Interesting idea: a 'Pump and Dump' into Treasuries

[c1ue]

Jim Willie always has interesting ideas.

I'm still not clear on how much is factual vs. conjectural, nor is his short term timing record necessarily spotless.

But ideas are still valuable:

http://www.gold-eagle.com/editorials...lie111908.html

The idea is: The Fed is draining liquidity out of the entire economic system - the US primarily but also the rest of world via trade - in order to be able to trade a flood of new Treasuries to replace the crap securities held as assets in the financial system.

In other words, if the entire system's liquidity is W+X+Y where W=cash, X=credit, Y=crap securities (negative number), one way to cancel out Z is to destroy X in order to create Z=treasuries. Said Treasuries are then used to negate crap securities (Y).

[ASH]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Jim Willie always has interesting ideas.

I'm still not clear on how much is factual vs. conjectural, nor is his short term timing record necessarily spotless.

But ideas are still valuable:

http://www.gold-eagle.com/editorials...lie111908.html

The idea is: The Fed is draining liquidity out of the entire economic system - the US primarily but also the rest of world via trade - in order to be able to trade a flood of new Treasuries to replace the crap securities held as assets in the financial system.

In other words, if the entire system's liquidity is W+X+Y where W=cash, X=credit, Y=crap securities (negative number), one way to cancel out Z is to destroy X in order to create Z=treasuries. Said Treasuries are then used to negate crap securities (Y).

Sounds very similar to Symbols's idea, actually.

[c1ue]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Sounds very similar to Symbols's idea, actually.

ASH,

Actually, no.

Symbol's idea was that New World Order would force the rest of the world to buy Treasuries.

What Jim Willy is saying is that the dollars in the American economy are being drained and replaced with Treasuries.

Or, in other words, outright theft of all 'free' dollars and replacement with Treasuries.

Sure, some foreign dollars are going to get affected. But the foreign dollars are already in Treasuries and wouldn't be affected by this action - in contrast the domestic dollars that were saved, are earned, are being spent, and are being loaned/borrowed will be affected.

[jtabeb]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Sounds very similar to Symbols's idea, actually.

Very, VERY similar. (Symbols, you still here? Did you read this one?)

[Supercilious]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

ASH,

Actually, no.

Symbol's idea was that New World Order would force the rest of the world to buy Treasuries.

What Jim Willy is saying is that the dollars in the American economy are being drained and replaced with Treasuries.

Or, in other words, outright theft of all 'free' dollars and replacement with Treasuries.

Sure, some foreign dollars are going to get affected. But the foreign dollars are already in Treasuries and wouldn't be affected by this action - in contrast the domestic dollars that were saved, are earned, are being spent, and are being loaned/borrowed will be affected.

Actually yes. Please read again the Fed's Hammer Drill. The deleveraging produces a liquidty shock (not exactly a pure deflationary shock since the freezing of crappy derivatives may not be totally irreversible) and the vacuum has to be filled by treasuries.

The NWO tinfoil hat part came when I was saying that this effect is not accidental/out-of-control but manufactured/desired.

But it is exactly this, as you say it:

In other words, if the entire system's liquidity is W+X+Y where W=cash, X=credit, Y=crap securities (negative number), one way to cancel out Z is to destroy X in order to create Z=treasuries. Said Treasuries are then used to negate crap securities (Y).

(BTW, there is an old proverb telling that one should not say loud the name of the Devil )

[c1ue]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Sorry, but just because the mechanism is the same, does not mean the effect is the same.

A replacement of the dollar with Treasuries in the US does not necessarily translate into the replacement of all other currencies with Treasury dollars in the rest of the world.

The rest of world has the option of putting their value in some other form - gold, currencies, local companies, etc.

Americans in contrast will not have this option; while those with liquid assets can do so, the vast majority of the nation subsists paycheck to mouth. It is this flow - GDP in action - which I refer to.

[jtabeb]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Sorry, but just because the mechanism is the same, does not mean the effect is the same.

A replacement of the dollar with Treasuries in the US does not necessarily translate into the replacement of all other currencies with Treasury dollars in the rest of the world.

The rest of world has the option of putting their value in some other form - gold, currencies, local companies, etc.

Americans in contrast will not have this option; while those with liquid assets can do so, the vast majority of the nation subsists paycheck to mouth. It is this flow - GDP in action - which I refer to.

Dude, at least give the guy some credit where credit is due. C'mon.

Actually describing a future occurance before it happens takes guts brains and some luck. But I think the Guts and Brains is what ruled the day.

Symbols, nice heads up. (Although I think we will all be trading gold and silver to buy stuff soon vs paper anything)

V/R

JT

[c1ue]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Well, for one thing, a US only phenomenon would seem to conflict with the idea of the 'New World Order' controlling things all over the world.

A US only phenomenon actually implies the opposite: that the US oligarchs are being rebuffed by the rest of the world in their attempts to continue the dollar fiat reserve free ride, and in turn are turning on their internal constituency.

From an actionable standpoint, this difference is gigantic.

For $#*'s theory - there is nowhere to hide. Or, How I Learned to Stop Worrying and Love the Bomb by investing on the theory of deflation.

For US only - being outside the US (and US dollar) is the place to hide. Or, Escape from New York by investing on the theory of inflation.

[Supercilious]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Dude, at least give the guy some credit where credit is due. C'mon.

Thank you jtabeb, but really ... I don't need any credit. If c1ue considers that I said something else (IMHO trying to twist my words or pretending he doesn't understand what I really said) that's fine ... it's a free country and he is entitled to his opinion, as everybody else is. I'm happy at least that now he is paying attention to an interesting development.

Actually describing a future occurance before it happens takes guts brains and some luck. But I think the Guts and Brains is what ruled the day.

Here I disagree with you. It doesn't take brains, guts and some luck. It takes only brains, or actually not even brains.... it takes only a healthy dose of skepticism and the ability to keep a cool head and cut through the BS chaff, so you can be able to see what really is happening.

After you are able to understand how something really works, making accurate predictions is really simple and straightforward, you don't need guts (things are going to happen as they have to happen regardless what others are saying or how loud the clowns in the media are "crying Uncle!") and luck has no role in the accuracy of your predictions.

As a principle, you need guts and luck only when you make a prediction based on an incomplete understanding of the situation and the prediction is based on a contraption of too many personal assumptions, which yourself are not entirely sure they are correct or not. Only then, you fear you may be proved wrong by reality and hope for luck, that in the end things will behave more or less as you predicted (so you will not need to make any dubious post facto excuses and clarification if you get really defensive and try to prove at any cost, you had actually an accurate prediction).

Symbols, nice heads up. (Although I think we will all be trading gold and silver to buy stuff soon vs paper anything)

I beleive that may be correct to some extent. I beleive we will see soon a PM bubble, but I'm not sure, at this moment, if it will be a one step move or a two step move (with separate peaks for consumer gold and investment grade gold).
Anyway, in conclusion, what matters is that I'm very happy you find my theory correct and c1ue finds Jim Willie's idea very interesting. Let's leave it like that because, IMHO, the rest is irrelevant.

[jtabeb]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

Let's leave it like that because, IMHO, the rest is irrelevant.

No, kindness and fairness to your fellow man are not irrelevant.

[pksubs]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

No, kindness and fairness to your fellow man are not irrelevant.

looking for enlightenment as always, can I get a pointer to "symbol's idea" ? Was that a previous post?

[Supercilious]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

looking for enlightenment as always, can I get a pointer to "symbol's idea" ? Was that a previous post?

We were basically talking about opinions I have previously expressed here:
1) The part with replacing collapsed derivatives a section in the Fed's Hammer Drill Theory.
http://www.itulip.com/forums/showpos...09&postcount=7

The part c1ue was referring to (trying to dismiss the resemblance with my theory) , was, basically, another view I have, that the Fed uses the financial backdraft produced by the collapse of derivatives, in order to force as many treasuries as possible down the throat of the global financial system (in a Problem Reaction Solution scenario).

The problem reaction solution scenario is a modern adaptation of a Hegelian concept and it's described briefly in the following clip (unfortunately I can't find the short clip anymore and you will have to forward at 7:15 for the relevant part)





The derivative replacement with treasuries is the method by which the Fed drills more treasuries into the system (not by one-to-one arm twisting).

So, let's recap:

1)The whole mess we are in now was created by flooding the international markets with treasuries (ballooning US debt).
2)This mess was created by the same people who are now supposed to "rescue" us from the "Great Depression of 2008"
3) The solution offered by the Hankie-Benkie is ... flooding again the international financial markets with treasuries ... What a surprise and what an original solution!

And it seems it works ... everybody is wearing brown pants, crying "Uncle (Ben)!" and asks/begs for .... more flooding with treasuries:
http://www.bloomberg.com/apps/news?p...7ZQ&refer=home

Recession’s Grip Forces U.S. to Flood World With More Dollars
By Rich Miller
Nov. 24 (Bloomberg) -- The world needs more dollars. The United States is preparing to provide them.
In an all-out assault on capitalism’s worst crisis since the Great Depression, the U.S. is taking on the role of both lender and borrower of last resort for the global economy.
The Federal Reserve, which has already pumped out hundreds of billions of dollars, might formally adopt a policy of flooding the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, may tap global capital markets for even more to finance a fiscal stimulus package of as much as $700 billion and provide additional bailout money for banks.
“You want to do everything you can when you’re facing the threat of a deflationary breakdown of the economy,” says Michael Feroli, a former Fed official who is now an economist at JPMorgan Chase & Co. in New York. He sees the central bank cutting the overnight lending rate to zero in January and holding it there throughout the year.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are being forced to pull out the stops because the extraordinary actions they’ve taken so far have failed to gain much traction. Credit markets are collapsing, stock prices are plunging and the world economy is sinking into a recession.

[...]
Investors, shell-shocked by the turmoil, are piling into super-safe Treasury securities, even as the U.S. government ships more supply out the door. Three-month bill rates dropped last week to 0.01 percent, the lowest since at least January 1940, and yields on Treasuries maturing in two through 30 years all fell to the least since the government began regular sales of the securities.
And the dollar has risen as loss-ridden banks worldwide husband their resources, even after receiving generous dollops of liquidity from the Fed. The U.S. currency has surged about 17 percent against the euro -- signaling demand for still more dollars -- in the two months since the crisis deepened after the failure of Lehman Brothers Holdings Inc. Meanwhile, gold is down almost 25 percent from its peak in March.
[...]
To help fight the worldwide dollar squeeze, the Fed has set up currency swap lines with more than a dozen other central banks. Some arrangements, including those with Europe, Britain and Japan, are open-ended, allowing the Fed’s counterparts to draw as many dollars as they need. The U.S. has also established individual $30 billion swap lines with Brazil, Mexico, South Korea and Singapore.
In a speech to a banking conference on Nov. 14, Bernanke characterized these efforts as an “internationally coordinated approach” among central banks to fulfill their function as lenders of last resort.
As the Fed has stepped up its efforts to combat the credit crisis, its balance sheet has mushroomed. Assets rose to $2.2 trillion on Nov. 19 from $924 billion on Sept. 10, just before the bankruptcy of Lehman Brothers shook the global financial system.
The central bank’s holdings are likely to increase further. “I would not be surprised to see them aggregate to $3 trillion -- roughly 20 percent of GDP -- by the time we ring in the new year,” Dallas Fed President Richard Fisher told the Texas Cattle Feeders Association on Nov. 4.
Only the Start
That may be only the start if the Fed cuts its benchmark rate, now at 1 percent, to zero and adopts what economists call a policy of “quantitative easing.” Under such a strategy, it would concentrate on expanding the amount of reserves in the banking system because it could no longer reduce the cost of that money.

[labasta]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

We were basically talking about opinions I have previously expressed here:
1) The part with replacing collapsed derivatives a section in the Fed's Hammer Drill Theory.
http://www.itulip.com/forums/showpos...09&postcount=7

The part c1ue was referring to (trying to dismiss the resemblance with my theory) , was, basically, another view I have, that the Fed uses the financial backdraft produced by the collapse of derivatives, in order to force as many treasuries as possible down the throat of the global financial system (in a Problem Reaction Solution scenario).

The problem reaction solution scenario is a modern adaptation of a Hegelian concept and it's described briefly in the following clip (unfortunately I can't find the short clip anymore and you will have to forward at 7:15 for the relevant part)





The derivative replacement with treasuries is the method by which the Fed drills more treasuries into the system (not by one-to-one arm twisting).

So, let's recap:

1)The whole mess we are in now was created by flooding the international markets with treasuries (ballooning US debt).
2)This mess was created by the same people who are now supposed to "rescue" us from the "Great Depression of 2008"
3) The solution offered by the Hankie-Benkie is ... flooding again the international financial markets with treasuries ... What a surprise and what an original solution!

And it seems it works ... everybody is wearing brown pants, crying "Uncle (Ben)!" and asks/begs for .... more flooding with treasuries:
http://www.bloomberg.com/apps/news?p...7ZQ&refer=home

I'm not sure. I'm not 100% convinced of the tinfoil hat theory because treasuries with no return on investment and a downgrade in rating (less secure) and the added inflationary pressure that this excess will create, would make the pendulum swing the other way at some point (after the initial panic has subsided). It could ferociously swing the other way causing a bond market default or, at the very least, very high interest rates (which is what I see coming, and not just for the US).

If they only slightly overdo it and create merely mild inflation to counteract the credit deflation then you may have a point. From the "all planned by the FED long ago" perspective, then this is a very dangerous game to play.

Unless of course their plan is to wipe Amercia off the map economically. I can see a more level, but much reduced, global playing field.

Or if you really want to go tinfoil hat sinister, then you could argue that they want to produce a gloabl economic collapse to wipe out most of the population through disease and starvation. A culling so the pop can be managed better in terms of its environment. But this is really off the wall.

[kingcopper]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

I'm not sure. I'm not 100% convinced of the tinfoil hat theory because treasuries with no return on investment and a downgrade in rating (less secure) and the added inflationary pressure that this excess will create, would make the pendulum swing the other way at some point (after the initial panic has subsided). It could ferociously swing the other way causing a bond market default or, at the very least, very high interest rates (which is what I see coming, and not just for the US).

If they only slightly overdo it and create merely mild inflation to counteract the credit deflation then you may have a point. From the "all planned by the FED long ago" perspective, then this is a very dangerous game to play.

Unless of course their plan is to wipe Amercia off the map economically. I can see a more level, but much reduced, global playing field.

Or if you really want to go tinfoil hat sinister, then you could argue that they want to produce a gloabl economic collapse to wipe out most of the population through disease and starvation. A culling so the pop can be managed better in terms of its environment. But this is really off the wall.

The Fed produces nothing except paper products we collectively assess value to. Symbols idea to me is that the FED knows this and must therefore make us WANT their type of paper because of fear of the unknown. It's sadly too real and could very well be part of a larger vision.

[labasta]

Re: Interesting idea: a 'Pump and Dump' into Treasuries

The Fed produces nothing except paper products we collectively assess value to. Symbols idea to me is that the FED knows this and must therefore make us WANT their type of paper because of fear of the unknown. It's sadly too real and could very well be part of a larger vision.

Yes, but only very temporarily it would seem. Running to Mammy is fine when you're investments are toast, but when you realise that it is Mammy who is really the one who is toast, then everyone will rush to gold: the true father of well being.

Paper has value up to a certain point where it does not. Treasuries are paper's last stand.

Gold to the moon. :eek: