So we're back to deflation right before hyperinflation. Great.

Quote:

This path is exactly how Zimbabwe blew up its economy and monetary system....

I'd be interested in more details on that, just out of idle curiosity. I've always wondered how they managed to screw things up so badly over there.

They started monetizing and once they started they went over the edge before they recognized what was going on.

The result was a mass flight out of their monetary system and an almost-instantaneous implosion.

Here's a detailed article about the shell game they have been playing.

http://seekingalpha.com/article/158330-h....

I still don't totally understand how they do everything but it's becoming clearer the more I hang out here and learn more and more every day.

It's Another "Through the Looking Glass" Moment at TF.

KD raises the spectre of Zimbabwe on his Ticker.

FWIW, I think one needs to go back to (at least) the bond action during December 2008.

But isn't Ben's goal to goose the stock markets for his banker buddies?

"Zimbabwe's market was up 23 sextillion percent..."
http://www.time.com/time/world/article/0....

It would sure suck to be short into that...

:)

They'd be passing out hookers and blow like it was 1999.

It's your money buying the paper in the name of "QE."

The only reason why they're purchasing agencies is so they don't torpedo the Treasury market to meet withdrawl demand.

The lender of last resort's last resort is the open market, not Mr. Gutenberg.

But General-ya,

I see "Federal National Mortgage Ass'n" and "Federal Home Loan Mortgage Corporation" and I thinking that come from government. I thinking if I buy such bonds, America will not let me lose any money. Was I wrong, General-ya?

(Sorry, just finished reading an Amy Tan novel.)

didn't Marc Faber allude to this some months ago?

in today's -word- this is simply not true.Did you mean 'world' Karl ?


Just trying to help.Great ticker !

" ... invest ... when you have a reasonable belief that the fundamentals of a given company as represented in the balance sheet and statements of the firm represent reality." karl denninger


1994 precedent-setting Supreme Court ruling when the majority decided there could be no liability for aiding and abetting in securities fraud.

"Despite unanimity by all of the circuits considering the issue, the Supreme Court found, in a 5-4 vote, that Section 10(b) and Rule 10b-5 did not encompass liability for aiding and abetting securities fraud. In reaching the conclusion, the Court did not rely on any language in the relevant rules or sections but the absence of language."

"The need to make an actual misstatement (or omission) would exonerate those who drafted but did not make the statement."

"Thus, the Court seemed untroubled by the notion that liability extended beyond the issuer ... "

http://www.theracetothebottom.org/securi....


Legal guarantors, attorneys and accountants, cannot be sued by investors if they enable fraud or lesser violations by their corporate clients.

The represented 'reality' appears to have been a purchased one. 60 years of rulings overturned so 'they' could purchase their bizness.

Chris Martenson has a very detailed look with charts too. Absolutely what is happening, giving the ripped off buyers of our agency debt a supposed safe treasury in exhange for devalued crap.

http://www.chrismartenson.com/blog/shell....

The Rule of Lahz...lalalalala, I can't hear you because I just changed the rules....

Another great ticker that should be e-mailed to your friends, family, and DC senators/reps.

typo

"ENRON occurred due to the ability of the firm to run off-balance sheet deals that turned out to be *and* outright scam"

and -> an

As long as people need dollars to buy oil, the Fed can do anything it wants and get away with it. In fact, the more oil demand, the more demand for dollars. This is why reserve currencies are a license to print.

"The Rule of Lahz...lalalalala, I can't hear you because I just changed the rules...." Spigot

In this case it appears deafness is tied into some form of undoing of Bush's turning of the national security apparatus into spying on domestic opponents.

Period.

What if they intentionally tank all the currencies? If all the currencies are devalued equally at the same time... it it almost like none of them have been devalued?



Also this helps explain why China has been playing so nice with us. Many of us here have wondered what they where offered to play ball with us.

All of this and none of this makes sense....tanking all currencies at the same time?????

If your wages aren't growing and the currency is tanking, there's no inflation - you simply purchase less. How does this effectively relieve the consumer debt problem if there's no translation to job and wages? Welcome to he future - indentured servitude to uncle whiskers otherwise known as Sam 'the drunken, philandering, self-felating pedophiliac douchebag.' For in time, he will be the only employer....

Maitski - good link.

Judges, bond markets, someone please stop this madness.

If China's currency the Yuan is still actually Pegged to the Dollar then these losses that the Chinese have been jawboning about cannot possibly be conceived as such; a devalued dollar unit will still be worth exactly what a unit of Chinese currency is worth... Zero sum change between the value of the Dollar and the Yuan.
Only the INTEREST rate on the Treasury can be of concern.
Effectively China is supporting the US in the devaluation of BOTH Currencies by maintenance of the Dollar Peg.
Any devaluation in the Dollar does of course affect the Treasuries and Dollar denominated Securities held by China; but the Peg inherently forces a Devaluation of the Yuan as long as China maintains the Parity of the Peg.

Genesis: Is it the MBS held by China or the Primary Dealers?
If you check the FAQ for the Fed Reserve program for purchasing MBS, they state that they are purchasing them from the Primary Dealers...
http://www.newyorkfed.org/markets/mbs_fa....

TheEdge11 had mentioned previously that the PDs were driving down TNX prior to the Fed's purchase of 30year Treasuries, which might be the deal worked out with the Fed Reserve. The Fed purchases ****ty MBS from the Primary Dealers and the Primary Dealers purchase Treasuries in order to provide demand.

This deal probably also extends to the Treasury auctions that seem to be driving down the interest rates...the PDs agree to provide demand for auctions in exchange for getting rid of their MBS Agencies. The Fed pays top dollar for the MBS, but gets a "rebate" from the PDs in the form of demand for Treasuries.

When the Fed stops purchasing MBS Agencies and Treasuries...what happens then? Will the PDs continue to provide demand for Treasuries?

End Result: The Fed prints more dollars and overpays for ****ty mortgages...we get shafted.

Here's a follow up to my previous post.
With my simple model for TNX, I'm estimating that total amount of 30 year Treasuries purchased by the PD for 2009 will be $200B, which means the Fed is getting a 15% discount on the total MBS purchased from the PD ($1.25T). I'm sure that similar models could be setup for other Treasury interest rates in order to estimate the amount of Treasuries purchased by the PD. These PD purchases create the Treasuries demand needed to keep interest rates low and the yield curve steep, but they also provide an indirect cost savings on the MBS purchased by the Fed.
The alternative would be for the Fed to simply receive a huge discount on the MBS purchased (Marked to Market), but that wouldn't provide demand for Treasuries and it would cause major problems for the MBS market. The Fed and Treasury appear to have made a deal where the pigmen are going to feel some pain for their role in the housing bubble.