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Stocks rally as Fed mulls end to balance sheet reduction

Does this mean the USA must payback US Treasury LOANS/TBills?


  • Total voters
    4
  • Poll closed .

DaveFagan

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Stocks rally as Fed mulls end to balance sheet reduction


'Stocks rose Friday as traders looked past a poor Intel earnings report and hoped a government shutdown solution would come soon, as well as a resolution to the U.S.-China trade war.
Speculation that the Federal Reserve may end it's balance sheet unwind sooner than expected also added to the bullish tone, as that's been a major concern of investors.
The Dow was up 240 points, aiming for its fifth consecutive week of gains. The S&P 500 rose 1 percent, while the Nasdaq added 1.3 percent as Starbucks gained on strong earnings.
The Wall Street Journal reported that the Federal Reserve is closer than expected to ending its balance sheet unwind. The Fed's decision is a key consideration for investors as they gauge the extent to which the central bank will tighten its monetary policy.".....

Does this mean the USA must payback US Treasury LOANS/TBills?

Yes!
No!
I don't Know!
Other, please explain!
 
I am under the impression that to reduce the balance sheet means to downsize debts owed to the FED. Collect loans. US Treasury Bonds are loans and does that mean that the FED is calling in those loans? Is that correct? The "fiat' money and quantitative easing always confuse me and seem related. Anybody understand and can give the short honest answer?
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I am under the impression that to reduce the balance sheet means to downsize debts owed to the FED. Collect loans. US Treasury Bonds are loans and does that mean that the FED is calling in those loans? Is that correct? The "fiat' money and quantitative easing always confuse me and seem related. Anybody understand and can give the short honest answer?
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T-Bills are money the Treasury owes to actual people or outside entities that actually paid real money to purchase the bills/bonds with expectation of a return on investment.

Quantitative easing is a fancy term for monetizing the debt, where the Treasury prints more money (issues certificates equal to cash) to loan itself to pay its own debts. It doesn't have to pay itself back, since it can forgive itself its own debt. As long as there is enough confidence in the Dollar (which there is now), the US economy is growing (which it is at historical highs), and the global financial lending markets are stable (they are, currently, but the future is concerning due to many global reasons including a real estate downturn), so right now it makes sense to do this. Six months or a year from now, especially if the Trump Administration is dragged through the ditch to Impeachment and jail, it would be ill-advised if not impossible.
 
this goes back to the financial crisis. the fed bought all the toxic assets that collapsed wall street and made the wall street banks and AIG whole. the fed has been sitting on trillions of dollars in worthless mortgage backed securities, CDO's and other worthless securities ever since. now they are selling them off to get them off their balance sheet. i imagine writing them off as bad debts is closer to the truth.

they won't be calling in treasury bonds. probably just selling more to help them over the bailout cost.
 
T-Bills are money the Treasury owes to actual people or outside entities that actually paid real money to purchase the bills/bonds with expectation of a return on investment.

Quantitative easing is a fancy term for monetizing the debt, where the Treasury prints more money (issues certificates equal to cash) to loan itself to pay its own debts. It doesn't have to pay itself back, since it can forgive itself its own debt. As long as there is enough confidence in the Dollar (which there is now), the US economy is growing (which it is at historical highs), and the global financial lending markets are stable (they are, currently, but the future is concerning due to many global reasons including a real estate downturn), so right now it makes sense to do this. Six months or a year from now, especially if the Trump Administration is dragged through the ditch to Impeachment and jail, it would be ill-advised if not impossible.

I'm saying the Federal Reserve is the "buyer" of many of these TBills. Those loans from the Fed must be paid back.
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this goes back to the financial crisis. the fed bought all the toxic assets that collapsed wall street and made the wall street banks and AIG whole. the fed has been sitting on trillions of dollars in worthless mortgage backed securities, CDO's and other worthless securities ever since. now they are selling them off to get them off their balance sheet. i imagine writing them off as bad debts is closer to the truth.

they won't be calling in treasury bonds. probably just selling more to help them over the bailout cost.

I thought they already foisted those toxic assets into the incompetent hands of Fannie Mae and Freddie Mac. Translated-you, me and Grandma and the taxpayers will get soaked.
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My Internet link will not download that. Thank you. I'm thinking that the FED was the "buyer of last resort" for TBills to create Quantitive Easing. Perhaps an excerpt from that article would be enlightening. I appreciate the effort.
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See attachment.
 

Attachments

  • Fed Balance Sheet.jpg
    Fed Balance Sheet.jpg
    101.7 KB · Views: 56
Thank you. My Internet link won't download that. Perhaps a simpler question is "How much does the USTreasury(taxpayers) owe to the FED? I believe the FED was the "buyer of last resort" for the loans (Tbills) that supported Quantitative Easing. Any figures available?\

How much does the US Treasury(taxpayers) owe to the FED?

Mind, I'm not trying to be a total smartass, but that question is existential in nature, so much so that Google will answer it, or at least point one to the right place to get the answer.
 
Last edited:
See attachment.

Thank you. The way I read that is what I thought. The FED loaned the US Treasury by buying TBills to support QE. That would be billions of dollars. The FED carries the TBills in their asset column jsut as if they have a deposit of money and the "juiced reserves". TBills, justify more loans. Now it is payback time, or obfuscatively stated as "unwinding" by all pertinent players. The recent $40 billion one month unwinding spooked the markets, so if QE debt by TBills is $2+ trillion, perhaps 4 trillion, then NASA "we have a problem." Unwinding is "payback" as I previously stated. Taxpayers must pay back the debts(TBills). I perceive this as catastrophic and may cause a lack of "confidence" that supports the US "fiat" Currency. The FED is a "private" Central Bank, technically not part of the US Gov't. If I am wrong, please enlighten me and again many thanks for the attachment.
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Thank you. The way I read that is what I thought. The FED loaned the US Treasury by buying TBills to support QE. That would be billions of dollars. The FED carries the TBills in their asset column jsut as if they have a deposit of money and the "juiced reserves". TBills, justify more loans. Now it is payback time, or obfuscatively stated as "unwinding" by all pertinent players. The recent $40 billion one month unwinding spooked the markets, so if QE debt by TBills is $2+ trillion, perhaps 4 trillion, then NASA "we have a problem." Unwinding is "payback" as I previously stated. Taxpayers must pay back the debts(TBills). I perceive this as catastrophic and may cause a lack of "confidence" that supports the US "fiat" Currency. The FED is a "private" Central Bank, technically not part of the US Gov't. If I am wrong, please enlighten me and again many thanks for the attachment.
/

You're welcome.
 
Note:For the Poll question, the answer is unequivocally YES!

The attachment by Xelor points out unwinding the Balance sheet. Collecting loans is the same term, including and especially TBills. One month "unwinding," getting paid back on loans, of $40 billion spooked the markets. Discussion consider returning to $6 billion/month payback, "unwinding." So let's just use $20 billion/month payback to do some calculating. USA debt $22 trillion. Payback @ $20 billion/month. $22 trillion is 22x109E12. $20 billion is 20x10E9. Divide the 22 trillion by 20 billion equals 1.1x10E3. We can pay it back in 1,100 years at that rate for the total deficit. The $4.5 trillion owed the FED would only take about 220+ years.
The point being that YES the TBills are loans and must be paid back and by the taxpayers. I post the figures because I know our currency is supported by "confidence," and think everyone should know that.
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Just want to bump this post to point out that the Poll Question has been answered.
TBills are loans. Taxpayers pay them back. We pay the holders of the TBills.
FED holds lots of TBills from Quantitative Easing financing. China, Japan, and India hold lots of TBills.
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