Wednesday, August 21, 2013

This is not going to end well

This post is all about the comments.  But first I need a short introduction to the principles of supply and demand.

The basic concept is that if you are trying to sell something but nobody is buying then the price will go down/collapse.   Conversely if you want to buy something that is in short supply, the buy price will go up.   It's kind of baby grade logic/ mathematics.

The Swiss National Bank for example, weakens, or artificially fixes the rate of the Swiss Franc to other currencies, by oversupplying Francs (CHF) to the world, by printing them and promising to exchange them to other countries at higher than free market pricing.  As such, the Swiss Francs per GB Pound or US Dollar or Euro goes down.  

Now let us return to the above chart.  Countries on the right have been selling US Treasuries and there has been a mystery  :-) buyer in the marketplace buying everything up, no questions asked.

Without that buyer the price would have collapsed.   The sellers might have got less money, but hey, in order not to spook the market, the mystery buyer just keeps on buying.

59 Billion Dollars in June

It is just mind boggling.

And now here is where the fun starts.

Please now goto this webpage

And read the comments below the graph.  I was quite literally in tears of laughter.

Unfortunately behind the tears of laughter there will ultimaely be tears of trajedy as the Buyer of Last Resort transfers its obligations to the US Taxpayer.

But I urge you to get back to the comments pages, 7 pages of classics and counting ......