Drew Horn

Helicopter Ben Turns into Ballistic Missile

The fed is issuing buying US paper because the demand for liquidity is in excess of supply. Yes, it is inflationary. Yes, by buying toxic assets US taxpayers are absorbing losses, not just in the US, but in many parts of the world. The issue that hasn't been fully recognized is that the US is subsidizing banks (and people) in many other countries. In effect, we are subsidizing Spain, UK, United Arab Emirates, Saudi Arabia, etc. etc. We have a chance of resolving our own problems, not all problems in the world. Watch out for inflation!!! TIPS look more attractive.


On Mar 18 05:31 PM Stephen Yu wrote:

> With this latest move, the FED is signaling that there are not enough
> buyers for US Treasuries. At the beginning of this crisis, it was
> hard to find buyers of "toxic" assets" like MBS' and CDOs. Now, even
> US Treasuries have trouble finding buyers and the FED has to step
> in as buyer-of-last-resort! Does it mean that Treasuries are now
> in the toxic asset category? If people do not trust US Treasuries,
> they do not trust the US. If they do not trust the US, they do not
> trust the dollar. And when the FED purchases Treasuries, it is printing
> money. This cannot be good for the dollar as it is getting debased.