As we picked up yesterday thanks to some gangster Google alerts and readers/Twitterati who know Jr Deputy Accountant loves herself some Treasurys, especially when they're being smuggled into Switzerland to the tune of $134.5 billion, the story of the Japanese nationals slipping through Italy with a mad amount of bonds hidden in the bottom of their suitcase is certainly a strange one.

Why won't you hear anything about this on CNN? Reuters? MarketWatch? No one? It's $134.5 billion in United States debt! We aren't talking about some idiots who tried to smuggle in a few $100 savings bonds without declaring them, we are talking about Japanese nationals trying to get to Switzerland with billions in antiquated U.S. Treasurys.

Strange but not related, in regards to the Federal Reserve's latest QE scheme, since late March, the Fed has bought about $138 billion of T-bills [oh so close!], or about 46 percent of the $300 billion the central bank has said it would purchase over a six-month period. What a hilarious coincidence, except in the age of blips there is no need for smuggling, just a computerized readjustment of money that doesn't exist anyway.

So the financial blogs are covering it, albeit sparsely, and I suppose part of the silence has to do with the fact that few have been able to dig up details and we hate to run rampant with wild speculation... wait, what?! Since when! Why is no one talking about this?

Well that is obvious. Let KD tell you.

Market Ticker's Karl Denninger yesterday:

Those sound like Bearer Bonds - at least the Kennedy ones do.

We no longer issue those (nor does pretty much anyone else) for obvious reasons - they're essentially money and can be had in VERY large size, making them great vehicles for various illegal enterprises.

But folks: This is $134.5 billion dollars worth.

If they're real, what government (the only entity that would have such a cache) is trying to unload them?

If they're fake, this is arguably the biggest counterfeiting operation ever, by a factor of many times. I've seen news about various counterfeiting operations over the years that have made me chuckle, but this one, if that's what it is, is absolutely jaw-dropping.

The cute part of this is that if the certificates are real Italy just got a hell of a bonanza - their money laundering laws provide for a statutory 40% penalty for failure to declare instruments and cash in excess of $10,000 Euros, which means they'd garner a close-to-$40 billion dollar windfall.

That ought to help their budget problems!

Notice, by the way, that the US Media has totally ignored this story - even though the securities in question are allegedly US instruments.

Gee, I wonder why? Might the authorities know they're real and be just a wee bit nervous that disclosure of a sovereign attempting to covertly dump nearly $140 billion in debt could cause a wee bit of panic, given that we're running nearly $200 billion a month in deficits?

Thank you, again, KD for being so damn realistic about the state of affairs.

I agree. Shouldn't the media be all over this like the Goldman rats on the rebel traders it gets in its sights?

Hey Lucy, I think you got some 'splainin to do - this ain't Bilderberg so what's with the U.S. media blackout??

Update: Italian Police Ask SEC to Authenticate Seized U.S. Treasuries says Bloomberg:

The bonds, with a face value of more than $134 billion, are probably forgeries, Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said today. If the notes are genuine, the pair would be the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.

The seized notes include 249 securities with a face value of $500 million each and 10 additional bonds with a value of more than $1 billion, the police force said on its Web site. Such high denominations would not have existed in 1934, the purported issue date of the notes, Mecarelli said. Moreover, the “Kennedy” classification of the bonds doesn’t appear to exist, he said.

Hey look, we got a PEEP out of them! Uh huh...