The Fed is Out of Bullets

Our friend TF from TFMetalsReport notes that The Fed’s current holdings of Treasuries under 2 years in duration are now negligible, meaning The Fed is out of short-term paper to sell (think operation twist) to keep long rates down .
TF states that with 10 year rates suddenly climbing back towards 2% and with The Fed suddenly out of bullets, the only option left is a re-ignition of overt quantitative easing.

 

The Fed is out of bullets. The goal of “Operation Twist” was to create demand for the 10-year and the 30-year, thereby keeping rates low and in a downtrend. They accomplished this “sterilized” program by selling their short-term bills and notes and using the proceeds to buy longer term notes and bonds. Now, look at that final frame again. The Fed is now out of paper to sell. Their current holdings in the 1.5 year and less range are negligible. Therefore, they have no more ammo. Now look again at that last frame. The Fed now owns nearly 70% of the outstanding 10-year note inventory. They are that market. There is hardly anyone left besides the Fed and the Fed is out of cash to keep it going. Suddenly, we have a simple imbalance of more sellers than buyers and…down goes price.

Notice what I said above, “the Fed is out of cash”. Like athletic momentum or alcohol-induced desire, this is but a temporary thing. Let me state this clearly again: THE FED CANNOT AND WILL NOT ALLOW RATES TO RESET HIGHER. THE RESULTING BURDEN OF HIGHER INTEREST COSTS ON THE ALREADY ACCUMULATED DEBT WILL ONLY SPEED THE DEMISE OF THE PONZI AND THIS CANNOT BE ALLOWED. Therefore, with rates backing up and with the Fed out of liquidity to support a turnaround, the only option left is a re-ignition of overt quantitative easing.

Will this announcement come from Jackson Hole? Will it come from the next FOMC meeting on 9/12-13? Will it come at the following meeting of 10/23-24? It’s impossible to say but what is possible to say is this: Watch the 10-year note. It will tell you.
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Comments

  1. “The Fed is out of bullets”, maybe they can borrow some of those 144000 hollow point bullets Social Security just bought.

    • Total rounds of ammunition purchased by Homeland “Security” is well over 1 billion.  That’s with a B billion.  We are not talking the Marine Corp here.  We are talking the TSA.  What would the TSA need over a billion rounds of 40 cal hollow point for?  This is not good.  

  2.  Maybe they can punch up a trillion in digits, transfer it to some shadow partners and let them ‘buy’ the treasuries.
    A straw purchase, I think it’s called.  Sneaking around is their current modus operandi anyway, why not?

  3. Maybe they’ll just throw the gun at us and run.

  4. This stuff gives me brain damage. Too many numbers and that stuff.  I can’t even handle the gold and silver futures market. Now lead futures—that’s my speed.

  5. Hey … ‘they’ (politicos and bankers) wanted an automatically inflating ‘money machine’ that ran on incurrence of loan interest as its self-generating ‘fuel’! Well, they simply couldn’t imagine having to be the sorry clowns actually borrowing and PAYING that mushrooming interest! There’s immaculate beauty in this circumstance of their having to suffer the very fate they sought to saddle onto others.The Word of God is written in Algebra!

  6. Guess they’ll be forced to break out the nukes/lasers soon; over time, the bullets became ineffective anyways.

  7. They’ll borrow them from the National Weather Service

  8. I think Parker Brothers has a new  Super Duper Edition 3  Monopoly Game they can purchase and start over with

  9. It figures that the Fed would pick a gun with 5 bullets
    Dumb asses.

  10. DHS has over a billion rounds of ammo they could share with the Fed. They must fear us folks.

    • jbjeep, my conclusion on those billion dum-dum rounds is that ‘moles’ in the military are tasked with killing most of the base enlistees while they’re disarmed, exactly as had happened last year (test run to evaluate feasibility) Because a decisive majority of the current military manpower opposes the Administration and Congressional appeasement of it, there’s a ‘Night of Long Knives’ ahead and that ammunition is extremely strong evidence of it in my mind.

  11. I frankly don’t know what to think of the gov. anymore! As Kennedy once said, When peaceful revolt is imposable then violent revolt is inevitable (or something along those lines). If people could find away to take away control of the electoral process from the political parties that are bought and payed for by TPTB, then maybe our republic and honest rule of law as outlined in the constitution would stand a chance. But as things stand now it seems like so much pie in the sky wishful thinking. Thank god for the 2nd amendment. It is for the DEFENCE of our liberty. I hope that it never comes to a fight and I would be the last to go looking for one. But it seems the dollar collapse is intentional and all the social turmoil that will follow is and has been planned. It seems TPTB and the gov. want to be unshackled from the restraints of the constitution and rule of law. A call from the people to DO SOMETHING in a climate of chaos and bedlam in the aftermath of a collapse would make the perfect excuse for martial law and the end of the constraints of law itself and the beginning of omnipotent power in the hands of so few over so many. Every tyrants dream come true. I pray this isn’t the case But, I can not think of any other reason for the laws the gov. has been passing, while letting lawless bankers and corp. executives commit any crimes they wish with no fear of reprisal.

  12. If China (a brutal communist dictatorship itself) were to get control of the worlds financial system. What then? Does anyone really believe they intend to be ” A FORCE FOR GOOD IN THE WORLD”? I for one seriously doubt it! They will use their wealth and power to spread communism world wide. That is and always has been the goal of ALL communists! This world is in a lot of trouble. I don’t cheer China. I fear China! Maybe “our” side thinks they need to be like China to beat China.

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