The Primary Dealers Credit Facility (PDCF) was created by the Federal Reserve in the Fall of 2008 to help restore order and maintain liquidity in the credit markets – as the banking crisis began gaining ‘traction.’
Primary Dealer’s ‘mission’ was to bid (take up the slack) at the monthly Treasury auctions whenever demand was light. It was not unusual for them to ‘take down’ the lion’s share of a given offering when foreign central banks (indirect bidders) and domestic (direct) bidders had cold feet. This week, for instance, Primary dealers ‘took down’ 54.66% of the $32 billion auction of 2 year bonds (which, by the way, inched the U.S. national debt up the the $15.413 trillion level).
In the past whenever the Dealers couldn’t ‘move’ (any or all of) the bonds they took down at an auction, they were allowed to ‘flip’ them back to the Federal Reserve, sometimes within days. They were still allowed to pocket the commissions (millions of dollars worth) for the bonds they could not successfully market (a no-lose deal for themselves – at the expense of U.S. taxpayers).
This monetizing (money printing) mechanism thus expanded the Fed’s balance sheet, and the longer term consequences will not be favorable.
The longer term risk for the U.S. Dollar (vs hard assets) is growing. And when the Dollar eventually begins its ‘hard slide,’ U.S. citizens are going to get economically hammered.
The Leviticus 25 Plan offers a viable economic recovery plan for America. And a real chance to avert economic calamity.