I’m going to try and explain this fraud in simple terms:
Step one -Get a massive bank bailout from the Fed after speculating in real estate and having your loans defaulted on, while still getting to keep all the profits you reaped.
Step two -In the process of getting bailed out, have the Fed actually pay your bank to not make loans.
Step three -Take the money the Fed is paying you not to make loans and from the bailouts to purchase bonds from the US Treasury.
Step four -Sell those bonds right back to the Federal Reserve during one of their open market operations where they print money to buy bonds.
Step five -Take a nice cut of commission pie for yourself in the process.
So you see boys and girls, if you own a mega-bank, you can get the Fed to give you money to buy bonds at no cost and no risk to yourself, then you can have the Fed buy those bonds right back while making a nice fat commission for yourself.
Then once you get a nice fat piece of commission pie, you can then turn around and dump it right back into the stock market to speculate on equities – all while assured that should your speculations fail, the Fed will bail you out again.
The Fed is literally handing the commercial banks money it printed out of thin air and that is not backed by any tangible assets at all. Normally the criminal Keynesians consider the fact that while loans expand the money supply, they are at least typically backed by an asset purchase that has real value; therefore they consider the expansion of the money supply to occur in proportion to “growth.” Not so with this funny money. It is equivalent to a criminal with a money printing machine in his basement.
Zero Hedge reports:
Ok this is it. Someone (preferably of the less than multi-millionaire Wall Street marionette variety) in Congress has to look into the blatant bond churn-cum-flip (that was happening behind the scenes a few months ago and is now so blatantly in your face it is a slap to all US taxpayers) which has the Fed paying Primary Dealers billions in commissions for a trade that has absolutely no value added. And while we have been complaining about this for months, today just takes the cake. Below we present the entire list of permitted issues to be monetized by Frosty-Sack. Note that there were 29 CUSIP eligible for buybacks. What happened – the Primary Dealers flipped virtually the entire operation in the form of the just auctioned off 3 Year PQ7! This is half the entire Primary Dealer allocation in the bond auction that was completed on January 11 (whose technical original issue date was yesterday). One more 3 Year POMO, the next of which is on January 31, in which PDs flip a like amount, and the Fed will have monetized the entire auction, but in the process having paid at least a few hundred million of taxpayer capital to the PDs for absolutely no value added! This is a daylight robbery and has to stop.