http://www.bloomberg.com/news/2012-12-03/treasury-scarcity-to-grow-as-fed-buys-90-of-new-bonds.html
Treasury Scarcity to Grow as Fed Buys 90% of New Bonds
Even as U.S. government debt swells to more than $16 trillion, Treasuries and other dollar fixed- income securities will be in short supply next year as the Federal Reserve soaks up almost all the net new bonds.
The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.
Rest at the link.
In short this is exactly what I have been talking about.Direct monetization of the debt.This will create inflation.It is very detrimental to the value of the dollar,and fully expect those who hold notes to try and unload them.Why would you hold an asset that was being deliberately devalued?As said earlier in this thread,we are pretty much in a full blown currency war.Most countries on earth are in a race to devalue to maintain trade.It is very much like the protectionism of the great depression,and has nearly the same effect.
Treasury Scarcity to Grow as Fed Buys 90% of New Bonds
Even as U.S. government debt swells to more than $16 trillion, Treasuries and other dollar fixed- income securities will be in short supply next year as the Federal Reserve soaks up almost all the net new bonds.
The government will reduce net sales by $250 billion from the $1.2 trillion of bills, notes and bonds issued in fiscal 2012 ended Sept. 30, a survey of 18 primary dealers found. At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.
Rest at the link.
In short this is exactly what I have been talking about.Direct monetization of the debt.This will create inflation.It is very detrimental to the value of the dollar,and fully expect those who hold notes to try and unload them.Why would you hold an asset that was being deliberately devalued?As said earlier in this thread,we are pretty much in a full blown currency war.Most countries on earth are in a race to devalue to maintain trade.It is very much like the protectionism of the great depression,and has nearly the same effect.
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