Fed and no QE
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Started by wglassfo - Jan. 7, 2020, 11:54 p.m.

With everything going on in Iran, the TV full of Iran etc. some other stuff is happening with domestic markets

Mostly I have been watching gold, the Fed and no QE

I know it is hard to get excited about what the Fed is doing but gold does seem to be telling us something

The Fed can go before congress and say truthfully they are not financing the natn'l debt

But in actual dollar amounts, moving about, the Fed is financing the debt. Or in other words the debt is being monetized

Not small amounts but billions, every month

So what you say, it happens. Well not in these large amounts and not with the Fed unable to help the banks bail us out of a crisis.

What happens is dealers buy the treasury notes being offered for sale and then hold them for approx 3 business days. Then the Fed buys what ever amount of treasury bills that nobody wants. Now the Fed just creates digital money, to pay the dealers.  No problem just create the money

At 1st it was the repo market but now it seems to be any excess debt investors don't want

Gold investors have watched this happen and realize that at some time the USD will go down as there is an ever increasing amount on the Fed balance sheet. Who pays the Fed debt?? Nobody and that is the last line of defense.

This is confusing to the average person as the natn'l debt is known and people sort of shrug off the trillion dollar debt

What people don't fully understand is the absence of enough buyers for USA debt

If the Fed becomes so over loaded with treasury bills on their balance sheet, then eventually some thing will happen, investors who buy treasury bills will pay attention, and we will have a new crisis, only this time it will be much bigger, simply because the numbers are so much bigger and there is no way to bail anybody out. Who will bail out the Fed???

You can't fix the system by creating more digital money. The last time the gov't bailed out the banks, as the banks were in danger of failing.. This time the gov't is the entity that needs to be bailed out, which simply can't happen

What this all means at the end of the day:  there are not enough investors to buy USA debt, as of today.. When this number becomes large enough then the buying will shut down to a trickle and the gig is up

There will be no place to go and borrow the money needed to pay the bills. Do you know of a place to go and borrow the money???

Simple once you understand what is happening, and definitely not good as the USD will eventually be worthless.

Why would the USD be worth anything if nobody will buy the debt. Money is a store of value. So if nobody will buy the money what is it worth

Do you think there will always be a buyer for USA debt

There is already a lack of buyers so why would it get any better???

The only unknown is how soon all this will come tumbling down

The whole world is in debt. Who has all the money???

If you had money would you buy USA debt???

Do you disagree with any thing in this post and why???

Do you understand why I say the USD will eventually be worthless??

I might add I think most if not all fiat money, in the entire world, will be worthless

By MarkB - Jan. 8, 2020, 3:21 a.m.
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What I have come to conclude, is that everybody is in a BK position. While over half of the US debt is held by home interests, the rest is held by foreign investors. Not so much different in the European debt. And certainly the ME and Asian debt holdings. 

Bottom line, the world is in bankruptcy. Deal with it.