This is crazy. Bernanke testified to congress that they would not do this. But the Fed bought 1/2 of the 7 year auction by stealth. And they bought these bonds through retail means from the banks, lol, including Goldman Sachs, lol. The 5 year auction went badly, so the 7 year was a setup.
I have a theory. First, the Fed is deathly afraid of inflation or it would not do this. Good demand at the bond auction translates to lower interest rates, at least for awhile. Second, the Fed is giving more money undercover to the banks so that they can stay zombies, not lend, not stimulate the economy, but make a little money selling bonds to the fed, lol.
And the banks are facing Mark 2 Market Again!!!!! That will be implemented on Nov 15. That will zombify the banks even more, making the Fed's job easier, and that will cause a painfully slooowwww recovery. Pealing paint off a wall will be faster.
So my theory is that we are Japan. Or at least the private fed bank wants us to be like Japan or we will fall off a cliff with too much debt. This is really creepy stuff.
http://socioecohistory.wordpress.com/20 … d-auction/
Brian, I'm even farther behind the curve--I still don't know exactly what they did!
Are we saying that they now more openly own the government?
They're hoping we're like Japan. The Daily Reckoning has been writing about this stuff for 10 years now: http://www.thedailyreckoning.com Ghost, it's no that the banks own the government, it's that the banks and government are so entwined that you can't do anything to one without doing something to the other. Government controls the banks by being able to print money and banks control the government because they have access to money that can ensure the re-election of politicians. What you can be sure of is that regular Americans are getting screwed by the whole thing.
Bgamal, are you really surprised at all this? The government has made it a cornerstone of its policy to stave off a correction by any means necessary. This is exactly what I'd expect to see out of their playbook. It is, after all, easier to get forgiveness than permission. In fact, in their eyes, it's better because they think they're going to fix the mess so that when they do have to get forgiveness, it'll pour out like manna from heaven because they "saved the economy". Insanity.
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