Yo, heads up....Something big with the $ is about to happen

[Mega]

...........trouble is am not bright enough to understand:-
http://www.zerohedge.com/article/29-...ll-prices-0000

It means?????
Mike

[Starving Steve]

Re: Yo, heads up....Something big with the $ is about to happen

It means Bernanke or his friends were buying-back govn't debt to drive-down interest rates and accommodate the need of govn't to painlessly finance its spending. Anyone who doesn't understand what a rising tide of liquidity is all about, just needs to take a walk along the seashore as the tide begins to come in.:rolleyes:

[ASH]

Re: Yo, heads up....Something big with the $ is about to happen

...........trouble is am not bright enough to understand:-
http://www.zerohedge.com/article/29-...ll-prices-0000

It means?????
Mike

My amateur take:

On the face of things, it means that the US Treasury offered to borrow about $150B for 28 days without paying any interest to the holders of the corresponding bills, and some combination of buyers actually loaned the Treasury $29B on those terms.

Why would you loan money to the Treasury without charging interest?

Option A: Most likely because your money is tied up in an investment from which you wish to exit, but you have no risk-free way to park the amount of money involved, and you wish access to that money in a short time period... or maybe you think the risk associated with tying the money up for a longer period of time isn't worth the small amount of interest you could earn.

So, broadly, this could mean there are market participants who perceive risk in the financial markets but also risk in all but the shortest government bonds.

Option B: You are loaning money to the Treasury for reasons of state, and are therefore not interested in realizing a profit. For instance, maybe you are China, and you are trying to avoid an outright dollar collapse (by helping fund our deficit) -- but you don't want to expose yourself to more dollar risk than necessary through increasing your holdings of long Treasury bonds. Or maybe you are a holder of long bonds and are rotating into short bonds, for the same reason of perceived risk.

[D-Mack]

Re: Yo, heads up....Something big with the $ is about to happen

I learn something new every day

Toilet Paper Issuance Facility

[goodrich4bk]

Re: Yo, heads up....Something big with the $ is about to happen

My uneducated guess is that some of these buyers are anticipating a downdraft in all other financial assets ---stocks, bonds, commodity futures --- and are willing to forgo yield for the ability to access cash after the anticipated collapse. It's the same reason I keep my cash under the $250k FDIC limit or under my bed. It'll be there when I most need it.

Foreign buyers are probably assuming the dollar has been oversold and that they'll make more on the currency exchange than they lose on the yield. At least that was my reasoning when I bought the Norwegian krone late last year at Everbank.com. It's also why low rates encourage such speculation: it's the "what do I have to lose" mentality. If I could get a decent yield at my bank, I'd keep my cash there, where ostensibly it could be loaned to credit-worthy businesses.

[Mega]

Re: Yo, heads up....Something big with the $ is about to happen

Where is EJ/FRED when you need him!
Mike

[ricket]

Re: Yo, heads up....Something big with the $ is about to happen

Where is EJ/FRED when you need him!
Mike

zerohedge + free > itulip + $;

[rj1]

Re: Yo, heads up....Something big with the $ is about to happen

Where is EJ/FRED when you need him!
Mike

It's not their job to answer the whims of the free forum's foremost troll?

I'm sure if you need them, they'll answer. It's just a case of you giving them the right amount of pounds/dollars/ounces of gold.

[LargoWinch]

Re: Yo, heads up....Something big with the $ is about to happen

zerohedge + free > itulip + $;

zerohedge (free) = $

zerohedge (free) + itulip ($) = $$$$$

[MulaMan]

Re: Yo, heads up....Something big with the $ is about to happen

My advice is that you should have sold your GLD above $1,200 last week.

[BuckarooBanzai]

Re: Yo, heads up....Something big with the $ is about to happen

...........trouble is am not bright enough to understand:-
http://www.zerohedge.com/article/29-...ll-prices-0000

It means?????
Mike

How about the obvious. The amount of $$$ out there is >>> than agreeable places to put them. Buying T-bills at 0% buys you something more precious than money, it buys you time.

[ThePythonicCow]

Re: Yo, heads up....Something big with the $ is about to happen

How about the obvious. The amount of $$$ out there is >>> than agreeable places to put them. Buying T-bills at 0% buys you something more precious than money, it buys you time.

For a long time I've wondered why put one's money in Treasuries at such low interest. Why not just keep the cash?

But a small light bulb went on in my cow-brain today. For small timers of meager wealth, such as myself, the choice of cold hard cash, FDIC insured bank deposits or Treasuries is a reasonable choice, all of similar risk, with the Treasuries being the least liquid and convenient.

But if I had a few billion dollars, instead of the paltry sums I do have, then cash isn't practical (physically difficult to manage and a security problem), and bank deposits are not FDIC insured. Bank deposits are rather essentially a loan to the bank on very liquid, very low interest rate, terms.

What matters in these choices (cash, bank or T-bills) is who is the counter party. That determines the risk. The counter party for cash is the security company I hire to guard my stash; the counter party for cash is the bank in which I deposit the funds; the counter party for T-bills is the United States government.

None of these three counter parties are perfect. Our local star, the sun, will easily outlast them all. But of the three, assuming all three are paying essentially zero percent, I'll take the United States.

[pescamaaan]

Re: Yo, heads up....Something big with the $ is about to happen

For a long time I've wondered why put one's money in Treasuries at such low interest. Why not just keep the cash?
.

What matters in these choices (cash, bank or T-bills) is who is the counter party. That determines the risk. The counter party for cash is the security company I hire to guard my stash; the counter party for cash is the bank in which I deposit the funds; the counter party for T-bills is the United States government.

None of these three counter parties are perfect. Our local star, the sun, will easily outlast them all. But of the three, assuming all three are paying essentially zero percent, I'll take the United States.

this is exactly right-it's all about counterparty risk. Any deposits over the FDIC coverage should be thought of as an unsecured loan to the bank. In the event of default, you're a general creditor and you get in line with everyone else. Institutions don't take these risks.

Also remember that the Treasury offerings are an auction market. That means the Treasury doesn't set the rates (at least directly) on each offering. Instead it's a bidding process where dealers (and not dealers) submit bids indicating the level of interest they hope to receive. The rate for the whole offering is then some average of all the bids (filled from best to worst - from the treasuries point of view that is)

[jpatter666]

Re: Yo, heads up....Something big with the $ is about to happen

this is exactly right-it's all about counterparty risk. Any deposits over the FDIC coverage should be thought of as an unsecured loan to the bank. In the event of default, you're a general creditor and you get in line with everyone else. Institutions don't take these risks.

Also remember that the Treasury offerings are an auction market. That means the Treasury doesn't set the rates (at least directly) on each offering. Instead it's a bidding process where dealers (and not dealers) submit bids indicating the level of interest they hope to receive. The rate for the whole offering is then some average of all the bids (filled from best to worst - from the treasuries point of view that is)

Yep -- and for a company (any small/medium sized company's payroll likely blows through the limits) that would be a serious concern.

[tmicou]

Re: Yo, heads up....Something big with the $ is about to happen

For a long time I've wondered why put one's money in Treasuries at such low interest. Why not just keep the cash?

But a small light bulb went on in my cow-brain today. For small timers of meager wealth, such as myself, the choice of cold hard cash, FDIC insured bank deposits or Treasuries is a reasonable choice, all of similar risk, with the Treasuries being the least liquid and convenient.

But if I had a few billion dollars, instead of the paltry sums I do have, then cash isn't practical (physically difficult to manage and a security problem), and bank deposits are not FDIC insured. Bank deposits are rather essentially a loan to the bank on very liquid, very low interest rate, terms.

What matters in these choices (cash, bank or T-bills) is who is the counter party. That determines the risk. The counter party for cash is the security company I hire to guard my stash; the counter party for cash is the bank in which I deposit the funds; the counter party for T-bills is the United States government.

None of these three counter parties are perfect. Our local star, the sun, will easily outlast them all. But of the three, assuming all three are paying essentially zero percent, I'll take the United States.

This is essentially the argument for buying gold at BV, and paying them to hold on to it for you versus paper gold.

But what if you are a small business with $100k's to $M's and really wanted to have the cash readily available? Perhaps a better counter-party risk would be to pay the bank to keep your money for you not a deposit (loan) to the bank, but rather a Safety Deposit Box where you pull money out of your deposit account (except $250k FDIC insured), and immediately putting the cash in the lock box, for which you pay the bank to keep safe your property? (Effectively negative interest).

This is probably not reasonable for B's of $, but for most of us who own small businesses that need to have cash on hand for bills and payroll, having $250k-$2M in the bank is not unusual. I for one, have multiple bank accounts to spread the risk, but still, that becomes hard to manage.

Not that I think a bank would be too keen about handing over several hundred thousand dollars of cash for me to turn around and put into the safety deposit box....I can imagine the scene now: "But sir, don't you want to make interest on that money?....I'll have to get a manager for that much money, and I don't know if we have it, yada yada yada...."