Saturday, March 20, 2021
👉Warning: The Fed Lost Control of The Bond Market
👉Warning: The Fed Lost Control of The Bond Market
Warning: The Fed Lost Control of The Bond Market
The Fed is in a difficult situation; it has lost control of the bond market.
The ten-year yield is obviously being manipulated and thus has no bearing on the market. Powell couldn't be more clear yesterday, and yields dropped a little. This morning the yields jumped 6%; on WHAT news?
Big banks have all reasons to manipulate the treasury yield. They want to force the Feds hands to hike interest rates because high rates profit to the bank. Just look at bank stocks today, the only ones to gain. Also, banks have been shouting and manipulating media to create the buzz that high treasury yields are bad for growth stocks. All this stock rotation story is the biggest market manipulation ever. Just read the mainstream media every day the way they wish for all this.
Let’s be real. Rates are going up because there are no buyers. It has to run hot for countries like Japan and others , so they can buy it.
Meanwhile, the Federal Reserve's balance sheet is HYPER-BALLOONING, gaining 100% in a year. It went from $3.8 trillion in September 2019 to over $7.5 trillion today.
Stocks are always better than bonds. History shows compound interest is worse than treading water. The bond market has become irrelevant.
If you want to retire on government bonds, you're going to have to end up eating that dog.
Nobody in the right mind would buy bonds and look to retire.
Treasury securities issued by another bankrupt country, not worth the paper it is printed on if it was even printed. Even Confederate treasury notes are worth something to collectors. Not much value in antique digital certificates.
We have no way to service the debt other than sell real estate or monetize the debt. Powell and the Fed are irrelevant. The charade is over.
The news that the Federal Reserve has little real control over Treasury yields. They manage the short-term rate, which is extended (historically) primarily only to banks. The majority of Treasury purchases are far beyond the reach of the federal reserve.
If the Fed loses control and yields spike, the economy will collapse. A yield spike could lead to panic, contagion, and credit crunch. Trillions of bonds underwater.
What if the bond yield is 20 percent and still no one wants to buy them?
As investors wise up and stop buying bonds, the Fed will have its hands full.
The king is naked.
The market is a self-entitled cartel of algo abusing criminals.
Meanwhile, they show inflation at or below 2%, while shadow stats shows inflation at over 6%.
Coming to the end of their game. Next yield curve controls.
Bond market too big for the Fed to control. They can have a super big impact on a specific part of the yield curve, but the entire market is simply too big, and yields indexed to so many different types of loans, so many different ways directly and indirectly.
Get your popcorn ready and sit back. This upcoming battle between the Fed and the bond vigilantes will be EPIC!
There is a reason we can't return to normal interest rates. We are a country of consumers, not producers, and that is a major problem.
And the Fed cannot stimulate lending with rates this low and inflation this high. That’s the problem.
The FED created the problem. Systemic debt. In the last decade, corporations and consumers have taken on so much debt because of Zero Interest Rates.Very few creditworthy companies and individuals are left to lend to!
I got a bad feeling about this debt market and the coming crash.
If people aren't able to repay the debts that have been deferred as a result of the pandemic, then we're in real danger of a credit crunch which would result in a liquidity trap.
Nobody ever points out that we have around 1 million new unemployment claims a week for a year now. It’s insanity.
As long as people get checks in the mail,no need for employment.
This funny money for everyone policy is going to end up so bad!
The Federal Reserve is raising the maximum amount of funds it can lend into its reverse repurchase agreement facility from $30 billion overnight to $80 billion.
If we have an inflation problem now, what will more QE do?
Hyperinflation!
Inflation is already here, has been here, and will never leave.
Wait till the Bond market collapses.....it will cost ten bucks for a candy bar.
The Fed has been 100% clear that they will "provide liquidity" as needed to keep the colossal debt Ponzi going.
They will just print money and send out the checks in perpetuity. This is the new normal.
Ben Bernanke tried to normalize rates and shrink the balance sheet - financial markets crashed, and he quickly returned to providing liquidity.
Janet Yellen tried to normalize rates and shrink the balance sheet at the end of her term - financial markets crashed, and her successor Powell, quickly returned to providing liquidity.
No one has the guts to normalize. It's too painful for the people with wealth and power. This endless speculating about the Fed's intentions is just hot air from financial experts in the press and on Wall Street.
The Fed's mandate is to use all the tools at its disposal to keep us from entering a Recession, forever, until we have a Depression or a major war that no one saw coming. If the only other alternative means Japanification of our economy, they're OK with that too.
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1,74%....This is really going wrong! The US has way too much debt to pay this high yield year by year! If this yield doesn't come down, the US will have difficulties paying the yearly yield on debt paper.And I am not even talking about paying back the debt itself ...that is still another issue!
People often forget that the Federal Reserve owns a small portion of the US Treasuries. The lion's share is owned by corporations and US citizens (with some foreign entities as well). The massive dump of debt which primarily fueled special interests, will cause more damage in the long-run than the benefit it ever could have in the short-term with the stimuli. The US Dollar simply is unreliable at this point ,and cannot be trusted. If the government doesn't get their house in order, the real fear that they will cease to service debt will come to fruition as there become fewer buyers of the tainted US Dollar debt notes.
While true that the fed holds just a small portion of the debt, it does virtually control the interest rate at the 'auctions'; which is equivalent to an eBay seller bidding on his own auctions. It then requires member banks to buy treasury debt in order to pass the stress test. The fed has also eliminated banks' reserve requirement, so banks no longer have to hold 20% of deposits in reserve. As an added incentive to be irresponsible, funds spent by banks on treasury debt are assumed to still be on the banks' books, so it is in effect double-counted, making bank reserve requirements less than zero. Quite the scam as long as nobody questions it.
It’s coming. Mathematical science proves it.
The US Government has an extremely negative valuation. Any tax hike will reduce GDP growth and perpetuate the downward spiral. Large and deep spending cuts are the only way out now.
They have only one intent, to spend the money of tomorrow, today. The US Dollar is already garbage, so are the other developed country currencies. We've been in a value burn down since the 2007 dips when they began the bailouts (TARP and 0% short-term rates). The US, like most developed countries, now has a negative valuation. We've been deflating in real terms (debt to assets included) for almost 15 years now.
Let interest go up, and let's have a free economy. Let the debtors fail, and the savers succeed. It's time to pull the plug on this fake economy.
The power of finance was the power of debt. Bank credit takes future prosperity and moves it into today. To allow business and industry to expand now rather than later. To allow you to buy a house early in life and make use of it, rather than later when you don’t have long to go. Unfortunately, it has been used the wrong way during globalization. Using future prosperity to inflate asset prices today. Real estate does make the economy boom, but there is no actual wealth creation in inflating asset prices. This is what is really happening. When you use bank credit to inflate asset prices, the debt rises much faster than GDP. The bank credit of mortgages is bringing future spending power today. Bank loans create money, and the repayment of debt to banks destroys wealth. In the real estate boom, new money pours into the economy from mortgage lending, fuelling a boom in the real economy, which feeds back into the real estate boom. The Japanese real estate boom of the 1980s was so excessive the people even commented on the “excess money,” and everyone enjoyed spending that excess money in the economy. In the real estate bust, debt repayments to banks destroy money and push the economy towards debt deflation (a shrinking money supply). Japan has been like this for thirty years as they pay back the debts from their 1980s excesses. It’s called a balance sheet recession. Using future spending power to inflate asset prices today is a mistake that comes from thinking inflating asset prices creates real wealth. GDP measures real wealth creation. Policymakers didn’t realize bank credit impoverished the future as they thought banks were financial intermediaries, but this is not true. The central banks started revealing the truth in 2014, about 35 years too late. Before 2008, the bankers brought future prosperity today, and everything boomed. The claims on future prosperity built up, out of sight and out of mind. Once it became apparent, these claims on future prosperity could never be met. A financial black hole opened up that was ready to swallow the Western financial system whole. Banking should be so easy. Bankers get to create money out of nothing through bank loans and get to charge interest on it. What could possibly go wrong? Bankers do need to ensure the vast majority of that money gets paid back, and this is where they keep falling flat on their faces. Banking requires prudent lending. If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices, they get into a world of trouble when those asset prices collapse. There is nearly a $14 trillion pyramids of super leveraged toxic assets that was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world.
All the Presidents Bankers. When this little lot lost almost all its value overnight, the Western banking system became insolvent. Wall Street can turn a typical asset price bubble into something that will take out the global economy using leverage. I cannot stress the importance of KNOWLEDGE - it outweighs temporary preps every time! It could be civil unrest, economic collapse, or world war 3 - or all three at once! Think Critically my friends; time is short! And Since banks give me zero interest in my savings, I have zero interest in banks, and I keep all my cash away from any financial institution. I know by doing this, I'm halfway there in being prepared.
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