Treasury Securities Conspiracy Theory

Saturday, June 18, 2005
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Who is buying them all up, and why?

America’s traditional financiers [Japan, China and Korea] have actually reduced their holdings of US debt obligations but our new best friends, the Pirates [hedge funds?] of the Caribbean have dramatically stood in for the debt fatigued Asians in accumulating a walloping 23 billion in additional US debt in the latest reporting month [Jan. 05]. Go figure, ehh, who would have ever thought that pirates could or would ever be so charitable?

Can one really believe that there is some “hedge fund” in the Carribbean buying these things up? The question posed by the auther is this: this supposed “Hedge Fund,” after purchasing $23 billion in US securities in one month, woud have to have endured a loss approximately “40% of the principal allocated to acquire the position,” based on a conservative estimate. Not only do hedge funds not operate on such a basis, but, no such losses are being reported from the hedge fund community. So who are these “Carribbean banks?” The “official” reports of the US government are feeding up the usual:

The explanations being offered up as plausible by officialdom and fed to us by the main steam financial press are not consistent with empirical facts or market observations. There are no wide spread or significant losses being reported by the hedge fund community from ill gotten losses in the Treasury market.

Suppose that the US government has an offshore operation set up to channel Fed printing press activity, and is buying up its own securities, to monetize its debt? Says Rob Kirby:

While I do not put too much faith in technical analysis, my suggestion to you, dear reader, is that history is indeed repeating itself and maybe Pirates still inhabit the Caribbean. Perhaps they are aided and abetted in their modern day financial piracy by Wizards and Snowmen, with printing presses, who reside in Washington? Could it be that the booty they have confiscated from us all is nothing more than the diluted purchasing power of the currency we all work for? If so, true to form – like the days of yore, these cads are sworn to secrecy as they pillage and harvest our wealth for their own self serving, grand illusion, fiat preserving ends.

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