Treasuries fall as five-year auction deemed a flop - No One Wants US's Debt?

yahoo.reuters.com ^ | 2/23/06 | Pedro Nicolaci da Costa

[tmp02]

This is not a good sign for stocks, is it?

..."It was a terrible auction," summed up one trader at a U.S. primary dealer. "The bid-to-cover stank, the indirect bid was bad -- I would be surprised if the market manages to rally from here."

... Worse yet, indirect bidders bought a meager $2.96 billion or 21.1 percent of the deal, compared with last year's average 38.13 percent. That left dealers holding the bag with $10.72 billion or 76.6 percent.

Signs of a tightening labor market had taken an early toll on Treasuries, with jobless claims receding to levels consistent with solid employment growth.

Claims fell by 20,000 to 278,000, when analysts had looked for a slight increase.

Given the Fed's worry that the economy is running near full capacity and could therefore generate more troublesome inflation, the data suggested the central bank will continue to tighten monetary policy.

[Rodney King]

In other words, it has "stored its value" and maintained it throughout time better than any fiat or currency ever printed.

Fiat money is also a store of value. Now, by its very nature you might not think it is a very good one for the long term, and I would tend to agree with you, but that does not mean that it is not a store of value.

[CodeToad]

"You made the claim, now prove it."

As soon as you admit that you don't have a clue about the answer. You called bullshit, so either you know that the statement that the fed loans out 7:1 against printed currency is BS or you don't. In other words, you had better know something is BS when calling BS.

[LurkingSince'98]

yes sir I agree with you, that fiat money has a store of value. But when you look it up in on economics text you will never find the works "store of value" alongside fiat money.

Fiat money stores value for how long? and the corollary questions is do you want to be the last man holding the store Confederate dollars the day after Lee surrendered.

Regards,
Lurking'

[CodeToad]

Fiat money is indeed a store of value and of faith in that value. Of course, the same goes for gold and silver, but the primary difference is that the feds cannot simply create more gold and silver on a whim as they do fiat currency, so there is more faith that gold and silver will retain their value.

I see a second issue that borrowing against currency could happen against metals, too, but it is less likely if currency is based only on metals in possession of the feds.

[Toddsterpatriot]

You see I had never heard that the Fed loaned money based of printed currency. If you had a source I'd have learned something new today. The fact that you said the Fed loaned money at the Prime Rate led me to believe that you were wrong about the 7:1 ratio you claimed.

In other words, you had better know something is BS when calling BS.

So says the BSer.

[Potowmack]

We've mortgaged the country to foreigners. Those who hold our debt, hold our future. An economy dominated by foreign investment is a third-world economy.

They give us money, and we give them little pieces of paper that say we will pay them back, maybe, if we feel like it.

You know the old saying- If you owe the bank a million dollars and you can't pay, you have a problem. If you owe the bank $100 million, the bank has a problem.

Oh, and China declares war on us sometime in the future? Fine. We declare all the debt held by the Chinese void, declare that no Chinese goods can henceforth be sold in the US and seize all assets in the US owned by Chinese companies and watch their economy collapse.

[Travis McGee]

We will do each other's laundry. Everything will be fine. Luxury is our birthright.

[LurkingSince'98]

Code' was right you just want others to do your research for you, Todd.

just Google "Federal Reserve loans money" and you get the following.

When Your Home Is on the Line: home
The Federal Reserve Board eagle logo links to home page ... Lines of credit vs. traditional second mortgage loans · Disclosures from lenders ...
www.federalreserve.gov/pubs/HomeLine/ - 16k - Cached - Similar pages

FRB: Putting Your Home on the Loan Line Is Risky Business
The Federal Reserve Board eagle logo links to home page ... A loan is for a fixed amount of money for a specific period of time; a line of credit is an ...
www.federalreserve.gov/pubs/riskyhomeloans/ - 27k - Cached - Similar pages
[ More results from www.federalreserve.gov ]

Personal Financial Education
How Does the Creation of Money Affect Interest Rates? (Flash) ... Publications. Federal Reserve publications relating to loans and credit. ...
www.federalreserveeducation.org/PFED/ - 44k - Cached - Similar pages

Instruments of the Money Market: Chapter 1 - The Money Market ...
First, they borrow in the money market to fund their loan portfolios and to acquire funds to satisfy noninterest-bearing reserve requirements at Federal ...
www.richmondfed.org/publications/economic_research/ instruments_of_the_money_market/ch01.cfm - 46k - Cached - Similar pages

Instruments of the Money Market: Chapter 2 - Federal Funds ...
"A Model of Money Stock Determination with Loan Demand and a Banking System Balance Sheet Constraint," Federal Reserve Bank of Richmond Economic Review, ...
www.richmondfed.org/publications/economic_research/ instruments_of_the_money_market/ch02.cfm - 68k - Cached - Similar pages

Hussman Funds - Why the Federal Reserve is Irrelevant
The main job of the Federal Reserve is to determine the mix of government ... The operative notion of easy money is that the Fed creates new bank reserves, ...
hussmanfunds.com/html/fedirrel.htm - 21k - Cached - Similar pages

THE FEDERAL RESERVE FRAUD
THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY. Most people believe it is as ... The FED creates money from nothing, and loans it back to us through banks, ...
www.geocities.com/northstarzone/FED.html - 14k - Cached - Similar pages

Oh I almost forgot when you see the links Todd, you need to highlight them with your mouse and press.

Oh, I almost forgot, you also have to READ what pops up.

That's how all the rest of us do it Todd.

Lurking'

[Travis McGee]

I was erring on the conservative side.

[Rodney King]

[Toddsterpatriot]

Gee thanks Lurk.

I just searched the entire site and didn't see a 7:1 ratio. What do I win?

[CodeToad]

Laundry? I thought I got married to cover that?
(ducking in case the wife reads FR)

[LurkingSince'98]

Travis,

warning Toddsapatriot and Petronski are back at the disinformation game.

I swear they must work for the government.

Regards,

Lurking'

[Travis McGee]

Oh, and China declares war on us sometime in the future? Fine. We declare all the debt held by the Chinese void, declare that no Chinese goods can henceforth be sold in the US and seize all assets in the US owned by Chinese companies and watch their economy collapse.

And what, pray tell, happens to our economy after that?

[Petronski]

warning Toddsapatriot and Petronski are back at the disinformation game.

First, forum rules require you to ping a poster you discuss by name. Failing to do so is cowardly.

Secondly, I don't see how "DOOM!" is disinformation, since you seem to believe that is true.

[LurkingSince'98]

Todd,

you really have to spend more thatn the three or four minutes between my post and yours to actually read the stuff that pops up.

but that may confuse you.

Lurking'

[LurkingSince'98]

ping you my ass.

I was responding to your post #60.

and you proved my point, you still can't post a cogent argument that is longer than one line.

Lurking'

[Petronski]

More lies.

[Potowmack]

And what, pray tell, happens to our economy after that?

Think of it this way- you have some money you want to spend, so you go to Wal-Mart, but you find that Wal-Mart is out of business. But Target is still selling Dora the Explorer backpacks, so you spend your money there. There is some inconvenience, but life goes on.

China has an export-driven economy- they need to sell their goods to foreigners. If they don't, their economy gets a really bad case of shrinkage. We, on the other hand, don't need to buy anything from China. We can build things here (granted, the cost of some consumer items will go up) or we can buy our Dora the Explorer backpacks from factories in India, or Latin America, or wherever.

So, if China wants to play missile tag over Taiwan, we tell them to take their debt and their exports and stick it up their Manchuria.

[LurkingSince'98]

Petronski's one line response.