Full story here.
“…just recently — on a Thursday in early August 2009 — agents for the Fed stepped into one of their own bond auctions and snapped up $7 billion of their own 7-year Treasury notes. That’s after buying more than $7 billion worth the day before… over $14 billion in all… and they paid the tab the way the Fed always does, with freshly printed cash.
That’s like whipping out your Visa card to pay your American Express bill!”
“It works almost like a money laundering scam. We write the foreign government for big chunks of bad “agency debt” — like bonds sold by failed agencies Fannie Mae and Freddie Mac — then they write us a check, using the cash we just gave them, to buy more of the Treasury’s bonds. Just so long as our government can pretend the buyers still show up” (more…)