Fed scam revealed: They bought their own T-notes

Last week or so, the Treasury Department was auctioning off $39 billion or so in 5-year Treasury notes (i.e., government debt) -- and the auction didn't go so well. Investors were bummed, stocks dropped, etc.

Then, surprise, surprise: the next auction of 7-YEAR notes only a few days later showed great demand... which is kind of weird, because why would people buy really 7-year debt papers, but not 5-year debt papers?

This guy Chris Martenson -- see his blog below -- has investigated and found the BIG scam: at the 7-year auction, primary dealers bought up all the notes... and then turned around and sold them to the Fed!!!

The reason, of course: to make everything look just peachy and give the stock market and "dumbass" investors a boost and convince them to buy stocks... and to deceive foreign investors into thinking that the U.S. economy is sounder than it really is.

This is HUGE! Not that we didn't all know already that the government and Fed are lying thugs, but this is undebatable proof, black on white.

Read Martenson's blog post here: www.chrismartenson.com... tion/23880

The link is broken on their end.......please let me know if you have an alternate link to read this. I am very interested in this info!

Thanks

it was well covered last week in the Market Data thread.

Basically it is not as big a deal as it seems since the Fed is admittedly in the process of Quantitative Easing (QE) to keep rates stable.

What was unusual was that the Bills they bought were just issued, then again, they were 7 yr T's which only recently were re-introduced, so there really were no "old" ones to buy.

For those who have run into the acronym QE, which stands for hardly intuitive “quantitative easing,” and are not familiar with this process – a derivative born out of desperation – here is a brief overview.

We know that the Fed tries to do its best to supply the economy with money, which is not an easy task. Sometimes it happens that prices grow faster and an inflationary trend is detected. If it is bothersome, the Fed raises bank rates, which tightens the credit and which in turn slows down the economy. That prevents prices going up further. When the opposite takes place and the economy appears anemic, the Fed takes it easy on the bank rates. But what happens when the bank rate reaches down to zero. Can there be an interest rate bellow zero to stimulate the economy?

Simple math tells you not, but in practical terms yes, it can be done. That’s where QE kicks in. All you need to do is to advice corporations, preferably banks, that you are willing to buy their bonds. This is actually a good deal for some corporations. And so the Fed becomes a bondholder and the money are pouring into the economy via bond purchase made by the Fed.

Here are the effect of Quantitative easing: lots of corporate bonds are out.

While companies sold a record $837.9 billion of bonds this year and raised $109.8 billion in stock offerings, the increase in cash shows they are following the lead of consumers, who pushed the U.S. savings rate to a 14-year high of 6.2 percent in May.

www.bloomberg.com...

The problem is that the money are not entering the economy the way they should. An old fashioned attitude is the obstacle: America decided to save in a wrong time. LOL.

Here 's the link to the blog again.

www.chrismartenson.com...

[edit on 11-8-2009 by sylvie]

[edit on 11-8-2009 by sylvie]