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LSURussian 
LSU Fan
Baton Rouge
Member since Feb 2005
63209 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:22 pm to Aubie Spr96)
quote:
:inb4russian:
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GumboPot
LSU Fan
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:24 pm to LSURussian)
Well, you are the resident expert.
eta: in this subject area.
This post was edited on 4/2 at 9:25 pm
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udtiger
LSU Fan
Louisiana
Member since Nov 2006
18057 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:25 pm to PsychTiger)
quote:
You've got plenty of time. Just close before December 21st.
Cool.
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GumboPot
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:29 pm to udtiger)
I think you'll be just fine.
The Federal Reserve will not exit the treasury bill/note market all a once. I'm sure Bernake plans to land this thing softly.
This post was edited on 4/2 at 9:31 pm
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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63209 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:33 pm to GumboPot)
quote:
Well, you are the resident expert. eta: in this subject area.
True, but.....so? What's the question?
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GumboPot
LSU Fan
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:37 pm to LSURussian)
There is no question per se.
Aubie just made the emoticon :inb4russian: b/c this is a Fed thread.
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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63209 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:40 pm to GumboPot)
He's obsessed with me. I've tried to explain to him I like girls.....
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GumboPot
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 9:41 pm to LSURussian)
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foshizzle
LSU Fan
Member since Mar 2008
25125 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 10:13 pm to PsychTiger)
quote:
Wonder how China feels about the competition.
China has been slowly unloading it's Treasury holdings for awhile, they probably like the fact that there is a large, willing buyer.
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prplhze2000
LSU Fan
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Member since Jan 2007
29256 posts
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 10:54 pm to foshizzle)
If you look at Z1, I think it shows the Fed unloaded T's in the fourth quarter. The buying stops in third if I remember right.
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I Love Bama 
Alabama Fan
Alabama
Member since Nov 2007
27122 posts
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 10:54 pm to prplhze2000)
Does this mean I need to hurry and refi everything?
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GumboPot
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Member since Mar 2009
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 11:24 pm to prplhze2000)
The Fed is in Operation Twist 2 currently until June.
quote:
The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.”1
LINK
That squashes long term rates.
After twist 2, we should get some more "accommodative" policies from the Fed. Bernake has indicated so...and it is easy to see why. Who else is going to purchase all the debt by our deficit spending congress?
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ljhog 
Arkansas Fan
Lake Jackson, Tx.
Member since Apr 2009
8872 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 11:52 pm to I Love Bama)
quote:
Does this mean I need to hurry and refi everything?
nope, sell and horde cash in Canadian dollars or Swiss Francs.
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I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
27122 posts
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| re: Fed is buying 61 percent of US debt (Posted on 4/2/12 at 11:53 pm to ljhog)
My question was serious. This is fricking scary.
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cssamerican 
New Orleans Saints Fan
Member since Mar 2011
1769 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 5:44 am to I Love Bama)
So, we are printing money and lending it to ourselves. Does this mean the debt is BS? Or does this mean hyperinflation is coming at some point? If the later, what is the best way to take advantage of the situation financially?
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Enadious
LSU Fan
formerly B5Lurker City of Central
Member since Aug 2004
14096 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 7:09 am to cssamerican)
quote:
Or does this mean hyperinflation is coming at some point?
Ding ding ding.
quote:
If the later, what is the best way to take advantage of the situation financially?
Kill yourself while you can still afford to die.
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CITWTT
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25229 posts
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| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 7:15 am to miketiger)
You would have known about that fact much earlier if you watched Glen Beck over a year ago.
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ApexTiger
LSU Fan
cary nc
Member since Oct 2003
28177 posts
| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 7:33 am to CITWTT)
quote:
You would have known about that fact much earlier if you watched Glen Beck over a year ago.
I like Glenn Beck, but many centrists can't stand him
I fail to understand
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CITWTT
LSU Fan
baton rouge
Member since Sep 2005
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| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 8:01 am to ApexTiger)
The thing that seems odd to me about Beck is that he was always bringing to light facts that needed to be uncovered, and that was the impetus to get him off of Fox. Now he operates on his own, without need for advertisers, and can tell more of the truth to those willing to listen.
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GumboPot
LSU Fan
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| re: Fed is buying 61 percent of US debt (Posted on 4/3/12 at 8:09 am to cssamerican)
quote:
So, we are printing money and lending it to ourselves.
Yes and no.
No in terms of the Federal Reserve. The Federal Reserve is a private banking institution. It is about as public as Federal Express.
Yes in terms of intergovernmental agencies buying debt from the treasury. For example, the Social Security Administration owns ~$2.5 trillion. Intergovernmental agencies accounts for approximately $5 trillion.
quote:
Does this mean the debt is BS?
No, we have to pay it back. You know what happens if the treasury doesn't pay it back, right?
quote:
Or does this mean hyperinflation is coming at some point?
Not necessarily. Inflation is likely but hyperinflation is unlikely, imo.
The Federal Reserve is in a catch-22 currently (but that is the game they play). They have to continue with their current accommodative policies in order to enable the federal government with its deficit spending. The two current policies are near zero interest rate policy (ZIRP) and Operation Twist 2.
ZIRP is were the Federal Reserve is setting the Fed's funds rate near zero. It is currently 0.25%. This is the rate at which lending institution can borrow from the Fed. The result is banking institutions borrowing large amounts of money at 0.25% from the Fed and turning around and buying treasuries with 1%+ yields. These banks are making money off the spread between the Fed's fund rate and the underlying treasury yield. This helps fund the government. Additionally, when banks begin less T bill/note purchases and more consumer lending, this is when inflation will kick in.
As described in my earlier post Operations Twist 2 is a Fed policy where they are buying the Ts with +6 maturity dates and selling the Ts with less than 6 maturity dates. This is a Federal Reserve balance sheet reshuffle. No new net government debt is being put on the Fed's balance sheet under this program. However what is being accomplished is squashing long term rates (which affects mortgage products).
quote:
If the later, what is the best way to take advantage of the situation financially?
If you think inflation is going to kick in (for a number of reasons), you may consider shorting treasuries. Shorting means you think that the price of the treasuries will go down. And when the price of a treasury goes down the yield goes up (the yield affects interest rate products). To short treasuries you may consider the ETFs TBF or TMV for the ride up. When we are at what you believe are peak interest rates you could transfer those funds into high yielding CDs at your local bank. During the Carter years people were getting 15% to 20% on CDs. That is one of several different strategies you could employ (but do your own DD).
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