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Jeff Nielson: ‘Maximum Fraud’ in U.S. Treasuries Market !

We will all be trillionaires but can't afford breakfast !

  • You have to ask yourself: who is buying all these US treasuries when foreign countries are dumping? Obviously the Illuminist FedRes. Where do they get the money from? They create it electronically out of thin air. They simply type the amount needed into their computer! Americans are made to pay these debts back with interest to the FedRes! What a wonderful SCAM !
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    ‘Maximum Fraud’ in U.S. Treasuries Market ! 
    by Jeff  Nielson, http://www.bullionbullscanada.com/ 
    Spending as much time as I do writing about the Land of Fraud, I never thought I would see myself using the phrase “maximum fraud” to describe any U.S. market. Each time I thought I had witnessed the apex of human fraud, within a matter of weeks or perhaps months I would witness some even more extreme outrage.
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    One should never underestimate Federal Reserve Chairman B.S. Bernanke, however, when the subject turns to fraud and deceit. This is the same man who told the world (day after day) that the U.S. had a “Goldilocks economy”, where U.S. markets and house prices would keep going up forever – at the very peak of the made-in-Wall-Street U.S. housing bubble. This is the same man who then promised the world (again and again) that the U.S. economy would experience a “soft landing” after that gigantic bubble had already burst. This is the same man who has announced more “exit strategies” than Harry Houdini – with not one of them ever materializing.
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    Yet even the infamous “Helicopter Ben” Bernanke has outdone himself with his latest operations in the U.S. Treasuries market. For those who missed the news, foreign central banks (the largest holders of U.S. Treasuries) have been frantically dumping more Treasuries onto the market over the past four weeks than at any other time in U.S. history.
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    Those with even the tiniest understanding of supply/demand fundamentals understand how markets operate in such situations. When there is a sudden explosion of supply, the price buyers are willing to pay for that good plummets until enough new buyers enter the market to soak-up all of that excess supply.
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    So how far have U.S. Treasuries prices fallen during this “panic” in the U.S. Treasuries market? Zero. To comprehend the absolute absurdity of this situation requires adding one more piece of data to our scenario: U.S. Treasuries prices are currently at their highest level in history – despite the fact that the United States has never been less solvent.
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    Readers need to realize how a bond market works. Prices and yields (i.e. interest rates) move in a precisely opposite/inverse manner to each other. As yield goes up, bond prices decline in a precisely proportional manner (and vice versa). Given that yield is (supposedly) a function of risk, with the U.S. economy being less solvent than at any other time in history, this implies record-low prices for U.S. Treasuries – not all-time highs.
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    Realizing that many ordinary investors don’t understand the dynamics of the bond market, let me equate this situation to the world of equities with an analogy. Picture a hypothetical company with the world’s largest market-cap, which we’ll call “U.S. Treasuries Inc.”
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    The share price of U.S. Treasuries Inc. is sitting at an all-time high (and has been there for many months), despite the fact the company is teetering on bankruptcy. Suddenly, the largest shareholders of U.S. Treasuries Inc. all start simultaneously dumping more shares than at any other time in history. Anyone with even a modicum of market experience knows the inevitable consequence of such an event: the share-price would crash.
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    Understand what is directly implied here. For maximum supply to be dumped onto this market, while prices didn’t even budge slightly from all-time highs does not merely imply “high demand”. It necessarily implies infinite demand. Only where demand was literally “infinite” would we see sufficient buyers instantly materialize (at the highest prices in history) irrespective of how much new supply hit the market. And this did not simply occur over some anomalous one- or two-day period, but rather consistently for (at least) four solid weeks.
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    However, even if it was mathematically plausible for there to be infinite demand for U.S. Treasuries (which it is not), “infinite demand” is not a plausible explanation for what has transpired in the U.S. Treasuries market, since it is directly contradicted by other price data.
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    … for more click here!

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January 5, 2012 - Posted by | Economics | , , , , , , , ,

1 Comment

  1. [...] Who is the buyer for the other 30% of U. S. Treasuries?  Click on this link for the answer:  http://socioecohistory.wordpress.com/2012/01/05/jeff-nielson-maximum-fraud-in-u-s-treasuries-market/   [...]

    Pingback by CHAPTER 10. Three Phases of a Monetary Collapse | January 13, 2012


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