Here Comes the Economic Boom

[jclay2]

The claim was that the Fed was buying 65-70% of all US Treasuries. They aren't since they are no longer net buyers.

Can you say the same on a duration weighted basis? They are levering up on all the long term risky high duration garbage with short term paper.

[Zippyjuan]

The Treaury has not been issuing much in the way of long term debt so yes, within that category, the Fed has been their significant buyer. I think the Treasury should also be moving more US debt to longer term instruments to capture lower debt costs for farther into the future.

Couple intersting charts I found:
http://www.ritholtz.com/blog/2012/06...-s-treasuries/

Domestic Investors – Mutual Funds

The next big domestic buyer that comes to mind is the mutual fund community with more than $12.4 trillion in assets ($9.9 trillion in long-term funds — stocks, bonds and hybrid funds — and $2.5 trillion in money market mutual funds). The two charts below show the net purchases of Treasuries for money market mutual funds and long-term mutual funds. This data also comes from the Federal Reserve’s flow-of-funds report.

As the first chart shows, money market mutual funds were net sellers of Treasuries seven quarters in a row before returning with net purchases.

The second chart shows long-term mutual funds are net buyers of Treasuries. While these purchases have rebounded in recent quarters, neither the long-term mutual funds nor the money market funds are large players in the Treasury market when compared to foreigners or the Federal Reserve

Domestic Investors – Banks

Are banks’ holdings of Treasuries closer in scale to those of the Federal Reserve or foreigners?

The first chart below shows U.S. chartered bank holdings of Treasuries have declined from $294 billion in Q1 1994 to just $29 billion in Q1 2012. The second chart shows a long-term look at the percentage of banks’ assets invested in Treasuries. Back in the 1950s it was near 40%. Today it is less than 0.3%. Simply put, banks do not buy Treasuries.

[oyarde]

I'm definitely not an economic expert, so hopefully you can correct me if I'm wrong, but if China/the world keeps buying our debt and doesn't dump their dollars then the music keeps playing right? I think it's impossible to know how much time we have, I still think if we greatly reduced the deficit very soon we could avoid the worst of it.

There is no chance of greatly reducing the deficit. If you do not believe that, look at the Senate, how many votes can you get , to cut anything ?

[Feeding the Abscess]

And now hurricane Sandy has created jobs and tons of new wealth. Rejoice!

[oyarde]

Actually, tons of new expense to be carried by state, local govt.'s , insurane co.'s to be passed to the tax payer.... net loss ...

[mczerone]

"Boom" or "Bubble"?

[Feeding the Abscess]

Actually, tons of new expense to be carried by state, local govt.'s , insurane co.'s to be passed to the tax payer.... net loss ...

Tons of demand has been created, and think of all the employment needed to rebuild!

[pacu44]

And this allows banks to do what?

Purchase treasuries to bolster their reserves...to fractionally lend them off.

The Fed, the USG and the Primary Dealers are playing a game of monetary merry-go-round.

There is no fractional at all... Fractions? its all x9...

youtube Mike Maloney interviews Richard Daughty

[Jordan]

Good to see all the negative Nancy viewpoints in this thread. I consider it a contrarian indicator - things are getting better.

[NoOneButPaul]

If you really think things are getting better you're not looking at it correctly...

I don't care what bubble they inflate or how much better they try to make things seem.

This is an undeniable truth.

The US Debt is past 16 Trillion, US Total Debt is 58Trillion, the unfunded Liabilities are in the nature of 250trillion, student loan debt OUTWEIGHS personal credit card debt, none of this is in a reverse trend. It's all getting much worse, and the reason that there's an illusion of prosperity is because of the massive inflation that's going on to create it.

Nothing is better, nothing is close to better, if you ride up the bubble and assume it's peaches and cream you're crazy. Whatever ride up we get temporarily will be offset in the future by an even greater crash than 2008.

Things might get better but it's an illusion. This country is flat out broke and the people are carrying the entire burden they just haven't been slammed with it yet.