Reinko

The Treasury Bond Bubble

Ah the Austrian school, so charming. Just so charming... But I think when you adopt their ideas you can get allocation problems for money.
On the other hand, what the Federal Reserve is doing the last years is also utterly crazy; M3 money supply growth runs at 17% or so. Therefore one thing is clear: Because this is so much above GDP growth and inflation, there must be a lot of bubble money...

And when you see all those Wall Street traders running from stocks to bonds and vice versa (depending on the economical news) it looks indeed there is a lot of bubble money going round at Wall Street.

TAF: Temporary Applause for the Fed

The last time I looked at the European libor rates only the most short termed got down while all others were just as high as before the 500 billion injection.

Furthermore it has to be taken into account that the US FED only placed a few times 20 billion in the system where the ECB got atomic with 500 billion.

At the time I already suspected that the large ECB move was in fact for the USA and the European libor rates later confirmed that because right now the ECB is collecting it back.