would care? Except for the end user who needs the stuff.

Therefore, STACK is the optimal word, I guess

Thanks Turd and all for wonderful insights

GG

silver66
Dec 3, 2012 - 12:37pm

second

my lucky day

Silver66

¤
Dec 3, 2012 - 12:39pm

Yep...

I thought the exact same thing when I posted it at The Newsticker earlier this a.m. Thanks for posting that article for everyone to see and consider. They literally spelled it out and are telegraphing everyone what to expect.

tsedawa
Dec 3, 2012 - 12:43pm

what!!!

thurd!!!!!!!

edit.. what!!! cost me the thurd

philly
Dec 3, 2012 - 12:54pm

Closer and closer to

Closer and closer to achieving my goals!!

Fifth!

paperempire
Dec 3, 2012 - 1:03pm

Looking for historical money supply growth

Has anyone ever come across a plot (or raw data) of one of the broader measures of money supply (M2, TMS, etc) that spans pre Great Depression (1929) until now?

tpbeta
Dec 3, 2012 - 1:11pm

The key line being...

"...a survey of 18 primary dealers found." In other words it's what the primary expect, not what has been announced. To be fair, it's what everyone and their dog expects.


Dec 3, 2012 - 1:22pm

Nickels

I just went to the bank and got some nickel rolls while I was there. You know, I am going to enjoy going through them, looking for silver war nickels. And I think I'll just start stacking all the real nickels too. Once upon a time we valued silver little more than we valued nickel.

Seems like things are speeding up...

S Roche
Dec 3, 2012 - 1:23pm

Ben Lightyear...

When he says infinity....

From June 2012

“If we don’t see continued improvement in the labor market, we’ll be prepared to take additional steps if appropriate,” Fed Chairman Ben S. Bernanke said at a news conference in Washington following a two-day meeting of the Federal Open Market Committee. “Additional asset purchases would be among the things that we would certainly consider.”

https://www.bloomberg.com/news/2012-06-20/fed-expands-operation-twist-by...

The PDs are simply taking him at his word. They're not gonna buy themselves at these rates.

Urban Roman
Dec 3, 2012 - 1:28pm

Achphttt!

( edit to write a comment after reading the article )

... editing ... waiting for TFM to come back online ... editing ...

Perhaps that is why the POSX is taking a powder today.

But what happens when the Fed "discovers" that there isn't any "there" there in the MBS? Are they going to go into the real estate business?


Dec 3, 2012 - 1:45pm
Eric Original
Dec 3, 2012 - 1:58pm

ditto from Trader Dan

Trader Dan is saying the same thing ($85B/mo) in a KWN post from last week. He references something from Goldman Sachs that maybe somebody can track down. Goldman should know.

https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/11/29_...$1_Trillion_Of_QE_For_2013.html

jolidacrown
Dec 3, 2012 - 2:02pm

From Jim Sinclair

Take this article and Google "Debt Monetization and results thereof."

There could be no scarier words than the Fed buying 90% of newly issued treasury instruments. This article, if proved true as a trend, is a foundation set in cement for gold trading at and above $3500. All other supportive arguments on gold will take it higher.

malejandro
Dec 3, 2012 - 3:02pm

SLV 35$ JAN13 Option

Am I seeing this correctly, the Total Volume for today on the 35$ Strike is 23,329 and Total OI is 99682?!

thurd aye
Dec 3, 2012 - 3:04pm

So many posts ,so little

So many posts ,so little time.Bolux,I got it! See, that's all I need to say.Parcel passed.

The idea is this.B passes to me ,I pass to Monadas.Nobody will know what the f he is talking about world tour,and the snippet of the man with the golden/silver whisper gets through. No names ,no packdrill.Come on guys we slip it around in the P/Messages,and no one will ever catch on.Whatda you say? A bit of invention here pls.

Thanks B ,WoW,and soon ,yes.

enjoy the concert. ;O))

(dragged from last post)

Missiondweller
Dec 3, 2012 - 3:17pm

effectively absorbing about 90 percent....

WTF????

Am I reading this right? We will monetize 90% of our debt?

Why even sell Treasuries? Why not just print and hand out cash?

This is truly nuts. Our dollars are not worth sh*t!

ivars
Dec 3, 2012 - 3:19pm

I would be really surprised

I would be really surprised if USD debt issuance in 2013 is less than in 2012. If that is so, then Iran war is delayed to 2014. And economy is fine, and taxes are increased. Everything is OK, moving into right direction gradually.

Theoretically its possible .. that means also delay in USD debt default for 1-2 years. Not surprising if things get stretched out a bit further..Happens all the time , they can kick the can quite well.

I thought, because of slowing of debt issuance in 2012, that 2012 is the smallest slope year before next acceleration. That is also suggested by trying to model USG debt curve with power* log -periodic functions.

So, I am not convinced. They must have just projected the slowing growth speed linearly in the future, as economists do.

But economy far from equlibrium, where it usually is, especially now, is non linear. So I think reduction of federal debt in 2013 compared to 2012 is either mistake of linear thinking, or political calculation. Not going to happen. There are so many events piling up to require more bailouts or subsidies or military spending or stimulus that some of them will happen.

And then USG will increase its debt. Nothing magic about 16 trillion, 20 or 25. Only that the speed of debt growth becomes unsustainable as it accelerates with every new step, being already almost super exponential, coming fast to this final stage. 

Call it USG debt bubble. Going to burst , and on approach , must accelerate in 2013 - to burst in 2016 or 2017.

HeNateMe
Dec 3, 2012 - 3:41pm

Local Coin Shop

Went in on Saturday to check out some Maples. The dude who showed them to me knew that I knew what I was talking about. The funny thing was another gentleman, who looked to be purchasing, overheard our conversation. He started chatting about manipulation of price in the gold/silver market and options expiry. I was like, "What?! Are you a fellow Turdite in disguise?" I didn't say it, but I thought it. Turned out he was a stock broker (but still a possible Turdite). He knew what he was talking about and it made my day.

BTW - the coin shop's prices were better (when considering shipping/handling) than anyone listed on https://comparesilverprices.com/.

HeNateMe

MisesFan
Dec 3, 2012 - 3:42pm

More fuel for the

More fuel for the fire......follows up on Jim K's comments last week.

Asia Leaders Push Regional Trade Pact

https://www.globaltimes.cn/content/747887.shtml

¤
Dec 3, 2012 - 3:45pm

P4

Lol!!!

babaganoush2307
Dec 3, 2012 - 4:00pm

Fed is playing bad bank here...

...just buy up all the bad debt and stick it on the book never to be seen by anyone ever again, problem solved keep moving nothing to see here....

babaganoush2307
Dec 3, 2012 - 4:08pm

Benny Bucks?

We stopped using those after benny bought all the bad debt, now were back to the USD it's as strong as ever! <sarc>

billwilson
Dec 3, 2012 - 4:15pm

Tomorrow

Based on the miners today ... one has to suspect more short term pain/buying opps tomorrow for PMs. 

¤
Dec 3, 2012 - 4:31pm

90% of debt

I've been saying it for awhile & recently. At some point the Treasury/Fed. will walk away from our own (mostly owned) debt and forgive themselves. In a twisted, upside down world it makes perfect sense as way to extinguish or write off the debt. In essence, what they've done the entire time (for many years) is to purchase their own debt like a semi-secret TARP except the troubled asset (liability in this example) is the UST market. They'll successfully accomplish this unless someone calls them out publicly about it. China? Maybe. Unless they use the US debt maneuver to play their hand before, during or after we play ours.

HeNateMe
Dec 3, 2012 - 5:36pm

A Poem I Wrote - To Lighten the Mood

Gesundheit!

God bless the sun

God bless the rain

God bless the subtle

Numbing pain

God bless the earth

God bless the moon

God bless the unknown soldier's tomb

God bless the States

God bless the Queen

God bless Kermit

And Ben Vereen

God bless the past

God bless tomorrow

God bless the mortgage money

I borrow

God bless Christmas

And Labor Day

God bless the ordinary

Days in May

God bless the dead

God bless the gestating

God bless the living

Are you relating?

God bless my tears

God bless my winnings

God bless Charlie Sheen's beginnings

God bless everything

Even doggie poo

God bless me

God bless you.

And God

Don't forget

Your blessing too.

القراع عصفور ¤
Dec 3, 2012 - 5:55pm

DPH - 90% of debt

you are so right. what's the saying - you owe the bank a million, your bad, you owe the bank a billion, oops, bank's bad.

China is trying to extricate themselves while still getting something for all their US T-bills/bonds. it is a classic game theory challenge.

i am on my new old computer that i mentioned. still have some bugs to work out, so probably won't be posting any video for a while, so also may be MIA from the bar.

btw... my first local mission to find the magic green booze has failed.

sengfarmer
Dec 3, 2012 - 6:25pm

LCS update

I went to the local LCS today to see what he had for sale. I was looking for some junk.

NOTHING. He had nothing for sale except a few 2012 ASE proofs at way over spot and some carded collectibles that I'm not interested in.

He said I should have came in about ten days ago. He had one buyer come in and buy everything he had in silver and some quarter ounce gold coins.

He said the same thing happened about a month before that with another single buyer of all of his inventory.

The Watchman
Dec 3, 2012 - 6:40pm
HeNateMe
Dec 3, 2012 - 6:48pm

Turd Convention

I still have fantasies of a Turd Convention. Probably in Vegas. I think we'd have a blast.

HeNateMe

Nigel Black
Dec 3, 2012 - 6:49pm
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