Let's break the Fed!

I have been rather obsessed with this Fed defending treasuries story, and my mind harkened back to George Soros.

This is a excerpt from Soros' Wikipedia entry:



I think this demonstrates some important ideas:

1. Central banks are strong players, of course, but they can also be spectacularly wrong.

2. This in turn creates ENORMOUS OPPORTUNITIES for speculators with enough vision and guts.

This is approximately the opposite scenario: The Fed is actively trying to devalue the US dollar, lower long rates, and artificially inflate commodity prices.

Now this is really stupid for a whole raft of reasons: it assumes that everybody around the world is an idiot that will continue to buy US treasuries at any price, regardless of a rapidly deteriorating Fed balance sheet. This is obviously retarded Hugo Chavez type thinking, but when you get a unaccountable institution run by Keynesians gone wild this is the sort of insane stuff that is going to happen.

Anyway I am starting to think that there is money to be made here. I think every time the Fed starts printing money to buy treasuries, I want to be on the opposite side of that trade. I want to be on the side of common sense. I want to show my disdain for this reckless policy by hitting them where it truly may register: their wallets.


Here's a four year chart of TLT. It shows IMHO a spectacular long term top:



So damn the torpedoes, concerned citizen investors of America, let's get out there and buy TBT!