QE = Primarily A Debt Monetization Exercise

Headlines:
Central Banks Incentivized To Overpay.
Improves Sovereign Deficit/Debt Metrics.
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CASE STUDY:
Central Banks Sustain Sovereigns
USA + Italy

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USA = S&P Long Term Credit Rating = AAA+
Italy = S&P Long Term Credit Rating = BBB

USA = QE/Debt Monetization = Yes = Federal Reserve
Italy = QE/Debt Monetization = Yes = ECB

USA = QE’ed 10 Year Bond Yield = 2.32 = See Chart Above
Italy = QE’ed 10 Year Bond Yield = 2.25 = See Chart Above

USA = Higher Costs Yet Superior Credit Metrics
Italy = Lower Costs Yet Inferior Credit Metrics

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USA = Ex: QE = Higher Coupons + More Indentures
Italy = Ex: QE = Higher Coupons + More Indentures

USA = Ex: QE = Fiscal Deficit = 10% Higher
Italy = Ex: QE = Fiscal Deficit = 30% Higher

USA = Ex: QE = Lower Credit Rating
Italy = Ex: QE = Lower Credit Rating

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USA = QE Circumvents Higher Deficit/Debt Via Artificial Indenture Demand = Prices Higher/Yields Lower
Italy = QE Circumvents Higher Deficit/Debt Via Artificial Indenture Demand = Prices Higher/Yields Lower

USA = QE = Masks Deficit Via Debt Monetization = Remittance of Coupons To Sovereign Treasury
Italy = QE = Masks Deficit Via Debt Monetization = Remittance of Coupons To Sovereign Treasury

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