Need Fed info

I've been investing for years, but never really studied bonds. I've never been interested. I got excited about the Fed several years ago, but never really followed up and studied them. It always seemed strange to me that non government banks could print money and have so much power, but hey, they have done it for years and just a handful of people get exercised about it, so it must be OK.

Now it comes to me that QE2 was Bernanke buying $600 billion in treasuries with printed money with the sole purpose of keeping rates down while the economy heals. I'm thinking, private banks,.....buying bonds,......driving rates down. When you keep rates down, the PRICE of the bond goes UP!. Doing a little napkin math, I figure Bernanke has a balance sheet larger than $1- 1 1/2 trillion. If he ran the interest rates down from 3% to under 2%, he should have a $100-$150 billion in profit now on the capital gains on the bonds. QE3 will be Benanke selling the short term bonds to buy long term bonds. That will lower the rate on the 30 year and give the same capital gain on the bond price AGAIN.

Question,....what happens to the $100 billion? Does he get to keep it? Does it go to the Treasury?

If you put your tin foil hat on just right, you can get a headache real quick. I need to read that Jekyll Island book soon. Who else can print money out of thin air and generate billions of dollars profit? If he loses it, he just prints more. What a racket.

Some one that knows more than I do, please tell me they don't get to keep the money.

The Fed has a balance sheet which reflects its purchases of Treasury bonds. Paradoxically, such purchases by the Fed inject cash into the economy but also make it harder for banks to acquire and hold Treasuries for their capital accounts.

Don’t bother researching, generally in the US you can do alright if you don’t make a fuss. Just keep waving your flag, supporting the troops, and don’t forget to remove your shoes and put them in the box before getting on the plane.

Who else can print money out of thin air and generate billions of dollars profit? If he loses it, he just prints more. What a racket.

There is no money to keep because there is no printed money. It is all numbers in a computer. They are just shuffling numbers around to create environments they think are conducive to economic health. They usually get it wrong.

I understand what you are saying, but Bernanke is more or less telling you he will drive the price of 30 year bonds up with the "twister" deal. Buy gold if you want to protect the value of today's dollar. He was telling people outright that he would buy Treasuries to keep the rate down and Pimco sold everything. What a moron. Look at the billions lost while Bernanke forced the rates down after saying that's what he would do. There is an old saying, "Don't fight the Fed" that comes to mind. Bernanke has told us he will keep rates low for 2 years. That sounds like a promise from a guy with a printing press. ( Yes, I know they don't actually print the money). Moving the decimal on a computer does the same thing but saves trees and ink.

Does anybody know where the money goes on the Fed balance sheet? If someone can prove they get to keep it to finance 100 ft yachts on the Mediterranean, I'll scream. I understand now why Ron Paul wants an audit now. It's time to look behind the curtain. If I was a conspiracy type guy, I could envision a bunch of bankers in a smokey room deciding who to make war with and what companies survive and which don't. It wouldn't necessarily be America. Imagine the power they wield if they can print money to make profits with.

Much of bond selling is simply buying bonds that are maturing, that much I know.

I also know that bonds can be used to buy up foreign debt, so you’re not as beholden to foreign lenders.

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