The Fed buying Debt

The Fed buying Debt

They’re slightly under $1 trillion physically in circulation around the globe. The taxpaying majority (TTM) through officials in congress has leveraged the US dollar 14 to 1 because of the national debt. This does not include the derivatives market, which may have leveraged the dollar as high as1500 to 1.

Private debt may have leveraged the dollar at a guesstimate of 60 to 1. To what level will the Fed raise interest rate in order to drain the global financial system of excess dollar reserves? The financial crisis of 2008 highlighted a massive shortage of dollars, which forced TTM to leverage currency up to 23 to 1.

This run on the dollar should have triggered a sharp rise in US interest rates. Alternatively the dollar was devalued through printing extraordinary sums of cash. Holders of the US dollar paper are potentially facing a tax by inflation that could render notes worthless. The Fed is caught in a catch 22 as it fills the gap left by foreign investors.

Being the major purchaser and possibly holder of US treasuries the Fed faces its own inflation tax. Speculating the Federal Reserve System may be using an unofficial inflation tax by devaluing the dollar. Monetary easing could be another means of draining the dark pool of debt.

TTM are bankrolling the banking system by accumulating debt while paying the banks interest on treasuries as well as money barrowed to bailout a global financial system.

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