​Bond Market conspiracy theory: The “Belgian Beard”

​Bond Market conspiracy theory: The “Belgian Beard”

​Bond Market conspiracy theory: The “Belgian Beard” Chatter floating around the darker edges of the internet this past week included speculation about whether the US Federal Reserve is buying up bonds through the Belgium central bank as a way of disguising its actions.

According to the theory, a massive purchase of USD 141.2 of Federal Reserve bonds by Belgium’s Central Bank from November 2013 through January 2014 would be impossible for the small country of Belgium to carry off. According to the conspiracy theorists the buy was actually the US Fed working throughd Belgium to carry out a bond buying operation as a way of stabilizing the U.S. currency. The Fed has been printing money on epic scales, is desperate to cover up real figures about bond sales and save the dollar from a further slide, and so the "Belgian Beard."

“...Where did the $141.2 billion come from? Certainly Belgium did not have a budget surplus of USD 141.2 billion,” asked one rumour monger.

As proof the conspiracists point out that, in very short order, Belgium has become one of the US government’s debt holders, passing key money market centers like the UK and Switzerland. Was the massive purchase “laundered" through Belgium to hide the fact that actual bond purchases during the November-January were much higher than reported?

Obviously, the Fed has been engaged in unheard of central bank operations, including the recent so-called quantitative easing cycles known as Q1, Q2 and Q3. The Fed is in an odd place. Even though interest rates are historically low, the economy has failed to recover, the American dollar has slid. Buying bounds under cover would create an illusion of strong demand for U.S. debt, which should have helped rates move higher. So the idea isn’t as crazy, not in terms of current weirdness in the U.S. govenrment debt market.  

“That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar,” said the commentator.