I have read it somewhere, in the case of The Fed it’s remitted back to Treasury I think and then the bonds are destroyed.
I’ll try and find the link.
2020 Collapse
- Thread starter TreasureHunter
- Start date
I have read it somewhere, in the case of The Fed it’s remitted back to Treasury I think and then the bonds are destroyed.
I’ll try and find the link.
Ask him to get himself and his family out of Russia before the borders are closed. Once they become paranoid, everyone becomes an enemy, even their own citizens and family.
they hold Russian passports, so it is safer inside Russia
when they are outside, there are just too many kidnappers
Easy, just lose the passport.
Feds would sell the bought Government Bonds, Bills and Notes back to treasury and tresury would need pay "todays" value for the Bonds, Bills and Notes by taking cash out of circulation back to Fed, who would destory the face value "Burn it" but would they do that for the interest earned?
Also remember that Feds bought hundreds of bilions of Corporate Bonds with much higher interest and coupons. And the same could apply for the face value destroyed or "burned" but the same questions remain for Interest earned and coupons
I could be wrong in the mechanics
What's this about? Isn't the Fed and Treasury both the government?
The Fed is not federal, its private. A seperate entity not bound by our laws.
the embassy is also closing in many countries real soon...so if lost they would be paperless, but can always swim from Crimea after a Turkish boat trip.
Fed profit will be returned to Treasury...that is how it flows
its a club, members are non human, they are institutions like banks... INTERESTS cartel
Russia planning to reinstall Yanukovich – Ukrainian media
Ukrainian sources say Putin plans to appoint twice-ousted president a third time
As you know The Fed (and other CBs) buy bonds on the secondary market from institutions like banks. These are short term notes that mature in a matter of months and maybe bonds, maybe 2 year, not sure. Not long the long term ones.
The Fed for example is bound by law to remit any profits back to Treasury, so interest payments paid on any bonds are sent back to where they originated. Once Treasury bonds mature they are destroyed. The Fed uses the following device, it's similar to the device found in many home computers:
Unlike us though when The Fed presses it the asset (Treasury note/bond) and its corresponding liability (USD obligation) both just disappear into the ether making absolutely no difference at all to world. The Fed no longer has an asset and it no longer has a liability. It just has fewer assets and an equal amount of fewer liabilities. If we destroyed our liability (eg mortgage) we would still be left with an asset, unless of course we also also destroy our marriage which would mean we may also have less assets, that's not the way central bank balance sheets work.
I would imagine corporate bonds may operate in the same way. I'm not sure @leo25 may be able to chip in. But the majority of funding is done in the Repo and Reverse-repo market where central banks borrow securities in the short term from institutions and then hand them back after an agreed time together with any interest payable (Repo), or vice-versa banks borrow securities in the short term from CBs and agree to hand them back after an agreed period of time with interest (Reverse repo). I may have the repo/reverse-repo backwards there. Someone?
Yep, exactly. Governments do not need to issue bonds to create money. CBs can just as easily do so on their behalf using one of these devices:
But they don't, and the reason they don't is because the government tasks the Central Bank with the responsibility to maintain financial stability. Under our current system in order to be financially stable an economy and the institutions that are engaged in the banking system are required to abide by various capital, leverage and liquidity ratios. Government bonds are a completely risk free asset that allow institutions to meet capital ratio requirements. Institutions need bonds in order to remain compliant.
This is correct. Once the martial law is enforced, the trap is shut. The best case is only one member of the family is allowed out at any time, the rest remain as hostages to state to ensure return of the one traveling.
During the 1920's and 30's numerous Soviet sympathisers from Europe moved there, to pursue the communist utopian life. Stalin sent them to Siberia in the purges and at least half of them were killed.
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In other news https://www.bloomberg.com/news/arti...st-as-u-s-european-farmers-start-planting-cro
Fertilizer is getting harder to find just as farmers are getting ready for planting. And now Russia’s invasion of Ukraine is injecting even more uncertainty into then already tight crop nutrient market.
Russia is a low-cost, high-volume global producer for all major fertilizers, and it’s the world’s second-largest producer of potash after Canada. While sanctions haven’t yet hit Russian fertilizer companies, more restrictions could be coming. Just Wednesday, the U.S. said it will target Russia’s oil sector by restricting exports of technology related to the energy sector.
Interestingly the phosphate price increase is impacting other ingredients that were seemingly unrelated. Maltodextrin for example, was the cheapest bulker we had. Now it's premium and needs to be replaced with a starch (the shift to the other ingredients will eventually push those prices up too).
As you know The Fed (and other CBs) buy bonds on the secondary market from institutions like banks. These are short term notes that mature in a matter of months and maybe bonds, maybe 2 year, not sure. Not long the long term ones.
The Fed for example is bound by law to remit any profits back to Treasury, so interest payments paid on any bonds are sent back to where they originated. Once Treasury bonds mature they are destroyed. The Fed uses the following device, it's similar to the device found in many home computers:
Unlike us though when The Fed presses it the asset (Treasury note/bond) and its corresponding liability (USD obligation) both just disappear into the ether making absolutely no difference at all to world. The Fed no longer has an asset and it no longer has a liability. It just has fewer assets and an equal amount of fewer liabilities. If we destroyed our liability (eg mortgage) we would still be left with an asset, unless of course we also also destroy our marriage which would mean we may also have less assets, that's not the way central bank balance sheets work.
I would imagine corporate bonds may operate in the same way. I'm not sure @leo25 may be able to chip in. But the majority of funding is done in the Repo and Reverse-repo market where central banks borrow securities in the short term from institutions and then hand them back after an agreed time together with any interest payable (Repo), or vice-versa banks borrow securities in the short term from CBs and agree to hand them back after an agreed period of time with interest (Reverse repo). I may have the repo/reverse-repo backwards there. Someone?
Yep, exactly. Governments do not need to issue bonds to create money. CBs can just as easily do so on their behalf using one of these devices:
But they don't, and the reason they don't is because the government tasks the Central Bank with the responsibility to maintain financial stability. Under our current system in order to be financially stable an economy and the institutions that are engaged in the banking system are required to abide by various capital, leverage and liquidity ratios. Government bonds are a completely risk free asset that allow institutions to meet capital ratio requirements. Institutions need bonds in order to remain compliant.
Thanks, this QT is something I need to get a basic handle on, so I can decide if it is non issue for my simple ecomonic view or something to be worried about for in the future for my inestments.
My very very simplistic view without factoring in Interest Rates is that QE is inflationary which must mean QT should be Deflationary in nature.
@Ipv6Ready, here is a link, not much about interest earned on Treasuries but it goes into a bit of detail on how quantitative easing works. During Quantitave Tightening (QT) when it comes to CBs, once the Treasury security has matured and the proceeds from it are received, they are then "extinguished". How polite is that? LMAO
During a period of QE the proceeds are rolled back in to buying more Treasury securities.
The Fed is still planning to buy Treasury securities, it's just that they're not replacing all of the securities they own with new ones. It's a net reduction in purchases.
https://fedguy.com/quantitative-tightening-step-by-step/#more-3896
During a period of QE the proceeds are rolled back in to buying more Treasury securities.
The Fed is still planning to buy Treasury securities, it's just that they're not replacing all of the securities they own with new ones. It's a net reduction in purchases.
https://fedguy.com/quantitative-tightening-step-by-step/#more-3896
Phosphate and Natural Gas are also the major ingredients of fertilizers.
Exactly.
Ok. Where the money ends up is what determines whether QE is inflationary or not. Let's keep it simple by only discussing Treasury securities. By definition QE is simply CBs adding to their net purchases of Treasury notes/bonds by agreeing to buy them on the secondary market at an agreed rate, they target the yield curve for that.
So the banks can buy government bonds all the while knowing that not only are they completely risk free, but the CB will agree to buy them if needed and keep them as reserves on their balance sheet on behalf of the banks. Banks and other ADIs see the reserves on their balance sheets exploding, which may give them greater confidence to extend loans. But they haven't been extending loans across the board, they've given tonnes of cash to the big end of town which has used it to buy shares or they've given it to mums and dads or mums and mums or whatever to buy houses. They haven't been issuing vast amounts of credit for consumer consumption or to small and medium enterprises.
I'd say keep an eye on credit growth in the consumer market and for SMEs to determine if QE has an inflationary effect.
What does have an inflationary effect is fiscal policy, eg increasing welfare handouts, stimulus cheques and government spending on infrastructure and services.
And of course fkn pandemics and wars.
Edit to add: and I forgot, wage rises and/or money printing that exceed an economy's capacity to meet demand. We don't nor won't have that problem in Oz, or the US, NZ etc.
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