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brk[_2_]
March 27th 09, 05:47 PM
And when the Fed monetizes debt, it’s not as if it buys it directly
from mom and pop. Who owns the debt? Well, the biggest holder is
China. When the Fed buys U.S. Treasury debt from China, the cash
doesn’t automatically fall into the U.S. consumer slipstream.

The Chinese could hoard the money. Or they could use it to buy U.S.
businesses – big business, such as GM and Caterpillar. In effect, what
the Fed is really doing is facilitating a massive transfer of real
wealth – from America to foreigners. By holding up the price of U.S.
Treasuries (by buying them itself) the Fed is funneling cash to the
foreign owners. The foreigners then redeem the cash for major U.S.
assets (at low prices).

Maybe that was the deal the feds worked out with the Chinese. Or maybe
these are just the collateral and unforeseen consequences of a foolish
plan. We don’t know. But it doesn’t necessarily put a lot of extra
cash on the street.

Ike Milligan
March 28th 09, 12:03 AM
"brk" > wrote in message
...
>
>
>
> And when the Fed monetizes debt, it's not as if it buys it directly
> from mom and pop. Who owns the debt? Well, the biggest holder is
> China. When the Fed buys U.S. Treasury debt from China, the cash
> doesn't automatically fall into the U.S. consumer slipstream.
>
> The Chinese could hoard the money. Or they could use it to buy U.S.
> businesses - big business, such as GM and Caterpillar. In effect, what
> the Fed is really doing is facilitating a massive transfer of real
> wealth - from America to foreigners. By holding up the price of U.S.
> Treasuries (by buying them itself) the Fed is funneling cash to the
> foreign owners. The foreigners then redeem the cash for major U.S.
> assets (at low prices).
>
> Maybe that was the deal the feds worked out with the Chinese. Or maybe
> these are just the collateral and unforeseen consequences of a foolish
> plan. We don't know. But it doesn't necessarily put a lot of extra
> cash on the street.

If the consequences are unforeseen, how come you know so much?

<remainder of knee-jerk diatribe snipped>
>

March 29th 09, 07:27 PM
In misc.survivalism brk > wrote:

> Maybe that was the deal the feds worked out with the Chinese.

The Chinese hate what the Fed is doing. They are now talking about a new
currency to replace the dollar. Seemingly, they are concerned about dollar
inflation.

Or maybe
> these are just the collateral and unforeseen consequences of a foolish
> plan. We don?t know. But it doesn?t necessarily put a lot of extra
> cash on the street.


There are lots and lots of Amercian holders of US Bonds. Big banks, etc.
That's kind of the whole point of what they are doing.

--
The whole problem with the world is that fools and fanatics are always so
certain of themselves, but wiser people so full of doubts.
-- Bertrand Russell