Monday, July 16, 2012

Federal Reserve and Printing Money

The Federal Reserve does not actually physically print money, however what the Fed is doing (QE, QE2, Operation Twist, Operation Twist 2,...) has the same affect:  devaluation of the dollar.  Ben Bernanke doubles down on the curve flattener in another desperate attempt to "steer" the economy:

The central bank will prolong the program through the end of the year, selling $267 billion of shorter-term securities and buying the same amount of longer-term debt in a bid to reduce borrowing costs and spur the economy.

Very few outside of Washington D.C. are benefiting from Bernanke's policies.  As of today, real treasury yields are almost completely negative:

DATE                    5 YR    7 YR    10 YR 20 YR 30 YR
07/02/12           -1.04 -0.81 -0.50 0.10   0.51
07/03/12           -1.08 -0.82 -0.48 0.14   0.53
07/05/12           -1.12 -0.86 -0.51 0.10   0.50
07/06/12           -1.12 -0.87 -0.53 0.08   0.48
07/09/12           -1.14 -0.89 -0.57 0.03   0.43
07/10/12           -1.16 -0.92 -0.59 0.01   0.40
07/11/12           -1.15 -0.90 -0.57 0.03   0.41
07/12/12           -1.13 -0.90 -0.58 0.00   0.39
07/13/12           -1.15 -0.91 -0.59 -0.01 0.38
07/16/12           -1.18 -0.94 -0.61 -0.02 0.37

                   Monday Jul 16, 2012, 4:20 PM

1 comments:

Anonymous said...

Your govt is willing to lend you money that it (your govt) will debase to the extend that you are losing money in real terms out to 20 years. But if you lend them money as far out as 30 years, you earn 37 basis points? 30 years for 37 basis points. Ummm, risk and reward anyone??!

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