Heck of an Asset Inflation We’re Not Having Brownie…

You don’t get to be head of the Fed without being a pretty darn good poker player, bluffing with a straight face you are not tightening, while in fact you are.

Nowhere was this more evident today than with 90-Day Treasury Bills, which today hit Six-month highs at 1.5%.

That’s right, while many were dozing in bond and equity risk trades, the almost risk-less trade just jumped from Half a percent in November to One and a Half percent now, a 300% increase in four months.

http://stockcharts.com/charts/gallery.html?$IRX

(Pay no attention to those obese feline women and men behind the curtain.)

Gosh, if we did not know any better, we’d think there was a whole lot of disintermediation tap dance going on, reverse flight to quality out of bonds and the dollar to Big4 knows where, maybe even physical cash stash or Forex.

Interesting the head of SAFE, China’s State Administration of Foreign Exchange, came out and said NO, we are not going to put our $2.4 Trillion reserves into more than $42 Billion of gold after watching it go nowhere for 30 years, thank you.

http://stockcharts.com/charts/gallery.html?$gold

Another big bad bluff?

In fact, China found with copper, iron, oil and other resources that piling on even a small part of $2.4 Trillion can make those crucial markets pretty illiquid and expensive for their industrial manufacturing producers darn fast.

And now we’re getting word signs of the Chinese Credit Bubble are real.

Famous last words of Japan and the BRICs after lost IMF decades:

SELL? To whom?

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This entry was posted on Tuesday, March 9th, 2010 at 7:12 pm and is filed under Money doctor and Counselor. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.