What is POMO and how does it effect PM spot prices?

"POMO" or "Permanent OMO" is the common abbreviation for the NY FED's Permanent Open Market Operations.   On the NY FED's website they refer to POMO as follows:

Purchases or sales of securities on an outright basis that add or drain reserves and change the size of the System Open Market Account (SOMA) portfolio are amongst the tools used by the Federal Reserve to implement monetary policy.

TREASURY

Purchases or sales of Treasury securities on an outright basis have been used historically as a tool to manage the supply of bank reserves to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC). On March 18, 2009, the FOMC announced a longer-dated Treasury purchase program with a different operating goal, to help improve conditions in private credit markets. On August 10, 2010, the FOMC directed the Open Market Trading Desk at the Federal Reserve Bank of New York to keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities (MBS) in longer-term Treasury securities.

..or in layman's terms, to my understanding:  Market manipulation by the FED via its Primary Dealers.  By purchasing Treasuries from the Primary Dealers, the Fed is creating and holding more of it's own debt.  The FED Primary Dealers use these funds, still warm from the FED Treasurys purchase, to pump up the jams in the stock market, while (as some seriously suspect) driving DOWN the gold price via shorts.

 What are we actually talking about in quantity of bits of linen (USD)?  The NY FED having a virtual printing press, the foresight of economic gurus meditating within mahogany halls (FOMC), plus close acquaintances at the Treasury in their war chest, the POMO injections are significant:

Link: FED Tentative Outright Treasury Operation Schedule

 

So what is the FED POMO impact on Markets, the Dollar index, and Gold?

Are the Primary dealers shorting gold, tantamount to giving oxygen to the Canary in the economic coalmine, while the deadly gases continue to build up?   Zero Hedge's most recent guest post on the topic included the following chart that showed the POMO effect on major indexes and asset prices:

According to Zero Hedge:

... today is the day the Fed did will likely overtake Japan as the second largest holder of US Treasurys. ...  China is merely $25 billion away. At a run rate of $10 billion in POMO purchases per week, the Fed will be the largest holder of US Treasuries in the world before the midterm elections.

 Is Monetization of debt and currency debasement toward zero inevitable?   With the BOJ cutting rates to zero this week (and Chili and Brazil competing for rates suitable to support growing exports) , the IMF fears an all out currency war is brewing which many economists now believe could very well turn into a global currency race to the bottom.

Only one historic currency class has been proven and time tested to survive this type of currency onslaught.

Chirp Chirp ...
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