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It’s So Not QE – POTOMOMO Update for December 18

Here’s an update of “It’s So Not QE,” brought to you by the good folks at the Federal Reserve, providing welfare programs for crooked bankers and other economic parasites since 1913.

This is an embellished excerpt from Liquidity Trader’s Here’s Why The Fed is Trapped.

Liquidity moves markets!

Follow the money. Find the profits! 

As long as the Federal Government keeps hitting the market with new debt supply month in and month out, the Fed’s rescue can never end. The Primary Dealers are overloaded with long fixed income inventory and are heavily leveraged. Any drop in prices will destroy them, and will bring the financial system down with them.

So the Fed  must take all the new inventory that the Treasury is clobbering the market with. Nobody else wants this shit at these prices. They’re screaming, No Mas! Fed has to take it and swallow it and never allow it to come on the market again.

Here’s how it looks as of December 18. The Fed has pumped $266 billion in temporary Repo loans (Temporary Open Market Operations, or TOMO) and $210 billion in outright purchases (Permanent Open Market Operations, or POMO) of Treasuries into Primary Dealer accounts since September 17. That makes a total of $476 billion in direct subsidies to the Primary Dealers in 3 months. Pretty soon you’re talking real money.

Not QE

It’s so Not QE

Meanwhile the Federal Government has hit the market with $525 billion in new debt since Sepetember 17.

In other words, since starting “I Can’t Believe It’s Not QE,” on September 17,  the Fed has monetized 91% of the Federal Debt via its strawmen the Primary Dealers.

It’s the new POMO and TOMO. It’s financial POTOMOMO — a soon to be trillion dollar welfare program that flows from the banks of the Potomac to Wall Street, keeping dealers and bankers living large, and asset prices juiced.

Meanwhile, the Trump Regime cuts the food stamp program by half a billion a year so that more Americans can go hungry. Feed the bankers, starve the poor.

These are our government’s priorities. These are the policies they make in our name.

Meanwhile, we gotta trade it, so I tackle that issue at Liquidity Trader.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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