It's Official: Bernanke Lied, the Dollar Died
Market Ticker believes that Dallas Fed's Richard Fisher was lying when he said the Fed would not play handmaiden to the Treasury (his words, not mine as mine were "the Fed is not the Treasury's bitch, bitch) but I disagree with that assessment. No offense to KD as I do not go a day without reading the Ticker but he's wrong.
I don't blame Richard Fisher for this, and if one looks at the entire system instead of looking at the Fed Board of Governors with its soldiers dispatched to serve them at their respective districts, it is fairly easy to understand that they are not one in the same. The regional banks (except for New York, naturally) do serve their intended purpose of normalizing the Fed system and keeping shenanigans like the ones we just witnessed in check. This isn't Fed propaganda, it's how things are. They do stupid financial literacy events and talk to local businesses and reach out to their own districts and to each other, sharing information to gauge the economy in real world terms. Their numbers may not be correct but they're in the trenches stabilizing the mania of the Board. Bear with me.
The Board is absolutely out of its fucking mind at the moment to pull a move like this. Richard Fisher didn't have shit to do with this because I honestly believe he'd pull a shotgun on any Fed Governor who had the balls to suggest this kind of behavior at an FOMC meeting. (Speaking of which, I'm still waiting for Lacker v Yellen but I am not holding my breath) Texas boys are like that, you know, and Fisher absolutely understands that the Fed is in dangerous territory.
There is no way Richard Fisher would agree with the Fed jerking off the Treasury to the tune of 47% of 7 year T-bills. Just bang them on the NY Fed markets desk, why don't they? Ouch.
That being said, someone gave this the OK. Don't look to Dallas Fed for an answer.
Market Ticker ("blatant monetization", I love it):
Well now we know what happened: The Fed pretty clearly pre-arranged, either explicitly or by "suggestion", that the Primary Dealers take up the auction with the promise that The Fed would immediately monetize half what the Primary Dealer's took!WC Varones has the backstory, which is what tipped us off in the first place.
Folks, this is beyond bad - it is pernicious and outrageous conduct by The Federal Reserve in conspiracy with the Primary Dealers, both of which are now desperately trying to prop up the US Government Bond Market through subterfuge rather than just buying up the bond issue from Treasury when originally put to the market!
If you think the economy and credit markets are "on the mend" why would The Fed do something like this? It would not be necessary unless The Fed was told (by those very same Primary Dealers) that they were going to be unable or unwilling to take down any more Treasury Debt.
Folks, let me be clear: The United States HAS OFFICIALLY HIT THE TREASURY DEBT WALL and The Fed and Treasury are engaged in subterfuge and conspiracy in an attempt to hide this from the market.
There is no other explanation for what just happened.
Just wanted to make sure we are watching the right villains here, kids, that's all. We only have one chance to get this right, I'd hate for us to waste our energy on the wrong guy.
What do you call this? A circle jerk? Financial rape? Perverted money laundering? I'm not even sure. If someone comes up with something good, please let me know.