The Federal Reserve Gave Libya $26 billion

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NoDrama

Well-Known Member
The last time china bought a 10 year note was in 2007, they buy all 2 year and under bills, China is the largest foreign purchaser of US debt in the entire whole universe. You think China wants to be left holding the bag? Hardly. The next biggest foreign purchaser of US debt is about to lose 33% of its land to radiation and will never be populated in anyone's lifetime ever again. I doubt Japan keeps buying our debt, most likely they will sell much of it to provide funds to rebuild.

Who owns the most US Debt in the world?

there are $180 trillion in derivatives in the USA alone, they all work off of interest rates set by the Fed. The Fed MUST buy debt in order to keep interest rates down, there is no other way.
 
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NoDrama

Well-Known Member
mame said:
U.S. Treasury transactions are overwhelmingly long term in the form of the Treasury note - which starts at two years and ends at the extremely popular 10 year note(which was the specific length I was refering to). I said Bond, which is actually the 30 year note - but those are all but antiquated(in favor of the 10 year note), the Treasury didn't start issuing these again until 2006 and they remain fairly uncommon just as the very short term bills. My point is that the Treasury deals almost entirely in long term loans... Almost all foreign entities engaged in investing in U.S. Treasuries do so with long term notes.
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Well the reality is that the Treasury auctioned off $132 billion in Short term (under a year) bills, $13 billion in 30 year bonds, and $21 Billion in 10 year bonds. The reality is exactly the opposite of what you are assuming. The largest auction of all was for 4 week bills. 4 weeks, not 10 years.

http://www.treasurydirect.gov/RT/RTGateway?page=institHome
 
mame

mame

Well-Known Member
NoDrama said:
Well the reality is that the Treasury auctioned off $132 billion in Short term (under a year) bills, $13 billion in 30 year bonds, and $21 Billion in 10 year bonds. The reality is exactly the opposite of what you are assuming. The largest auction of all was for 4 week bills. 4 weeks, not 10 years.

http://www.treasurydirect.gov/RT/RTGateway?page=institHome
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your cherry picking data to strengthen your point. The same link you gave me shows a total of $195B in long term(more than a year) auctioned off next to $132B in short term (less than a year). Although I was clearly wrong in the assertion that the 10yr bond is super popular, as your link illustrates current trends pretty well (although it's a snapshot of only a couple months) - The reality is hardly the polar opposite of what I was assuming(considering long term bonds overall are popular).

So back to the point in my first post that was in response to the OP, now that we've cleared this whole bond issue up. It is likely that the Treasury bonds had a longer duration on them than the Fed's emergency loans; In such a case, the Bank didn't rip the U.S. off... If trends depicted in that snapshot are constant over longer periods of time than it could just as easily have been short term bills as well, which could very well mean we got ripped off... but there still isn't any information as far as I can tell that'd help us to find out exactly what duration bills the bank was dealing in.

+rep for that link btw, I save all this shit for later... Never know when/if I'll need it for a paper or something.
 
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NoDrama

Well-Known Member
Long term debt is more than 10 years, Mid term debt is 1-10 years, short term debt is 1 year or less. Bills, notes, bonds; short, medium, long. http://en.wikipedia.org/wiki/United_States_Treasury_security

Long term debt in total is $34 Billion auctioned
Medium Term debt total is $131 Billion auctioned
Short term Debt total is $132 Billion auctioned

we sell mostly short/mid term debt because that is all foreigners will buy, the only entity that is really buying any long term debt is the Federal Reserve, which is BY FAR the largest holder of US Debt than anyone or any country.

China is a Net seller, they sell long and mid term debt and purchase short term.

PS if you were to add up all the Mid + long term debt auctioned it comes to $165 Billion, you were off a little less than the entire amount of the US Budget cut which doesn't even have a budget yet, LOL.

EDIT: just one more thing, We are selling our debt at a rate of about $300 Billion every 3 months, PLUS INTEREST! About $4 billion each business day at an average of 2.5% interest ( http://www.treasurydirect.gov/govt/rates/pd/avg/2011/2011_03.htm ) which if you just did simple math comes out to about $100 Million of tax payer money going into interest from just ONE DAY!!!! STAGGERING!!!!!
 
mame

mame

Well-Known Member
Look, you're completely ignoring the main point of my first post.

My assertion was that the Libyan bank didn't make any money by taking a fed loan and buying treasury bills with it. My premise may have been incorrect but my assertion is still correct. For example, the 3 month financial Fed interest rate was set at .40%. In the same year, 3 month long T-bills yeilded less interest - looks like ~ 0.25-0.30%. Let's do some math:

$1,000,000 is lent from the Fed to a bank for 3 months... In that time, the fed makes 0.4% interest - or $4,000.
$1,000,000 is used to buy 3 month long T-bills... In that time, the bank makes $2,500-$3,000 (the graph is pretty crowded and there is no accompanying table)... So this is a net loss, not a gain.

The bank lost money on the transaction... what is all the fuss about?
 
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NoDrama

Well-Known Member
I see your point but you are actually missing a key ingredient. When the Libyan Bank borrows $26 Billion and Buys Tresuries with it, those treasuries then act as a reserve, the Central bank of Libya is then able to make loans totaling $260 Billion and issues those loans at a interest rate of about 6%. Simple math would be $15.6 billion in interest accrued(Profit) the first year, They just might be able to pay that loan off in record time.

The Central bank of Libya is 100% owned by the State of Libya. Who runs Libya with an iron fist?

Why are we giving money to despotic rulers and then spending tens of millions to attack them? Seems counterproductive to me. Does the FDIC insure that money? Who insures the FDIC? Think Qadaffi is going to pay us back?


Thanks Mame, always an interesting discussion with you.
 
mame

mame

Well-Known Member
NoDrama said:
I see your point but you are actually missing a key ingredient. When the Libyan Bank borrows $26 Billion and Buys Tresuries with it, those treasuries then act as a reserve, the Central bank of Libya is then able to make loans totaling $260 Billion and issues those loans at a interest rate of about 6%. Simple math would be $15.6 billion in interest accrued(Profit) the first year, They just might be able to pay that loan off in record time.

The Central bank of Libya is 100% owned by the State of Libya. Who runs Libya with an iron fist?

Why are we giving money to despotic rulers and then spending tens of millions to attack them? Seems counterproductive to me. Does the FDIC insure that money? Who insures the FDIC? Think Qadaffi is going to pay us back?
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Good point.

Thanks Mame, always an interesting discussion with you.
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You too yo
 
The Ruiner

The Ruiner

Well-Known Member
Redirecting here....

Can anyone lend some credence to the notion that the loan was something of a "prepper" for a bigger picture, say the ouster of Qadhafi and his replacement by western-friendly forces?

You scratch my back I scratch yours....

Since we are all pretty much in agreement that this was a pre-planned operation (which probably took YEARS of planning, just how many will not be known a long time), why couldn't this just be a part of it? Which, I have argued (to what avail with the hearts and minds here I wonder), is for the benefit of us all here in the States?
 
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wiseguy316

Well-Known Member
Just makes our dollar worth less, where did this money come from? We don't have it. Wait print some more it's all good.
 
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budsmoker87

New Member
paying off...for whom? our lovely secretary of state hillary clinton, so she can continue to cruise the world in her jumbo plane?


how exactly was this a good investment for the average person living in the united states?
 
DrFever

DrFever

New Member
i hate to say it but the dollar isnt worth wiping my ass with

. But in the end, the lawful dollar of the United States was 371.25 in silver, or 24.75 grains of gold.
The problem with this system from the point of view of the government or the banks is that it limits the amount of money they can work with. When the bank runs out of silver or gold (or the equivalent certificates) it can no longer lend any more money with which to earn interest. When the government runs out of gold or silver (or the equivalent certificates) it can no longer spend money (just like the rest of us). The immediate effect of ending the gold standard was that with the paper dollar no longer legally dependent on 371.25 in silver or 24.75 grains of gold, more paper dollars (now called "Federal Reserve Notes") could be printed, their worth no longer under the control of the citizens but under the control of the issuing central bank, based on the total number of dollars printed (or created as credit lines). The more dollars which are created out of thin air, the less each one is worth.
A federal Reserve Note. The swindle of the system is simple. The Federal Reserve Bank hires the US Treasury to print up some money. The Federal Reserve only actually pays the treasury for the cost of the printing, they do NOT pay $1 for each 1$ printed. But the Federal Reserve turns around and loans out that money (or credit line) to banks at full face value, those banks which have exhausted their deposits then loan that Federal Reserve fiat money to you, and you must repay it in the full dollar value (plus interest) in work product, even though the Federal Reserve printed that money for pennies, or created it out of thin air in a computer. As the Federal Reserve overprints more money, the money supply inflates, and too much money starts chasing too few goods and services, which means prices go up. But contrary to the charade put on by the Federal Reserve, inflation doesn't just come and go due to some arcane sorcery. The Federal Reserve can halt inflation any time it wants to by simply shutting down those printing presses. It therefore follows that both inflation and recession are fully under the control of the Federal Reserve. Over time, that excess of printing has destroyed the value of that dollar you think you have. If you want to know by just how much, go out and try to purchase 371.25 grains of silver right now. Usually, the deterioration is gradual. Sometimes, it has to be obvious, such as the 1985 devaluation (done to halt the trade imbalance) which triggered the Japanese real-estate grab in this country.
 
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NoDrama

Well-Known Member
To tell if the Dollar is losing value all one has to do is be aware of the price of Gold. If gold is going up, the dollar is going down.
 
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