fed to begin quantitative easing today, page-2

BH - Thought you might find this interesting. From a Le Met member, posted in MIDAS today


Hi Bill
Todays announcement that the Fed would start buying treasuries tomorrow is rather interesting. On march 18 the fed annouced that they had instituted a program to buy treasuries as well as agency securities. The amount of treasuries to be bought under the program was 300 billion dollars. The Fed and their team of manipulators had been capping interest rates on the ten year at just over 3% and the 30 year at 3.7%. Before the fed announcement the interest rate on the 30 year was attempting to breakout above 3.8%.

The fed report for the week ending march 18 showed the fed bought $162 Billion !! treasuries. That's more than half the amount for the entire program. It happened during the week that they announced the program. Since the original announcement rally treasuries have been sinking. Especially the 30 year which had already broke the old 3.7% limit until the end of the day (Mar 24) Fed buying announcement. So I guess the program is really $462 billion.

Either way the Fed will have to expand the program to include any trading partner that wants out. The Fed has shown its hand. They have a busted flush. Every purchase of treasuries makes it more obvious just how weak the US dollar really is. The Chinese and the Russians and the Oil states will all turn to the Fed to buy their bonds. The fed can't refuse and all the dollars used to buy those bonds will flood the market looking for a home. Inflation will come roaring back making the deflation we experienced the last six or seven months look like a picnic.
Steve Silver
(Mar 23 Barrons "federal reserve data bank".)