The T-bill issue is very serious, because they are the most liquid collateral for the $70 trillion shadow banking system. And without the liquidity they provide securities and derivative markets, we can say that Round Two of the banking crisis could make Lehman look like a picnic in the park.
- Vaccine Education Summit
- Bitcoin Summit
- Ernie's Favorites
- THE R3VOLUTION CONTINUES
- "It's Not My Debt"
- Fascist Nation's Favorites
- Surviving the Greatest Depression
- The Only Solution - Direct Action Revolution
- Western Libertarian
- S.A.F.E. - Second Amendment is For Everyone
- Freedom Summit
- Declare Your Independence
- FreedomsPhoenix Speakers Bureau
- Wallet Voting
- Harhea Phoenix
- Black Market Friday
Should this continue into next week and beyond, the Fed will have to enter damage-limitation mode if the Treasury cannot issue any more bonds because of the separate problem of the debt ceiling.
Most likely, QE will have to be switched from financing the government to buying Treasuries already owned by the private sector. Any attempt to reduce the monthly addition of raw money will simply result in bond yields and then interest rates rising. And indeed, already this week we have seen yields on short-term T-bills rise in anticipation of a possible default. The market is naturally beginning to discount the possibility that the Fed may not be able to control the situation.
Additional Related items you might find interesting:Related items:
News Link • World News
News Link • Economy - International
News Link • Social Networking/Social Media
News Link • Government Debt & Financing