As This Monetization Comes to a Close...
Jim Willie seems to believe that the sovereign debt crisis is just around the corner, after test runs like Iceland, Dubai, and of course Greece. He also believes that the Treasury and Fed have worked together to create an obscure illusion of demand for US debt using creative accounting and a catch-all category called household debt. Yeah, like as in all those unemployed people who can't afford to pay their mortgages nor credit card bills nor health care premiums. Those households. And just about anyone else they can conjure up.
One more time, say it with me, kids: foreign central banks LOL!
JW via Kitco:
The foreign accumulation of new USTreasury debt is tiny compared to what official USTBond debt is issued and auctioned. Nobody seems to be capable of primary school mathematics, once graduation to Wall Street and USGovt service is achieved. If new debt is five times what foreigners are buying, then after factoring the domestic bond fund absence like PIMCO (they detest bonds nowadays), one can quickly conclude that the USFed/Treasury tarnished tagteam is monetizing 60% to 80% of all new debt issuance. Isolation is here, but must be more fully recognized.
The Greek tragedy has an American conclusion. It is written in stone, but US leaders and the US population are blinded by a generation of dominance and privilege. Like a tsunami, the tragedy will strike the WashingtonDC shores and shred its financial seawalls. A sequence is at work, with Southern Europe next in line, then England, finally the United States. The financial foundation data demands it. The denials ignore reality. The isolation of the USGovt debt finance machinery, and exposure of its abused Printing Pre$$ assure a default event, or at least a path to such a default. It will probably not be properly recognized.
To ask the United States as a collective entity to embrace its fate is nearly as mad as the very behavior that we see in bond markets.
Manipulation? The Fed? Surely you jest. No, actually you don't, and you need look no further than this September 2009 piece by Zero Hedge in which former Fed chairman Arthur Burns actually has the audacity to say that a truly free relationship between gold and "money" (I use the term loosely) in the global economy "could easily frustrate our efforts to control world liquidity".
A gem from ZH:
Aside from the gratuitous observation that even 34 years ago it was painfully obvious how "massive" liquidity could and would result in runaway inflation and the Fed actually cared about this potential danger, what highlights the hypocrisy of the Fed is that when it comes to drowning the world in excess pieces of paper, only the United States should have the right to do so.
Exactly. And apparently we should also be allowed to monetize everything that isn't nailed down.
While it would be quite easy to strap on the tin foil hat tight and claim the Fed and Treasury are in bed together on this jerk off, I can't quite believe they can even play well enough with each other long enough to come to some sort of manipulation agreement.