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Created on: 12/18/2012 4:22:58 AM   Last Update: 12/18/2012 4:33:39 AM Posted by: RTT
WARNING: This entry is 4420 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.

1 POST The US Fed balance sheet is alive, it is alive !
the-us-fed-balance-sheet-is-alive-it-is-aliveThe US Federal Reserve balance sheet begins to grow. What does it mean?

- The Fed is buying per month $45 Bn of US Treasuries (30 yr) to keep interest rates down. The FED is the only buyer in the long bond market. If they were not then interest would be rising fast. The truth is that a good economy has rising interest rates and not falling rates. This is a running bailout of the US Government spending.

- The Fed is buying per month $40 Bn of MBS or Mortgage Backed Securities (MBS) from the banks. This is a pure asset swap. The Fed is the only buyer in this market. They are buying MBS at full price, when they not even worth half of the original setup valuation. The Fed is giving good solid CASH to the banks to do as they wish. This is a running bailout of banks with MBS.

The banks will use the CASH to speculate. The banks can not make a buck with mortgage rates so low, there is no money in mortgages any more! The banks have to find yield from speculation in the markets, with greater leverage. You got it, nothing has changed. 

Consider ...
1) The US Fed balance has been a laggard behind the ECB (EURUSD) and BOJ (USDJPY). The central bank laggard has the stronger dollar. Therefore the fed must expand the balance sheet to debase the currency to avoid a stronger dollar than its exporting partners.
2) The Fed is worried about the fragile US economically and cant afford to allow USD to appreciate.
3) The USD is cheap currency for the carry trade to fund risk assets. A rising USD would frustrate these transactions.

Peter Schiff has more



The US Federal Reserve balance sheet is ticking up. Is this why the banking sector raced to higher prices the week before Christmas. (See BAC, GS,C, AIG, EUFN, JPM, WFC, DB,  etc)


US Balance Sheet


Keep an eye on Gold and Silver. Readtheticker.com is not a gold bug site, but facts are facts folks.



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