Monetization

Although it probably won’t happen within the next couple of months, it’s a good bet that the ECB will eventually be prodded into monetising a large amount of European government and commercial bank debt.

In bull markets, corrections and consolidations are needed to periodically cleanse the market of extreme optimism and an overbought condition….

Charts from contraryinvestor.com show that, as of right now, there is going to be almost $1.8 trillion in US Treasury debt maturing this year, and all of it will need to be “rolled over” by issuing new debt.

Perhaps it is also instructive that they also note that “Just shy of 50% of UST debt ‘rolls’ within three years.

The feds called out all available hands. Over in Japan, they injected another 21 trillion yen into their economy. You understand why, of course. You don’t? Well, let us explain it.

With total cumulative purchases at just over €60 billion since the beginning of its sovereign debt monetization program in May, the ECB purchased just €302 million in (Greek 6 Month) debt last week. As always, tomorrow will see the pyramid scheme of taking the purchases and reliquifying the market in yet another weekly term deposit … Continue reading

Zero Hedge recently posted several insightful pieces from Hinde Capital, among which the fund’s presentation on the ECB’s role as the European Commission’s whore, and more recently, its presentation on Gold as the “currency of first resort” (recreated below). Last week, fund manager Ben Davies, who previously ran trading for RBS Greenwich Capital in London … Continue reading

Another month and another release of UK inflation data at far above the Bank of England’s target of 2% and above the upper limit of the Banks 1% to 3% range by reporting CPI of +3.4% for May. Thus the BoE Governor, Mervyn King will write another letter to repeat that the high rate of … Continue reading

A few weeks ago we wrote about the true cause of hyperinflation, which is a major break or failure in the bond market. It has nothing to do with demand, bank lending or the velocity of money as many have suggested. It is a confidence issue….

The US cannot finance its ever growing obligations from existing savings or foreign borrowing. The solution is number three: monetization.