If you’re like me, you’re wondering how the treasury has managed to keep rates down on US bonds while auctioning off more debt than ever. Chris Martenson explains how the federal reserve is pulling a fast one on the American people.
The shell game
For various reasons, the Federal Reserve cannot just up and start buying all the Treasury paper that becomes available in record amounts, week after week, month after month. Instead, it uses this three-step shell game to hide what it is doing under a layer of complexity:Shell #1: Foreign central banks sell agency debt out of the custody account.
Shell #2: The Federal Reserve buys those agency bonds with money created out of thin air.
Shell #3: Foreign central banks use that very same money to buy Treasuries at the next government auction.
Read the rest of this excellent article here.