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.
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.
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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