Another not-so-small purchase by the Fed

August 24, 2009

There are 9.5 weeks left before the end of October, when the Fed plans to end its $300 billion Treasury purchase program.  As I wrote last week, the Fed is running low on ammo if it plans to make its money stretch all the way into October.

Today, they announced another not-so-small purchase of Treasuries, $6.1 billion to be precise.  That brings the total purchased to $268.5 billion, leaving $31.5 billion left to spend over the next 9.5 weeks.

Since the start of the program in March the Fed has averaged $12.2 billion of Treasury purchases per week.  They have enough ammo left to average $3.3 billion per week through the end of October.

What’s for certain is there won’t be any more weeks like August 5th-11th, when the Fed swallowed $23.5 billion worth of Treasuries.

As the Fed winds down its participation in Treasury markets, will investors step in to soak up the flood of supply?  If they don’t, interest rates could head higher, choking off the “recovery.”

3 comments

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The FED always wins.

The FED will always win – until the American people decide to control the issuance and valuation of their own new national currency via Congress.

The way is was SUPPOSED to be, until that snowy Christmas eve night in 1913…

The USD is private property, and not of the US Gov’t.
The FED’s balance sheet (and that of subsidiaries such as Maiden Lane III) has grown substantially. The AIG assets acquisition alone is staggering. Nevermind the collateral “in” Fort Knox.

This world needs a new renaissance. Someone needs to lead the revolt from this oppression by the banks.
Is the USA going to be the one?

You know what the main difference is between Capitalist Democracy and Communism is?

In Communism, the guy at the top is the guy who is REALLY running the show. In a Democracy, it is not always so apparent.

Posted by Baron von Lufthoven | Report as abusive

Use of “purchased” must be a joke. That’s the only thing I can figure.

Posted by eh | Report as abusive

So WTF, I been waitin for “higher rates” with no COLA for the next 2 years and interest as low as it is on savings, it no wonder we all stop buyin.

Just how can they say no COLA for 2011? I thought it was determined by the figures they use for a given time, those figures won’t even be known till Sept of 2010

Posted by Hoody | Report as abusive