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The new bond buying program Jim Jubak expects would require the further expansion of the Federal Reserve's already massive balance sheet, which stood at $2.85 trillion as of November 21.

Jubak believes the Fed's balance sheet will grow to more than $3 trillion sometime in 2013.

The Fed's balance sheet was at just about $1 trillion before the start of the current downturn.

1 posted on 12/10/2012 10:59:30 PM PST by zeestephen
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To: zeestephen
the new program will be an out-and-out plan to buy five- to seven-year Treasurys

The author is still pretending that the previous QE was to "help the economy". Now the emperor's jock strap has fallen off and the Fed is revealed as simply the enabler for Congress and Obama to spend money we don't and never will have. In fact low rates have destroyed much of the economy by taking away capital from long term uses growing businesses and turning worldwide stock markets into a casino. Low rates here and Japan have devastated economies elsewhere by creating booms and busts through carry trade. It is one of the reasons that the marginal economies in Europe are going under.

The only way this ends is default or inflation. There is no more chance of growing and paying the money back through tax revenue (with no tax increases). The bubble that has been created and maintained in Treasuries and will be extended with this blatant nonsense will crash and burn very badly with the potential for hyperinflation starting with a currency swap where bonds and entitlements get paid out in funny money. Ultimately the Chinese and others who make things we want will want their payment in PMs and there will be middlemen to take your PMs without much the government can do about it.

2 posted on 12/11/2012 2:18:40 AM PST by palmer (Jim, please bill me 50 cents for this completely useless post)
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To: zeestephen

You would have to admit that the bond rating for the US...will be lowered again by spring of 2013, and I’m betting on a second lowering by the end of 2013.


3 posted on 12/11/2012 2:37:12 AM PST by pepsionice
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To: zeestephen

As a CPA who spent many years auditing balance sheets, I can honestly say that the Fed balance sheet is not worth the paper it is written on. When an entity has the authority to fabricate assets (monetary supply) at will with no tangible backup support, it is a facade.

What puzzles me is that they are now creating the illusion of long term interest rate stability by turning their fabricated cash into long term low interest rate debt investments.

And, every time I see the morning DOW futures skyrocket after a bad previous day, or watch the DOW go up while the NASDAQ is off considerably, I know they are playing games!


4 posted on 12/11/2012 3:25:12 AM PST by tired&retired
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To: zeestephen
From the article, here's the flaw in the mainstream thinking: "The big problem comes when the economy starts to pick up speed. Then, all that created money that was intended to speed up growth becomes the source of inflation and threatens to push up not just prices (consumer inflation) but also the prices of financial assets (asset-price inflation). Neither is good." What these pundits haven't figured out yet is that with a $3 trillion balance sheet of garbage assets, the Fed no longer has any incentive to allow the economy to grow. So the economy will not be allowed to grow.
7 posted on 12/11/2012 3:41:34 AM PST by gotribe
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To: zeestephen

3 trillion “in 2013”? One more month of 45 billion in crappy mortgage repurchases sticks the fork in that number, should be more like “might pass 4 trillion”...


9 posted on 12/11/2012 6:25:53 AM PST by Axenolith (Government blows, and that which governs least, blows least...)
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