80% of US debt purchased by the Fed in 2009?!

Quote from wavel:
Those are interesting statistics, although I suspect that the vast majority of individuals who feel concerned will be at the very least quite sceptical with regards to the accuracy of any data released by an entity that they believe to be lacking transparency, whether that belief is justified or not. So thats the problem here, a lack of trust. So how do we set about correcting that lack of trust?
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All sorts of people believe all sorts of things. I believe my eyes and facts. See my previous post regarding the facts of Fed's transparency or lack thereof. Make your own conclusions.
Just out of interest MartinG, do you trade the market based upon one single statistic, or do you trade the market having assessed a trend, which ofcourse requires multiple data points?
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What does my trading have to do with anything? But, generally, I trade using my brain and I think about a variety of factors. I do not know what "assessing a trend" means. In fact, I have yet to see a rigorous definition of "trend".
Bearing the previous question in mind, do you anticipate that the Fed will continue with purchases during 2010 or perhaps 2011? If so, in your expert opinion what % do you believe will be sufficient in order to "maintain market stability"? Do you believe that purchases could rise to 30% or do you anticipate a tapering off? Perhaps Fed purchases may only need to occur once every 5 or 11 years?
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The Fed has already stopped the program of outright treasury purchases. It's very unlikely that it will resume. The question now is whether it will continue/expand the purchases of Agency MBS. That depends largely on the state of the US housing mkt.
The fundamental problem here is that neither the Fed nor the "government" have provided the "voting electorate" with a long-term performance benchmark by which the "voting electorate" can use in order to assess the progress that is being achieved, and perhaps due to this lack of transparency in terms of where we are "moving to" merely serves to compound an increasingly sceptical (and increasingly informed/misinformed) "voting consumer". Do you agree with me that a lack of transparency only serves to generate more scepticism, and if so, what steps must be taken to ensure that these concerns are 100% nullified in order to prevent an uprising?

Do you see any steps that have already been taken by the US government that may suggest that an uprising has already been accounted for and is infact anticipated, legislation etc?
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I have already addressed the specific issue of Fed transparency. I am not sure what uprising you might be referring to. If you want to know my general views on the issue, here they are.

The Fed is not the problem. The debt/deficit issues have been created by the politicians that have never bothered to stop and think about the implications of their actions. Demands for transparency and accountability have to be addressed to each new Congress and President. In fact, it boggles the mind how completely cavalier the legislative and executive branch have both been with the fiscal situation. For example, countries like Australia, Norway and Sweden have specific, long-term rules and regulations in place to prevent govts from running amok with the budget. Moreover, they periodically examine the condition of the budget and threats to long-term fiscal sustainability. What does the US govt do? Nothing. In fact, every single new president seems to get elected into office on a platform of yet more tax cuts, deficits be damned. Fix the political process and stop looking for problems at the Fed.
 
Quote from Trexticle:

Quote from Martinghoul:

Why do you insist on repeating the drivel that you hear in the media?

I am not repeating drivel herd in the media. I have watched congressional grillings of our fed "auditor". The representative was less than forthcoming about any specific actions that the fed was involved in. Anybody can talk in generalities. Audits are supposed to be specific and thorough.
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You're referring to the testimony of Elizabeth Coleman, I assume? I see her saying that they have not reached any conclusions and have not completed any reviews at the time of questioning. What is so incriminating in that? In fact, if you look at the FRB OIG's website, in the Semiannual Report to Congress (http://www.federalreserve.gov/oig/SAR0909.htm#8040) it states that the following are ongoing: a) the external audit by an independent public accountancy firm of the Fed's financial statements for 2009; b) OIG review of Fed's special programs and facilities.

If the OIG review and/or the independent audit find something irregular/criminal, by all means, responsible Fed officials should be held accountable.

Now, back to our original subject... There is no evidence that the Fed had misrepresented any aspect of the Outright Treasury Purchase program. Various audits/reviews are ongoing and so far no irregularities in Fed's conduct of the special programs/facilities, including the Outright Treasury Purchases, have been found. As a result, given all the currently available facts of the matter, I conclude that the Fed purchased EXACTLY $300bn of Treasury securities, or 14.3% of debt issued by the US Treasury in 2009.
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Quote from Martinghoul:

The Fed is not the problem. The debt/deficit issues have been created by the politicians that have never bothered to stop and think about the implications of their actions. Demands for transparency and accountability have to be addressed to each new Congress and President. In fact, it boggles the mind how completely cavalier the legislative and executive branch have both been with the fiscal situation. For example, countries like Australia, Norway and Sweden have specific, long-term rules and regulations in place to prevent govts from running amok with the budget. Moreover, they periodically examine the condition of the budget and threats to long-term fiscal sustainability. What does the US govt do? Nothing. In fact, every single new president seems to get elected into office on a platform of yet more tax cuts, deficits be damned. Fix the political process and stop looking for problems at the Fed. [/B]
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Thanks Martin I enjoy reading your posts for a number of reasons.

History shows us that "super powers" have always funded the major wars around the world, and that "super powers" always pay the ultimate price for funding these wars, i.e. by experiencing a subsequent collapse (Germany). Out of each of these collapses the world progressively becomes increasingly centralised (I'm sure you have heard of Europe considering you live in England, therefore I'm sure you can see the effects of WW1 and WW2, and therefore cannot deny that the by-product of German investment in war has resulted in a United states of Europe, albeit under the guise of a non-democratic treaty, namely the Lisbon Treaty).

Could it be that the current funding of the war on terror is merely the next stage to WW2, in order to expand upon the achievements of WW1 and WW2? Could it be that the US will be the next fall guy? Could it be that "reckless spending" is a pre-requisite for the funding of a long and bitter military campaign?

It's a shame those sandle wearing rocket launching dudes in the middle east are so tough, or else we wouldn't have to concern ourselves with the spread of information amongst the idiotic masses and the invariable effect that will have upon the order of society, as we could get things done much quicker if only the idiotic masses would role over and surrender.

Cest la vie.
 
Martinghoul, you indirectly point out some problems with our political system, namely the 22nd Amendment. Because a President and Congressmen have to run for re-election frequently they are forced to campaign and vote for short-term goals rather than long-term ones. If the voters aren't satisfied quickly they won't get re-elected. If a candidate ran on a platform of raising taxes in the short-term - and paying down the debt - and promised to lower taxes (let's assume they aren't lying - I know, it's hard) in the long-term they won't get elected and if they do that after they get into office they won't get re-elected.

As long as our political system stays the same nothing will change but I'll be the first to fall off my seat if ever the 22nd Amendment was repealed. That event could fix our short-term problems but have dire consequences for the long-term. God help us if we get a Mussolini-type President to sit in office for the next 20 years. As long as the 22nd Amendment is in place get used to large deficits.


Quote from Martinghoul:

All sorts of people believe all sorts of things. I believe my eyes and facts. See my previous post regarding the facts of Fed's transparency or lack thereof. Make your own conclusions.

What does my trading have to do with anything? But, generally, I trade using my brain and I think about a variety of factors. I do not know what "assessing a trend" means. In fact, I have yet to see a rigorous definition of "trend".

The Fed has already stopped the program of outright treasury purchases. It's very unlikely that it will resume. The question now is whether it will continue/expand the purchases of Agency MBS. That depends largely on the state of the US housing mkt.

I have already addressed the specific issue of Fed transparency. I am not sure what uprising you might be referring to. If you want to know my general views on the issue, here they are.

The Fed is not the problem. The debt/deficit issues have been created by the politicians that have never bothered to stop and think about the implications of their actions. Demands for transparency and accountability have to be addressed to each new Congress and President. In fact, it boggles the mind how completely cavalier the legislative and executive branch have both been with the fiscal situation. For example, countries like Australia, Norway and Sweden have specific, long-term rules and regulations in place to prevent govts from running amok with the budget. Moreover, they periodically examine the condition of the budget and threats to long-term fiscal sustainability. What does the US govt do? Nothing. In fact, every single new president seems to get elected into office on a platform of yet more tax cuts, deficits be damned. Fix the political process and stop looking for problems at the Fed.
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Quote from Martinghoul:

The Fed purchased EXACTLY $300bn of Treasury securities in 2009, as per the FOMC decision given here: http://www.federalreserve.gov/newsevents/press/monetary/20090318a.htm

Total issuance of Treasury securities in 2009 is estimated at arnd $2097.7bn (to Q409), according to SIFMA: http://www.sifma.org/uploadedFiles/Research/Statistics/SIFMA_USBondMarketIssuance.pdf

This implies that the Fed purchased arnd 14.3% of the debt issued by the US Treasury in 2009. Not 50%, not 80%, not even an unknown massive amount, which is what you'd hear from the conspiracy nuts.

I think I am going to start a "Stop the Idiocy!" campaign...
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That was only through Sept 2009. This table shows that net holdings of US Debt held by the rest of the world increased $525 Billion through Nov 2009 starting in Jan 2009.

If the World isn't buying and the Treasury claims only $300 Billion through Sept 2009 then where is the rest??

Numbers don't add up.


http://www.ustreas.gov/tic/mfh.txt
 
Quote from jficquette:

That was only through Sept 2009. This table shows that net holdings of US Debt held by the rest of the world increased $525 Billion through Nov 2009 starting in Jan 2009.

If the World isn't buying and the Treasury claims only $300 Billion through Sept 2009 then where is the rest??

Numbers don't add up.


http://www.ustreas.gov/tic/mfh.txt
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You mean the Fed claims only $300bn? Also, the last Fed buyback was held on Oct 29th, so it was less than $300bn through Sept 2009.

I hope your "where is the rest" is a rhetorical question, 'cause the answer should be relatively obvious. Who else buys treasuries, other than foreigners and the Fed? In which country did the personal savings rate go up to nearly 5% of disposable income in 2009? In which country are depository institutions/commercial banks being increasingly pushed by regulators to hold more govt securities as a way to improve their capital ratios/liquidity?

How can you say that the numbers don't add up if you haven't even tried adding them up?
 
Quote from Martinghoul:

Yep, very appropriate at this juncture, as is "plus ça change, plus c'est la même chose"...
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I think it would have been great if George W Bush's last words in office were:

Après moi le déluge!

Not that he has had such an effect on the grand scheme of things, but I think he will be the last President (for awhile) to have ridden a credit bubble.
 
Quote from Martinghoul:

You mean the Fed claims only $300bn? Also, the last Fed buyback was held on Oct 29th, so it was less than $300bn through Sept 2009.

I hope your "where is the rest" is a rhetorical question, 'cause the answer should be relatively obvious. Who else buys treasuries, other than foreigners and the Fed? In which country did the personal savings rate go up to nearly 5% of disposable income in 2009? In which country are depository institutions/commercial banks being increasingly pushed by regulators to hold more govt securities as a way to improve their capital ratios/liquidity?

How can you say that the numbers don't add up if you haven't even tried adding them up?
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So joe blow six pack is buying treasures?? There is a reason that the Fed won't open its books. The reason is because they are trying to hide the fact that they are buying our debt.

That crap you posted is nothng. It is just a statement saying they were going to buy x amount through Sept 2009.

Notice in the table the last 4 entries of 2009. Here is the inventory build on debt held by foreigners.

Aug $26 Bill
Sept $43 Bill
Oct $.6 Bill.
Nov $ 100 bill.

So the last 4 months excluding Dec other countries have bought $170 Bill.

Any clues as too how much debt was issued during the Aug-Nov 2009??

You add it up.

http://fedupusa.org/2010/01/08/federal-reserve-purchased-80-of-treasury-issues-in-2009/
 
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