Full story here from Project Mayhem via ZeroHedge.
“Evidence the Federal Reserve is monetizing treasuries by proxy emerges
Sprott Asset Management has released a report titled “Is it all just a ponzi scheme?” which delves into Treasury Bulletin data to examine the possible covert monetization of US Treasury Debt. For those who have been analyzing these market for some time now, it has become clear there is covert and implicit support for the US Treasury Market through the US Federal Reserve. Signs include the fact that Treasuries are sold by the corrupt US Govt to primary dealers (JPM, Goldman, Credit Suisse, etc) , and then within a matter of days are purchased from the primary dealers by the US Fed with its magical printing press. We have the serial numbers , boys. This is not rocket science.
However, even this covert support cannot account for the massive new funding requirements of the insolvent US Govt. Sprott Asset Management has provided us with a significant piece to this puzzle in their Dec 2009 report. In this report, they calculate the US Govt increased public debt by $1.885 trillion dollars in 2009. The government is deeply insolvent. How can this continue? There are ostensibly three main categories of USGovt debt buyers.
1) Foreign Buyers (namely, foreign governments)
Foreign Buyers, aka category (1), have been drying up. And rightfully so , as we enter a profound new phase in the global financial meltdown, this time involving roulette for sovereign debt default (shall we place bets?) . China cannot be a net buyer of Treasuries when they are strengthening the yuan to prevent food riots in Xinjiang.
2) US Fed
Yes, this has been analyzed in depth here at Zerohedge. The Fed is covertly monetizing debt through a game of hand-the-baton (where ‘baton’ means acidic US Treasury debt). US Treasury -> Primary Dealer -> USFed. The game is very simple since the Fed has a magical printing press.
3) “Other Investors”
This is where things get interesting, where Sprott has discovered an elaborate and interesting statistics game. There is a sub-category in the Treasury Bulletin report under “Other Investors” titled “Households”. Households supposedly comprise the bulk of new Treasury Issuance not in categories (1) or (2). But are we really to believe that Joe Sixpack, deeply underwater on his mortgage, is purchasing government debt through Treasury Direct? I think not.
The “Household” category under “other investors” purchased only $15 billion worth of treasuries in 2008. But They purchased $528.7 billion of treasuries by the end of Q3 2009. Excuse me – - what?! An increase of 35x from 2008 to 2009! From $15 billion to $528 billion! Hahahahaha!
Well, as it turns out, the “Household” sector is a catch-all category, calculated as residuals. This indicates that SOMEONE, for example a secretive VA-based US hedge fund operating with implicit government support with billions to throw around, is providing covert support to Uncle Sam. To the tune of half a trillion! Hahaha! This game will end in tears , folks! And by tears I mean ‘currency crisis’.
“The big block orders(market movers) come into the pit through paper. When I ask paper(GS, JPM,etc) who are they buying or selling for there are 6 funds that always are referenced. The Reston 6.”
“These days there is no single entity, rather there are 6 large hedge funds located in the Reston Virginia, and DC area who are the commercial accounts.
The commercial accounts take their direction from either the Treasury or Fed depending on which branch has the lead. These hedge funds are the ones placing large orders to GS, JPM, etc… Market moving orders. So when you hear that ‘paper is buying’ large quantities on the floor you cannot really tell who it is and all you can do is speculate. It looks like it’s coming from GS but they are just executing an order for a client. There is no trail back to Uncle Sam.”
VA-based PJM Capital: Rumored to be possible front for covert US Treasury monetization. With $150mn under management, this is unlikely. However, there are plenty of other hedge funds in and around Reston VA that could be operating as covert Treasury monetization fronts, responsible for the half trillion in funding during 2009. Can you name the “Reston 6″? Please send any information to project.mayhem.research [at] gmail
Sprott Calls The Fed “A Ponzi Scheme” As Half A Trillion in Treasury Purchasers Are Unaccounted For
John Williams warns of US hyperinflation
John Williams, publisher of ShadowStats.com, is warning of currency crisis.
“In terms of the GDP, we are about halfway to depression level. If you look at retail sales, industrial production, we are already well into depressionary. If you look at things such as the housing industry, the new orders for durable goods we are in Great Depression territory. If we have hyperinflation, which I see coming not too far down the road, that would be so disruptive to our system that it would result in the cessation of many levels of normal economic commerce”
With all the talk of deflation-this and deflation-that , many incompetant analysts are missing aspects of systemic crisis which are almost always currency-driven events. Take for example the Argentinian debt default. Hyperinflation , or in other words currency revaluation, was preceded by deflation. Think of it as in how the ocean goes out prior to being flooded by a tsunami.
Hyperinflation is a CURRENCY driven event. It is primarily a function of confidence. Confidence can evaporate in a heartbeat due to war, false-flag terrorism, disease, famine, or any number of other supposed ‘black swan’ events, which are not all that unpredictable after all, considering all of these events benefit corrupt governments. Prudent individuals are preparing for unknown unknowns , which we all know are coming. The result of the black swan getting sucked into the aircraft engine will be currency crisis. Read the full John Williams interview here.
UN to produce bullion coins as world currency
Posted by sakerfa on December 24, 2009
The announcement by the United Nations this week that it will license the minting of silver and gold bullion coins bearing the UN logo may be the button that launches metal prices into orbit.
This one pretty much speaks for itself. All of us need to do some hard drinking here at Mayhem HQ on New Years before I have anything more to say on this insanity. Besides, “if you don’t own gold, you are a fucking idiot.”
[there's more, check the link in the post]