Wikinvest Wire

A new look at the Fed MBS purchase program

Monday, February 22, 2010

From the folks at Casey Research comes a chart that gives the Federal Reserve's $1.25 billion MBS purchase program a completely different look and feel.
IMAGE The 12-month rolling vs. monthly data is a bit confusing, but the idea is clear enough.

The central bank's purchase program was, perhaps, not just aimed at keeping mortgage rates low, but, an effort that was required to keep mortgage rates from going sky-high.

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Anonymous said...

The old S&L rule was pay 3% on deposits, and charge 6% on mortgages. That worked until inflation made savers flee the S&L industry.

The new rule seems to be to try and rip off foreign savers via inflation. If they won't agree to get ripped off, the bank will just print its own money to lend out.

The whole system is designed to rip off savers with inflation. First domestic savers fled, so they sold the mortgages overseas. Then overseas savers fled when the bank foisted stupid loans on them.
The foreign exodus magnified when the bank started printing like crazy (future inflation risk). Foreign savers mostly refused long bonds of any type after that, but especially negative convexity mortgage securities.

So there you have it. They need a new group of gullible savers to rip off. High default mortgages, and unknown future inflation risk from all the printing have chased off all the savers on planet earth. Any Martian savers out there feel like getting ripped off?

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