Fed Just Monetized AGENCY Paper

Fed Just Monetized AGENCY Paper

www.ny.frb.org

Operation 1 - RESULTS
Operation Date: 09/23/2008

Operation Type: Outright Agency Discount Note Purchase

Release Time: 1:57 PM

Close Time: 2:30 PM

Settlement Date: 09/24/2008


Total Par Amt Accepted (mlns) : $2,000

Total Par Amt Submitted (mlns) : $4,063

(visit the link for the full news article)

Fait accompli anyone?

www.ny.frb.org
(visit the link for the full news article)

[edit on 24-9-2008 by MatrixBaller04]

umm...yeah not to be the village idiot but...what does that mean? Fed paper is now worth a dollar? I'm totally lost. Could you elaborate and possibly put your opinion or something other than french? Just a kind request, not a demand and certainly not expecting, just hoped for

One of the ways for a central bank to stave off credit contraction and deflation is to directly monetize paper assets - in simplified terms this means using printing press money to buy worthless paper assets instead of letting those assets meet the price discovery process in an open market.

Basically, they just added $2billion of debt to the tax payers, with no one saying a word.


[edit on 24-9-2008 by MatrixBaller04]

See to the treasury, they don't mind the "monetary debt" at all, as what they want is the CONTROL they now would have as the creditor.

Reuters

The U.S. Federal Reserve on Tuesday bought $2 billion in short-term debt from mortgage agencies as it tried to ease stresses caused by struggling money market funds.

...

"They are taking agency discount notes out of the market so they can help keep money market funds from breaking the buck," said Michael Franzese, head of government trading at Standard Chartered in New York. "The Fed operation is like a direct infusion," he said.

I'm trying to wrap my head around what exactly this means, but I don't think I like it. Did they just pull $2B out of their butts??

Yes. They bought worthless paper assets with our worthless dollar, thus adding $2billion to our debt.

ARRR whats another $2billion when you are in debt over $9trillion Sorry i know i should not be making fun but we are screwed any way

Every thing is working to plan

perhaps what they are doing is attempting to set a 'price' baseline for all the other $Trillions that is in question.

by setting a base price or by establishing a standard, the Treasury plan to buy the non-performing/unmarketable mortgage assets for somewhere between the 'firesale' price and the 'held to maturity' price has been
(at the 11th hour) set for the future transactions...which the $700Billion is for.

i'm very sure that the Fed/Reserve did some late night number crunching,
and as far as can be determined, the requested $700Billion should mathematically cover the costs for the ? several million? mortgage-related-assets that are on the books but unsaleable---causing the credit market blockage the rescue plan is 'going to fix'.

its a real round about way, but these people have intricate mind scapes.
& buying short term paper from the mortgage institutions works on more than one level, considering the situation.


at least that's what i think is being played out here...

[edit on 24-9-2008 by St Udio]