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In 2009, the Federal Reserve Bought 80% of U.S. Debt?!
Posted By admin On January 11, 2010 @ 5:44 am In Money Watch | Comments Disabled
Monday , January 11th, 2010
Update: CNBC: “I Guess You Can Use the Word Ponzi Scheme”
Am I reading this right!? Someone tell me I’m not reading this right.
Via: Pimco :
Here’s the problem that the U.S. Fed’s “exit” poses in simple English: Our fiscal 2009 deficit totaled nearly 12% of GDP and required over $1.5 trillion of new debt to finance it. The Chinese bought a little ($100 billion) of that, other sovereign wealth funds bought some more, but as shown in Chart 2, foreign investors as a group bought only 20% of the total – perhaps $300 billion or so. The balance over the past 12 months was substantially purchased by the Federal Reserve. Of course they purchased more 30-year Agency mortgages than Treasuries, but PIMCO and others sold them those mortgages and bought – you guessed it – Treasuries with the proceeds. The conclusion of this fairytale is that the government got to run up a 1.5 trillion dollar deficit, didn’t have to sell much of it to private investors, and lived happily ever – ever – well, not ever after, but certainly in 2009. Now, however, the Fed tells us that they’re “fed up,” or that they think the economy is strong enough for them to gracefully “exit,” or that they’re confident that private investors are capable of absorbing the balance. Not likely.
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URL to article: http://www.prisonplanet.com/in-2009-the-federal-reserve-bought-80-of-u-s-debt.html
URLs in this post:
 cryptogon.com: http://cryptogon.com/?p=12960
 Pimco: http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Let%E2%80%99s+Get+Fisical+January+2010.htm
 Image: http://www.prisonplanet.com/2009_christmas_special.htm
 US FEDERAL RESERVE to buy US DEBT? WITH WHAT?: http://www.prisonplanet.com/us-federal-reserve-to-buy-us-debt-with-what.html
 Fed Has Bought More U.S. Gov’t Debt This Year Than Treasury Has Issued: http://www.prisonplanet.com/fed-has-bought-more-u-s-gov%e2%80%99t-debt-this-year-than-treasury-has-issued.html
 Is The Federal Reserve Out Of Control? Markets Across The Globe Brace For Impact As The Federal Reserve Powers Up The Printing Presses: http://www.prisonplanet.com/is-the-federal-reserve-out-of-control-markets-across-the-globe-brace-for-impact-as-the-federal-reserve-powers-up-the-printing-presses.html
 More of America’s National Debt Being Bought by Foreign Governments: http://www.prisonplanet.com/more-of-america%e2%80%99s-national-debt-being-bought-by-foreign-governments.html
 Federal Reserve Made Record Profit in 2009: Report: http://www.prisonplanet.com/federal-reserve-made-record-profit-in-2009-report.html
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