Wednesday, February 11, 2009

CNBC's Santelli expresses surprise over today's well received Treasury auction



I was just watching CNBC and they cut to "breaking news," which essentially was reporter Rick Santelli expressing surprise over today's better than expected auction of $20 billion in Treasury notes.

It's amazing to me how these people still don't understand that the government's own spending provides the funds to purchase government securities, which is why auctions will pretty much ALWAYS go off without a hitch.

The government spends first (resulting in an increase in reserves available to depository institutions) and collects taxes and sells securities later.

3 comments:

STF said...

Good one. It's telling to see how much more oversubscribed US Tsy issues have been lately than, say, Germany. Bloomberg's been reporting this, but hasn't connected all the dots yet.

Mike Norman said...

Yes. Even worse is the fact that they look at investor wariness toward German bonds and conclude that we are next. Apples and oranges!

googleheim said...

Pardon my patron -

Could the gobbling up of US treasuries be similar to the recent gobbling up of the US dollar ?

? Buyers are taking another refuge in spite of no alternatives just like the flight to the U$D itself back in late 2008 where the fed had to put the brakes on that spike to prevent banks from around the world from losing customers who deposit in the local currencies, to prevent US auto makers from not being able to export ( as if they can anyway ), etc ?

If no one is buying Euro debt at current prices, then what does that mean ?

Bananas and dropping figs !