Sunday, June 21, 2009

Did You See This Bit of News In US Media?

After two smugglers were stopped last week with what at first appeared to be $134bn in US state bonds, the tension and paranoia surrounding the fate of the dollar hit a new high.

For every dollar created by the Federal Reserve to fund the stimulus packages, there is a dollar in US Treasury securities floating around. We may not know where the stimulus money went, but maybe we now know where some of the securities went.

From the UK's Telegraph:
Border guards in Chiasso see plenty of smugglers and plenty of false-bottomed suitcases, but no one in the town, which straddles the Italian-Swiss frontier, had ever seen anything like this. Trussed up in front of the police in the train station were two Japanese men, and beside them a suitcase with a booty unlike any other. Concealed at the bottom of the bag were some rather incredible sheets of paper. The documents were apparently dollar-denominated US government bonds with a face value of a staggering $134bn (£81bn).
How on earth did these two men, who at first refused to identify themselves,come to be there, trying to ride the train into Switzerland carrying bonds worth more than the gross domestic product of Singapore? If the bonds were genuine,the pair would have been America's fourth-biggest creditor, ahead of the UK and just behind Russia.
No sooner had the story leaked out from the Italian lakes region last week than it sparked a panoply of conspiracy tales. But one resounded more than any other: that the men were agents of the Japanese finance ministry, in the country for the G8 meeting, making a surreptitious journey into Switzerland to sell off one small chunk of the massive mountain of US bonds stacked up in the Japanese Treasury vaults.
Of course $134bn is only about 1/20 of the debt the Federal Reserve now holds. Maybe they were Federal Reserve agents ....

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