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The Federal Reserve Now Owns 15 Percent of the U.S. Treasury Market; At Its Current Rate, It Could Own the Whole Market in Less than Two Years

Courtesy of Pam Martens

Federal Reserve Building, Washington, D.C. with Dead Bull

By Pam Martens and Russ Martens

“The More I See Of The Moneyed Classes, The More I Understand the Guillotine.” ~ George Bernard Shaw

According to the U.S. Treasury, as of February 29, 2020, there was $16.9 trillion in marketable U.S. Treasury securities outstanding. Of that amount, at the end of February, the Federal Reserve held $2.47 trillion or 14.6 percent – making it, by far, the largest single holder of U.S. Treasuries anywhere in the world.

By this past Friday, the Fed’s ownership of the Treasury market had increased to $3.12 trillion. It had grown by an unprecedented $650 billion in one month’s time. And on March 23, the Fed announced that it would buy unlimited amounts of both Treasury securities and agency mortgage-backed securities “to support smooth market functioning.”

But exactly how can a so-called “free market” function smoothly if the country’s own central bank is cornering the market. Salomon Brothers paid a $290 million fine and came close to getting slapped with criminal charges by the U.S. Department of Justice in 1992 for manipulating prices in the Treasury market. And make no mistake about it, the Fed’s massive purchases are having a demonstrative impact on driving up prices in the Treasury market while driving down yields – meaning the income that determines if senior citizens in America can buy real groceries or have to live on one pot of soup for the week.


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