NASDAQ.com: Something Very Strange is Happening with Treasuries
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See, watching conspiracy videos on the web all day is not going to get you a job.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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http://community.nasdaq.com/News/2010-02/Something-Very-Strange-Is-Happening-With-Treasuries.aspx[^] Here we go. The collapse of the dollar, probably triggered by the rise in interest rates at the Federal Reserve (my guess, at least.) And this, my dear friends, is why I've stopped contributing to my 401K plan about two years ago, and have started to "hoard silver". Not like 20 oz of silver is much, but that's what I've got.
You've got that backwards. As the author points out at the end, "Put another way, someone(s) is/are willing to not make money just for the sake of insuring return OF capital (the US can always print money to return it) rather than any return ON capital.". That's someone(s) betting on the opposite. They are willing to forego any return on capital because they expect the dollar to rise in value.
Chris Meech I am Canadian. [heard in a local bar] In theory there is no difference between theory and practice. In practice there is. [Yogi Berra]
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josda1000 wrote:
Here we go. The collapse of the dollar, probably triggered by the rise in interest rates at the Federal Reserve (my guess, at least.)
When do you expect this to happen? I have an idea, it wont happen, and in three months when I ask you why it didn't happen you will point to another article, video, book or blog as new proof it's about to happen.
Josh Gray wrote:
When do you expect this to happen?
Personally I'd say two years, but it is a prediction.
Josh Gray wrote:
it wont happen, and in three months when I ask you why it didn't happen you will point to another article, video, book or blog as new proof it's about to happen.
I'm not trying to necessarily prove it'll happen, it's a prediction. One with much historical backing, and Austrian economic thought.
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You've got that backwards. As the author points out at the end, "Put another way, someone(s) is/are willing to not make money just for the sake of insuring return OF capital (the US can always print money to return it) rather than any return ON capital.". That's someone(s) betting on the opposite. They are willing to forego any return on capital because they expect the dollar to rise in value.
Chris Meech I am Canadian. [heard in a local bar] In theory there is no difference between theory and practice. In practice there is. [Yogi Berra]
Chris Meech wrote:
That's someone(s) betting on the opposite.
Highly unlikely, in my opinion. I believe that this independent source just wants to keep the ball rolling (keep the government from going bankrupt) by making sure that their treasuries are bought. That's why they say that likely, the Federal Reserve is probably the entity making all of the independent trades.
Chris Meech wrote:
They are willing to forego any return on capital because they expect the dollar to rise in value.
You can buy into this as much as you want, but the trend of the past forty years says otherwise.
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Chris Meech wrote:
That's someone(s) betting on the opposite.
Highly unlikely, in my opinion. I believe that this independent source just wants to keep the ball rolling (keep the government from going bankrupt) by making sure that their treasuries are bought. That's why they say that likely, the Federal Reserve is probably the entity making all of the independent trades.
Chris Meech wrote:
They are willing to forego any return on capital because they expect the dollar to rise in value.
You can buy into this as much as you want, but the trend of the past forty years says otherwise.
josda1000 wrote:
That's why they say that likely, the Federal Reserve is probably the entity making all of the independent trades.
They don't say that at all. The wording they used is: "One could potentially argue that this indirect buying came from the Fed..." and later "I cannot tell you which of the above is true. Heck, neither of them could be and something completely different could be happening." It also talks about the low percentage of indirect trades... The primary dealers are the ones that really set the rate here. The oddity here is that the BUYERS set the rate, and the BUYERS are accepting as low as zero. Rates, in this sense, are the interest they would receive. In other words, they're giving the government one month, zero-interest loans. Keep in mind these are short-term bonds (4 weeks), not the usual 10-30 year ones. Not sure what the motivation is behind the zero-yield bids... It's just strange.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
josda1000 wrote:
That's why they say that likely, the Federal Reserve is probably the entity making all of the independent trades.
They don't say that at all. The wording they used is: "One could potentially argue that this indirect buying came from the Fed..." and later "I cannot tell you which of the above is true. Heck, neither of them could be and something completely different could be happening." It also talks about the low percentage of indirect trades... The primary dealers are the ones that really set the rate here. The oddity here is that the BUYERS set the rate, and the BUYERS are accepting as low as zero. Rates, in this sense, are the interest they would receive. In other words, they're giving the government one month, zero-interest loans. Keep in mind these are short-term bonds (4 weeks), not the usual 10-30 year ones. Not sure what the motivation is behind the zero-yield bids... It's just strange.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel)Ian Shlasko wrote:
They don't say that at all. The wording they used is: "One could potentially argue that this indirect buying came from the Fed..." and later "I cannot tell you which of the above is true. Heck, neither of them could be and something completely different could be happening."
You're right, I'm sorry about that.
Ian Shlasko wrote:
The oddity here is that the BUYERS set the rate, and the BUYERS are accepting as low as zero. Rates, in this sense, are the interest they would receive. In other words, they're giving the government one month, zero-interest loans. Keep in mind these are short-term bonds (4 weeks), not the usual 10-30 year ones. Not sure what the motivation is behind the zero-yield bids... It's just strange.
Which is why I do happen to believe it's probably the Fed. The only reason I can possibly see this happening is that the Fed and the government wish to keep the currency and the current status quo alive, and the only way to do this is to give zero-interest loans, no matter the time period on the loan. A 14 trillion dollar debt ceiling is nothing to sneeze at.
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Ian Shlasko wrote:
They don't say that at all. The wording they used is: "One could potentially argue that this indirect buying came from the Fed..." and later "I cannot tell you which of the above is true. Heck, neither of them could be and something completely different could be happening."
You're right, I'm sorry about that.
Ian Shlasko wrote:
The oddity here is that the BUYERS set the rate, and the BUYERS are accepting as low as zero. Rates, in this sense, are the interest they would receive. In other words, they're giving the government one month, zero-interest loans. Keep in mind these are short-term bonds (4 weeks), not the usual 10-30 year ones. Not sure what the motivation is behind the zero-yield bids... It's just strange.
Which is why I do happen to believe it's probably the Fed. The only reason I can possibly see this happening is that the Fed and the government wish to keep the currency and the current status quo alive, and the only way to do this is to give zero-interest loans, no matter the time period on the loan. A 14 trillion dollar debt ceiling is nothing to sneeze at.
josda1000 wrote:
Which is why I do happen to believe it's probably the Fed. The only reason I can possibly see this happening is that the Fed and the government wish to keep the currency and the current status quo alive, and the only way to do this is to give zero-interest loans, no matter the time period on the loan. A 14 trillion dollar debt ceiling is nothing to sneeze at.
Again, the majority of the buyers are PRIMARY DEALERS. They're the ones setting the absurdly-low rate. Primary dealers are non-Fed banks and broker-dealers (list[^]). The "indirect" ones are usually foreign buyers, but could potentially be the Fed "sneaking" some bids in. So there are really two points made: 1) The primary dealers are willing to accept a zero yield for 4-week loans. 2) Very small amount of "indirect" buyers (Foreign or possibly Fed), enough so that there were enough bonds for everyone (Usually some people set their price too high, and don't get anything). Also, keep in mind that this oddity only applies to this particular auction, and that it's for very SHORT-TERM bonds (4 weeks). They do these auctions all the time, for varying durations. It's possible that this signifies a subtle shift in debt buying, yes, but it's also possible that people just don't want to buy short-term debt this week. One occurrence doesn't make a trend... If this repeats, well, it'll be something to watch out for.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
josda1000 wrote:
Which is why I do happen to believe it's probably the Fed. The only reason I can possibly see this happening is that the Fed and the government wish to keep the currency and the current status quo alive, and the only way to do this is to give zero-interest loans, no matter the time period on the loan. A 14 trillion dollar debt ceiling is nothing to sneeze at.
Again, the majority of the buyers are PRIMARY DEALERS. They're the ones setting the absurdly-low rate. Primary dealers are non-Fed banks and broker-dealers (list[^]). The "indirect" ones are usually foreign buyers, but could potentially be the Fed "sneaking" some bids in. So there are really two points made: 1) The primary dealers are willing to accept a zero yield for 4-week loans. 2) Very small amount of "indirect" buyers (Foreign or possibly Fed), enough so that there were enough bonds for everyone (Usually some people set their price too high, and don't get anything). Also, keep in mind that this oddity only applies to this particular auction, and that it's for very SHORT-TERM bonds (4 weeks). They do these auctions all the time, for varying durations. It's possible that this signifies a subtle shift in debt buying, yes, but it's also possible that people just don't want to buy short-term debt this week. One occurrence doesn't make a trend... If this repeats, well, it'll be something to watch out for.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel)Ian Shlasko wrote:
One occurrence doesn't make a trend... If this repeats, well, it'll be something to watch out for.
Yes, highly agreed on this point, so I do hope that this is just an abberation and an exaggeration on my part. I would love to be shown that I was wrong, and I'll be praying for it.
Ian Shlasko wrote:
Again, the majority of the buyers are PRIMARY DEALERS. They're the ones setting the absurdly-low rate. Primary dealers are non-Fed banks and broker-dealers (list[^]). The "indirect" ones are usually foreign buyers, but could potentially be the Fed "sneaking" some bids in.
From what I remember, primary dealers actually take stock in the Federal Reserve system, correct? Therefore, they have interest in the status quo as well, therefore they have a vested interest to set their yield at 0% if the situation calls for it. So I don't see any difference in what I said, though I should have been more specific.
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Ian Shlasko wrote:
One occurrence doesn't make a trend... If this repeats, well, it'll be something to watch out for.
Yes, highly agreed on this point, so I do hope that this is just an abberation and an exaggeration on my part. I would love to be shown that I was wrong, and I'll be praying for it.
Ian Shlasko wrote:
Again, the majority of the buyers are PRIMARY DEALERS. They're the ones setting the absurdly-low rate. Primary dealers are non-Fed banks and broker-dealers (list[^]). The "indirect" ones are usually foreign buyers, but could potentially be the Fed "sneaking" some bids in.
From what I remember, primary dealers actually take stock in the Federal Reserve system, correct? Therefore, they have interest in the status quo as well, therefore they have a vested interest to set their yield at 0% if the situation calls for it. So I don't see any difference in what I said, though I should have been more specific.
josda1000 wrote:
From what I remember, primary dealers actually take stock in the Federal Reserve system, correct?
No, the regional Federal Reserve banks are obligated to buy stock in the Fed system. The Primary Dealers are only obligated to "participate" in auctions... As in, they have to buy T-Bonds. This can't be because of reluctance, though, because they're taking LOW yields, not demanding higher ones. It's like offering $100,000 for a used Toyota with a busted accelerator :) If these were 10 or 30-year bonds, I'd be a little more concerned... But this is short-term paper.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
josda1000 wrote:
From what I remember, primary dealers actually take stock in the Federal Reserve system, correct?
No, the regional Federal Reserve banks are obligated to buy stock in the Fed system. The Primary Dealers are only obligated to "participate" in auctions... As in, they have to buy T-Bonds. This can't be because of reluctance, though, because they're taking LOW yields, not demanding higher ones. It's like offering $100,000 for a used Toyota with a busted accelerator :) If these were 10 or 30-year bonds, I'd be a little more concerned... But this is short-term paper.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel)Ian Shlasko wrote:
If these were 10 or 30-year bonds, I'd be a little more concerned... But this is short-term paper.
Agreed, but like you said, if this kind of trend continues, I'm going to start worrying.
Ian Shlasko wrote:
No, the regional Federal Reserve banks are obligated to buy stock in the Fed system.
Thanks for the clarification.
Ian Shlasko wrote:
As in, they have to buy T-Bonds. This can't be because of reluctance, though, because they're taking LOW yields, not demanding higher ones.
That's where my whole main argument comes from, though. They're definitely not being reluctant. Most people with any common sense would ask for at least some kind of profit off of the loan/buying mechanism. I myself would ask for 5 percent if I were to do some kind of trade like that. So this is just where my basis for "the Fed's playing the game" comes from. But yeah, there's always hope. Meaning, hopefully this is just a one time thing.
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[punches air] YES. I am DARK TRIAD. Fear me !!!!! Why triad ? Why not diad, or parallelogram ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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JHizzle wrote:
...Really?
What do you mean? Are you referring to my website? It will be completed by spring.
Watch the Fall of the Republic (High Quality 2:24:19)[^] Sons Of Liberty - Free Album (They sound very much like Metallica, great lyrics too)[^]
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Yeah, it was a long and involved reboot cycle... Involved lots of... well... Picture yourself in a boat on a river, with tangerine hills and marmalade skies... I kid, I kid... I don't shoot up on LSD before bed... Or do you shoot that up or snort it? I don't even know... But given the kind of dreams I usually have, you might think I do...
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel)You swallow it or absorb it thorugh your skin. Common doses are in microgram quantities (less than a milligram). One milligram will send you to the edge of the universe. Never tried it myself.
Watch the Fall of the Republic (High Quality 2:24:19)[^] Sons Of Liberty - Free Album (They sound very much like Metallica, great lyrics too)[^]
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thats a very specific little known reference, it is as if someone has mentioned it to css, maybe some professional? maybe hes doing a bit of transference here, applying his own issues on others?
Smile and the world smiles withyou, laugh and they think you are a nutter
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Ian Shlasko wrote:
If these were 10 or 30-year bonds, I'd be a little more concerned... But this is short-term paper.
Agreed, but like you said, if this kind of trend continues, I'm going to start worrying.
Ian Shlasko wrote:
No, the regional Federal Reserve banks are obligated to buy stock in the Fed system.
Thanks for the clarification.
Ian Shlasko wrote:
As in, they have to buy T-Bonds. This can't be because of reluctance, though, because they're taking LOW yields, not demanding higher ones.
That's where my whole main argument comes from, though. They're definitely not being reluctant. Most people with any common sense would ask for at least some kind of profit off of the loan/buying mechanism. I myself would ask for 5 percent if I were to do some kind of trade like that. So this is just where my basis for "the Fed's playing the game" comes from. But yeah, there's always hope. Meaning, hopefully this is just a one time thing.
josda1000 wrote:
Agreed, but like you said, if this kind of trend continues, I'm going to start worrying.
Yep.
josda1000 wrote:
That's where my whole main argument comes from, though. They're definitely not being reluctant. Most people with any common sense would ask for at least some kind of profit off of the loan/buying mechanism. I myself would ask for 5 percent if I were to do some kind of trade like that. So this is just where my basis for "the Fed's playing the game" comes from.
Agreed... It's kind of odd that the broker-dealers are doing that. I can think of plenty of potential reasons, but none of them really add up... There might be some back-room dealing going on, or maybe they're expecting a market collapse in the next four weeks (Zero gains is better than non-zero losses)... Whatever the case, we don't have enough information to determine their motivation.
Proud to have finally moved to the A-Ark. Which one are you in?
Author of Guardians of Xen (Sci-Fi/Fantasy novel) -
Josh Gray wrote:
When do you expect this to happen?
Personally I'd say two years, but it is a prediction.
Josh Gray wrote:
it wont happen, and in three months when I ask you why it didn't happen you will point to another article, video, book or blog as new proof it's about to happen.
I'm not trying to necessarily prove it'll happen, it's a prediction. One with much historical backing, and Austrian economic thought.
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Josh Gray wrote:
What's Austrian economic thought?
Never heard of Mises and his 10 commandments?
Bob Emmett @ Ynys Thanatos
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Christian Graus wrote:
watching conspiracy videos on the web all day is not going to get you a job.
It didn't prevent me from getting one, either. Definitely not a cause/effect type of relationship.
Well, CSS spends ALL day, literally. Which doesn't leave time for self improvement. Sure, if you know to keep your left of centre views to yourself, and you present well in an interview, there's no cause/effect there.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.