Here is the infamous Mogambo Guru's
comments from Kitco.com on the treasury
injecting cash into the banking system...
but before you read that do a google on
the Iraq study group members. Besides the
joint Republican Democratic cabal of
Harvard and Yale, you will note
Democrat extradornaire Jordan is now
CEO of investing banking firm Lazard
Freres, a stockholder of The Federal
Reserve System and member of the all
powerful Federal Reserve Bank of New
York. I guess the Dems and R's split up
control of the Fed. Jordon is a lawyer by
trade and training. and now for the
Mogambo.....
Ken Y. sent the Treasury link that he
thinks he may explain where some of
the enormous money is coming from to
fund the bloated, dysfunctional
system we call Home Sweet Economic
Home. It is a lulu, too!
The link describes the Term Investment
Option (which has the acronym TIO).
"In April 2002, the Treasury, through the
Federal Reserve System, piloted
a new investment option to test the
viability of placing excess cash
balances with Treasury Tax and Loan
(TT&L) depositaries for a defined term
and rate determined through a competitive
auction process. [The] Treasury
announced in October 2003 that the TIO
program would become a permanent
cash management alternative for investing
Treasury's excess cash
balances."
Why are they doing this? They say "The
program is designed to increase the
rate of return earned on Treasury
investments, add investment capacity to
the TT&L Program, and to provide TT&L
participants certainty in the terms
of these investments." Ahh! So the
Treasury Department is going to make
more money by investing temporary
excess estimated-tax remittances in an
expansion of "investment capacity" of the
banking system, and provide
moral hazard underwriting to the whole
thing, too? Wow! Things are worse
than I thought, as this is too bizarre
for
words.
And after hearing that, you are not
buying
gold now? And I mean right
freaking now? Then you had better start
writing down all the reasons that
you are not, because one day your little
children and grandchildren are
going to be groveling around in the
worthless dollars covering the dirt
floor of your drafty shack, and they will
want to know why you did not buy
gold when you could have and should
have. In response, you can use that
list of reasons to entertain them and
keep
them distracted from their
miserable situation, and you'll also have
something to brush the flies
away from their filthy faces while you do
it.
--- In lpsf-
discuss@yahoogroups.com,
Steve Dekorte
<steve@...> wrote:
Begin forwarded
message:
>
> Subject: from the
NY POST
>
> John Crudele, NY
POST
>
> "FOR the past few
years the U.S. Treasury
has been quietly
> involved in what the
financial markets call
"repo" agreements and
this
> near-secret
operation could explain
why the nation's money
supply
> seems to be
confoundingly large.
>
> It might also
explain why Washington
decided earlier this year
to
> stop publishing M3
money supply figures,
the broadest and most
popular
> measure of money
in circulation.
Repurchase agreements -
or repos -
> have long been used
by the Federal Reserve
to get money quickly into
> the hands of
financial institutions,
which in turn can put the
money
> into circulation in
the form of loans.
>
> Last Thursday, for
example, the Fed
executed $2.5 billion in
> overnight repos and
$8 billion in 14-day
repurchase agreements.
These
> were reported on the
financial wires. The
Treasury completed a
$5.5
> billion repo
operation on the same
day under what it calls
the Term
> Investment Option.
There was no mention of
the Treasury operation
on
> the wires. In the
Fed's repo deals, the
banks temporarily turn
over
> securities to the
central bank in exchange
for cash. The Treasury
TIO
> program works in a
similar way, except the
financial institutions
> pledge securities as
collateral in exchange
for the cash."
>
> Experts worry
whenever there is too
much money - liquidity -
in
> the financial system
because it can lead to
things like price spirals
> in the housing
market and bubbles in
stocks. But even more
worrisome
> for the financial
markets than too much
liquidity would be an
> inability to track the
amount of money being
pumped into the financial
> system.
>
> Unless I find out
differently, it looks as if
the Treasury has
> created a way to
duplicate the Fed's
power. And that is a
disturbing
> possibility unless it
is somehow monitored.
>
> "$20B was added to
the system last Thursday
and Friday. Where is it
> going with the
economy ebbing? Of
course it goes to the 'new
> economy', which is
financial speculation and
asset grabbling . . . The
> astute know that the
repo world runs The
Street. It is the lifeblood
> of The Street, and
'The Money Desk' of
each big firm is the heart
of
> the organization.
Other traders garner the
headlines and TV spots
but
> the 'money desk'
reigns supreme on The
Street. Just ask the
> ex-principals of
LTCM."