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  • im_too_hipp im_too_hipp Jan 12, 2013 12:41 PM Flag

    "Money from the bond market"

    Can't have it, not when the Fed has made their balance sheet $3 trillion balance and now a big % of the bond market: that would obliterate the value of the holding and huge hit to the gov't. Notice Friday that bonds on 10 year reached 1.93 % in the premarket and then backed off. Bernanke's balance sheet is so huge and distorted with gov't bond debt now that it could easily rock the markets in any sudden shift in rates. Somewhere in there lies the risk of the "huge QE" game Bernanke has played with goosing the US market: they turned themselves into acting like a leveraged hedge fund. More risk than you will ever hear from the mainstream media. This week must have unearthed Bernanke somewhat as yields are threatening to spike out of the top of the range. With huge carry balances on the Fed balance sheet, that would be bad news, not good news, for all "propped up " markets. Thats why you get stock market selloffs from time to time, trying to keep others besides Bernanke's printed money in the bond market, now that his balances have become such of huge % of the bond market and GDP. Your Central Banks is not supposed to act like a hedge fund here. In 2009 at suppressed prices? ok to support it. Now at PE's like AMZN at 150 times some foward BS number and after bloating Fed balance sheet from $800 billion to almost $3 trillion? dangerous to implosion on any sudden market jolts.

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