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  1. #1

    can you explain this?

    an associate sent this link...
    inviting the financial wizards on the board to explain it.
    my associate sent some comments.. i may post them after i read this one more time.
    https://www.seeitmarket.com/is-repo-...o-get-serious/

  2. #2
    i still don't understand...
    all i know is i paid 2.13 for gasoline over in alabama this week.
    gold and silver are up a little...
    hmm. if they are up, i wonder about brass and lead .
    no more goats here. no chickens or cows or pigs either.
    another associate was in san fran this week looking for folks to invest in his company. he says there are loads of venture capital groups with 100s of millions of dollars wanting to do investments..

    here are some comments... i may go look for my Patriots book... trying to remember what started rawles novel.
    -------------------

    An interesting article about US debt refinancing points to danger signs in the overnight repurchase markets.

    First, the federal government totally regulates interest rates between banks through repurchase of US debt that has been previously issued.

    The federal government also sets interest rates between banks by order from the federal reserve.

    In September, the the repurchase rates for loans between banks spiked to 8%.

    This indicates a lack of money available for banks to loan each other.

    So where did all the money in the banking system go?

    The short answer is that in the last quarter, the federal government has issued over $1 trillion in new debt.

    The fix has been to create money by the federal reserve buying old US treasury debt in the open market.

    This would inject more cash so that the banks can buy new debt.

    Just for information, the federal government cannot issue US debt directly to itself.

    US debt must originally be sold in the open market.

    So what are the effect of the actions taken?

    $320 billion dollars has been pulled out of the market, and it has been placed on the federal reserve balance sheet.

    Has this fixed the problem with cash reserves in the open market?

    It hasn't. The only way the federal reserve can sell all of its debt is for more old debt to be repurchased by the federal government, and new debt can be then sold on the market.

    This is called monetizing the debt.

    So what needs to happen?

    The correct answer is for the government to quit issuing new debt, and that takes political will to reduce federal government spending.

    Another answer is to find new customers for US debt to replace old customers who aren't buying US debt anymore.

    Old customers who don't want additional US debt anymore include big banks, China, the American public, etc.

    Why have the old customers gone away?

    Interest rates are too low, and all new money is going to the US stock market.

    There is a debt bubble that is building, and the danger is that interest rates will suddenly spike to make US government debt more attractive.

    This is all very bad for US debt and the US bond market because all old US debt obligations would have to be repriced by the bond market at the new interest rates.

    That would make the old bonds go down in value at the new market price requiring a higher interest rate.

    This is very bad for the US stock market because money would migrate to the new bond market rates which would be better than stock market returns.

    It would really hurt other countries who have bought US debt.

    I hope it all turns out good, and I hope that the US government money managers know how to fix things.
    Last edited by rockriver; 12-14-2019 at 06:34 PM.

  3. #3
    This had all crossed my mind as well. Bare's watching, IMHO

  4. #4
    hmm. trying to watch the commodities prices..
    i assume the 1.66 for gasoline is "wholesale"
    so, if gas went up 2.0 percent... i think that means it went up about 3 cents in one day...
    so maybe, i'll get those plastic cans down to the filling station and fill them.
    (and yes, i'm sure a bunch of you guys have 500 gallon tanks all the way up to many thousand... ) congrats... well done...
    anyhow, bottom line, just considering, what, in a reasonable fashion and expense, can the bride and i do to help offset coming events?
    for instance, is it time to fill the gas tanks.... i think so..
    buy a couple of extra cans of beans and prepared chicken?
    maybe some metals of various types...
    maybe that tractor implement i've been wanting. or get the chain saw fixed... ?
    or, just sit back, watch cnn, and feel happy, happy, happy.

    more and more "christian" organizations are taking stands that are contradictory to their supposed guidebook... that is one ongoing trend that will have a sho 'nuf bad response. i just don't have any idea when... 2 leaders of a recent affiliation just cleaned out the bank account and won't discuss the financials of the group.... bad sign... shame on them. shame on me for not paying better attention.

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