Naufal Sanaullah

Profiting From Bernanke's Super-Fed and Obama's Newer Deal

$2T of treasuries becomes a lot once it's exposed to fractional reserve. I think any further intervention in Treasury markets (which the Fed is clearly still doing, with printed money) will be to micro-manage the debt bubble collapse.

Price inflation will show up first and foremost in precious metals (which are all breaking out of important bear trends) and next in equities, which the Fed seems to be putting a price floor under at Dow 8000. This is the outside force you speak of, and it's here.


On Jan 07 07:07 PM Nelson_Lai1975 wrote:

> I agreed that Fed Carry Trade (as mentioned in your article) is what
> keeping demand for Treasuries artificially high.
>
> However, I don't believe that the tide will shift as we speaks. The
> Fed has not acquired enough debt as of yet. The Fed will want to
> be gold price low (via Gold Carry Trade) so there can continue selling
> 30 years Treasuries at around 2%.
>
> Think about it, if you are the Fed, will be satisfied with selling
> only 2 trillions of treasuries ? No, 2 T is like a big drop of water
> in the bucket, but that is not Fed ultimate goal.
>
> With all the anticipated spending that are needed in the short future,
> Fed will want to continue the Fed Carry Trade as long as possible.
>
>
> The tipping point will be outside force from the Fed That outside
> force will be inflation.
>
> It may take at least until after June before signs of inflation show
> up.
>
> Let wait and see.....