Thursday, February 18, 2010
Federal Reserve Short Positions are Set
Reference:
http://fdralloveragain.blogspot.com/2009/10/federal-reserve-is-mass-shorting-us.html
The Fed's short positions are set, it's time to crush the market.
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FDR,
ReplyDeleteYou've often commented on the FED's profit from the massive interest it collects from our government. But the FED and government assert that most of that is paid back into the Treasury. I take it that your view is that our government and the FED are simply telling bald-faced lies about where that interest ultimately ends up. I'm not saying you're wrong. I just want to know if I am missing something. Thanks.
Hey FDR, When there was mass selling w/heavy volume about a month ago when earnings season started - for no good reason really - I wondered if the Fed was selling. Now the picture is quite clear, but the rate hike was smaller than I expected. It will be interesting to see what happens now. I thought markets around the world would absolutely sell off, but that hasn't happened, which leads me to wonder if the inevitable will happen tomorrow...green? I don't understand why, but then again I haven't been able to figure out why the market has been climbing since March. Maybe investors will see this as a positive sign that the economy is getting better, albeit slowly. I'm short big time, so I hope I'm wrong, but I have this nagging feeling that we go higher.
ReplyDelete"You've often commented on the FED's profit from the massive interest it collects from our government. But the FED and government assert that most of that is paid back into the Treasury. I take it that your view is that our government and the FED are simply telling bald-faced lies"
ReplyDeleteNo, they are telling the truth. The Fed claims they pay most profits back to the Treasury, not most of the interest. The devil is in the details. Remember, the Fed is a corporation and when corporations spend, it is accounted in the expense column.
The Fed accounts for their purchase of Treasuries as an expense to them. The act of printing is never accounted for, that cash simply appears. Thus, printing cash reduces profits by an equal amount.
The accounting trick is as simple as that.
This will not be a slam dunk for the bears.
ReplyDeleteThe fed and their friends are playing the markets to their advantage.
The fed is taking an opportunity in the options exp to hide the real market impact.