Money Manufacturing by the US Central Bank - How it Works
The Federal Reserve has created ex nihilio 2.1 trillion dollars over the last two years. They have borrowed this money from no real economic source. Unlike the empty social security fund which was sustained by citizen ongoing real time taxes, this debit account is entirely fabricated. It was borrowed from no real source. This is a dramatic departure from US precedent fiscal responsibility. Another 1.25 trillion for MBS is planned in the near future - backed again by nothing. 300 billion dollars of US treasuries have been 'purchased' by the US central bank from March to October 2009, not coincidentally corresponding to the valuation rise of 4.5 trillion of Wilshire equity worth. Who will repurchase the 300 billion dollars of Fed owned US treasuries? Those exiting the equity and commodity markets at the saturation areas which are occurring presently.
The Nikkei, FTSE, and averaged Wilshire are at a 16-19/38 week :: x/2.5x first and second growth fractals with expected second fractal nonlinear decay to occur at anytime. US Treasuries are following a corresponding 9/22/18/8 of 13-14 week x/2.5x/2x/1.5-1.6x fractal with zero or .01 interest rates anticipated. On Thursday 19 November 2009 US Treasuries brought .05 percent interest. A thousand dollar investment would earn 50 cents in one year.
The Central Bank's monetization scheme is precisely this: create money out of nothing to buy 300 billion dollars worth of treasuries, or give ex nihilo 500 billion dollars to foreign governments to buy US debt instruments, decrease 'real private' demand for short term debt instruments by offering near zero interest returns, facilitate money flow into the speculative equity and commodity markets, and collude with collaborative Wall Street money trust partners in turn to rotate and 'invest' their winnings from the equity and commodity markets' trading saturation areas back to repurchase the original Federal Reserve's ex nihilo markers for debt markets and security markets. This cycle can be repeated along the rotational speculative equity and commodity fractal saturation curves.
As the value of property assets are generally related to real economic activity, wages, and jobs, real estate valuation will continue to devalue. The Wall Street Financial Trusts through this collaborative Federal Reserve - Wall Street monetization scheme will increasingly own a larger proportion of America's wealth, ultimately having the amassed electronic credit wherewithal to purchase whatever property assets they desire. The Federal Reserve's transactions and money system is a Frankenstein caricature of a real and responsible monetary policy.
There is connectivity between the currency markets and commodity markets. After the next few days the US dollar is expected to rise for 8 -11 weeks.