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American Capital Agency Corp. Message Board

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  • onion1273 onion1273 May 24, 2012 8:16 AM Flag

    Underlying resons why AGNC is up lately


    First off , let me start with I dont want to argue with you. People on this board have been very friendly and helpful to me in my options education amongst other topics.

    Sorry for the improper use of pronouns but when the FED buys bonds ( all kinds) during QE they are CREATING money to do it. They are INCREASING the money supply. This is not my opinion; Please look this up.

    Better put, they are using electronic money that did not exist before the purchase. Thats why they started with "Sterilized QE" this way they can buy long bonds by borrowing against the short term bonds ( repo) thereby not to increase the money supply.

    Pull a dollar bill out of your pocket. That is a share in USA inc. Remember it is not backed by gold anymore. Come on, you are a stock guy. ( remember, I am a bond broker 30yrs) You know what dilution does to the value of a stock.

    About your 3rd thing:
    The fed does not buy the bonds directly from "America"- that would be silly; they buy the bonds from banks and other private sector institutions. So they are flooding banks and institutions with capital that can be used to hire, invest in expansion or lend if its a bank, thereby stimulating the economy.

    And again keeping inflation going so we do not fall into the deflationary spiral.


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