Tick Tock… Tick Tock… Tick Tock…
Chart: Stone McCarthy
– The Fed Owns 31.89% Of The Bond Market: Up 0.3% In One Week (ZeroHedge, Aug 30, 2013):
We have beaten this topic to death so we won’t say much more, suffice to say the chart below shows what is the key issue: too much monetization and it’s game over for the reserve currency; too little and it’s an uncontrolled market sell off, and with every passing week the margin for error gets less and less.
- Last week the Fed owned $1.663 trillion in ten year equivalents, or 31.59% of total
- This week the Fed owned $1.678 trillion in ten year equivalents, or 31.89% of total
In other words, the Fed’s holdings of the Treasury market, expressed though the correct 10 Year equivalent basis not the completely wrong total notional, rose by a whopping 0.3% in one week!
Annualize that (especially without a taper) to understand just how cornered the Fed now is (especially with the TBAC already complaining non-stop about lack of Treasury liquidity and eligible private-sector collateral).
For much more on this, see here.
This is really bad news, especially the loss of liquidity in US treasuries…….that means nobody believes they are worth what they claim.
When I was a girl, and a young woman, a US treasury note was like cash. No longer. They are printing far more than there is value, and the end is near.
I don’t understand how they have kept it going this far…..lots of cheap tricks and rigging…….but the day of reckoning is coming. FDR’s FED chairman once described it best when asked what caused the crash of 1929.
“As in a poker game, the chips got concentrated in fewer and fewer hands until the other fellows could only stay in the game by borrowing. When their credit ran out, the game stopped.”