The Success Of Failure.

[tabs]

After the passage of the CARES ACT in 2020 and the FED increasing it's balance sheet by 3T in about 6 weeks, for the first time in at least 40 years there was an OUTFLOW of foreign capital from US Treasuries...The meaning of this is that the USD and Treasuries HAS LOST IT"S SAFE HAVEN STATUS. Which in past times of distress has always meant that the US could borrow more money at low interest rates.

Now it is up to the FED to purchase any unsold Treasuries to maintain control of interest rates so that debt service does not become unsustainable. Which if it got out of hand could force the US to DEFAULT on it's debt obligations. To accomplish this the FED is QEing 120B a month in mortgage backed securities and Treasuries with an estimated having 9T on the balance sheet by the end of 2022.

As the situation has developed since March 2020 and especially after the 2021's 1.9T RECOVERY ACT, Crypto currencies have gained evermore traction and legitimacy in the mainstream financial world as an ALTERNATIVE to a NOW SUSPECT or SHAKY USD. This new found legitimacy ultimately means that the 230 year Rock Of Gibraltar USD has like a prize fighter who has taken one too many punches has wobbled.

The FED's recent weaving and dodging actions at the Reverse Repo window which in the past week has gone from 200B a day to 450B a day, delegitimizing crypto causing it's recent steep decline, Bidens reducing his Infrastructure Bill from 2.3T to 1.7T and potentially to 1T ALL INDICATE AN INSTABILITY IN THE USD... AND MORE OVER AN EFFORT TO STABILIZE OR SAVE THE USD from the ADVERSE SHIFT of a global unloading of them wholesale... Needless to say if that happens the USA becomes a 3rd World Nation OVERNIGHT.

The FED is trying to restore USD credibility, or to save Americans from themselves and their delusion of being a rich nation.

[tabs]

[pwd72s]

So, just watching the tide go out..with many wondering why inflation "all of a sudden".

The problem, the way I see it..is that there are no safe havens... Makes me feel very sorry for the youngsters...

[Bill Douglas]

Ah, whatever. As the young kids say (the ones who are going to be repaying the debt).

I don't think there are going to be any crazy chit changes in our time. Just ups and downs. Different winners and losers, sure, but life will go on and the smart money will continue to make money.

[tabs]

Originally Posted by pwd72s

So, just watching the tide go out..with many wondering why inflation "all of a sudden".

The problem, the way I see it..is that there are no safe havens... Makes me feel very sorry for the youngsters...

No safety any where. USD is universal..it takes everuthing down with it. The world is standing on the deck of the Titanic..

[tabs]

Originally Posted by Bill Douglas

Ah, whatever. As the young kids say (the ones who are going to be repaying the debt).

I don't think there are going to be any crazy chit changes in our time. Just ups and downs. Different winners and losers, sure, but life will go on and the smart money will continue to make money.

Dont bet on it.

Lets look at it..as in how dicey the situation is..the FED is pulling 450B a day in excess liquidity out of the system. Why? What would be happening if that liquidity were allowed to flow through the system?

A spike in inflation? Increased volatility. Instability..they are keeping markets in equilibrium so they dont have a runaway situation that could escalate.

The world order needs foreign and domestic holders of USD to feel secure in holding them and what could destroy that illusion is a runaway hyper inflation in the USA.

The end of the FEDs facilitating US govt deficite spending to prop up the US economy is coming into sight..Too many USD in the float with more heavy spending coming from the mmt crowd in power.

THE PERCEPTION IS THAT THE USD ISNT THAT SECURE ANYMORE. THE PROBLEM IS THAT THERE ISNT A VIABLE ALTERNATIVE. The central banks know they are out of options and that the walls are now closing in on them.

This isnt about winners and losers but about survival. The boyzat the FED and shrewd money guys know this.

[Bill Douglas]

England and Europe just think of USA as a good place to go for a holiday, but the real action is London City, and the Germans. They think sure they've got some money but they are just a good fun place that radiates out from the beaches of Florida.

[tabs]

Originally Posted by Bill Douglas

England and Europe just think of USA as a good place to go for a holiday, but the real action is London City, and the Germans. They think sure they've got some money but they are just a good fun place that radiates out from the beaches of Florida.

Americans have pissed away success...now they are successful at failure...

[black73]

The Success Of Failure? You mean like successfully failing to have anything you predict ever come true? Successfully failing to see that there are people much smarter than you that have the situation under control? Successfully failing to see that you do not know everything, as demonstrated by your decades of failed predictions? Successfully failing to see that it is time to STFU or bang a new drum?

[Sooner or later]

Tabs,

Have a source for this?

"for the first time in at least 40 years there was an OUTFLOW of foreign capital from US Treasuries"

[Discseven]

Lots of naysayers against Dent. Others admire his studies (regardless of his market nosedive predictions being fooked by repeating stimulus programs.) Posting this vid as food for thought.


TABS... poetic title "Success of Failure."


.

[Sooner or later]

Originally Posted by Sooner or later

Tabs,

Have a source for this?

"for the first time in at least 40 years there was an OUTFLOW of foreign capital from US Treasuries"

I have been trying to verify that statement. I can't find anything. I hope Tabs supplies a link to his information.

I did find this. Not sure if this is what he is talking about.

https://www.reuters.com/article/us-usa-economy-capital-idUSBRE97F02T20130816

Aug 15th, 2013
(Reuters) - China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries.

The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday.

China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.

[wdfifteen]

Originally Posted by tabs

Needless to say if that happens the USA becomes a 3rd World Nation OVERNIGHT.

We're already well on our way.

[stevej37]

Meanwhile the markets keep heading up.

[jyl]

The reverse repo (RRP) thing is interesting.

As I understand it, this is banks and other large financial institutions trying to get excess cash off their books, by exchanging cash for Treasuries. For a bank, $1 of customer deposits is classified as a liability. Normally they turn around and lend that $1 to a borrower, and that loan is classified as an asset. But right now they have more cash deposits than they have loans to make. So they exchange that $1 of cash for $1 of Treasuries. Owning a Treasury bond is like making a loan to the US govt, it is classified as an asset for the bank. And they make a percent or so of interest on the Treasury bond, as opposed to nothing on the cash. These are overnight actions, i.e. the exchange lasts a day. It all takes place electronically, just numbers moving from one of the bank’s accounts at the Fed to another of the bank’s accounts at the Fed.

I am not sure that I consider RRP actions to be particularly important, in themselves. RRP activity reached these levels around 2016-ish as well, and didn’t signify anything horrible. It does indicate that banks have more deposits than they have loan opportunities, at the moment, but that could change in a day - these are just overnight moves.

The bigger picture is that the economy is awash with cash, or liquidity as they say. That’s not unique to the US. China is dealing with the same thing, as is Europe.

The bigger picture is also that the economy is awash with debt. That is also not unique to the US. China’s debt, on a whole economy basis, is soaring and actually they are facing a huge bad debt problem because their economy isn’t as good at allocating credit to productive and creditworthy uses
as the US economy is.

And, at least in the banking sector, the cash is outpacing the debt - hence RRP.

From an individual person’s perspective, debt is often bad. To an economy, debt is a key driver of growth. It moves money from unproductive uses - piling up in vaults doing nothing - to productive uses - starting companies, growing businesses, building wealth. Without debt, there are no loans and no interest. Sometimes it goes bad (2008, etc) but between those episodes, it is good.

[tabs]

Originally Posted by Sooner or later

Tabs,

Have a source for this?

"for the first time in at least 40 years there was an OUTFLOW of foreign capital from US Treasuries"

https://www.youtube.com/watch?v=ScAeHsXIUqI&t=72s

Start at 8:00 minutes in

[black73]

Wile E. Tabs thinking he has finally captured US economic devastation.

[tabs]

Originally Posted by jyl

The reverse repo (RRP) thing is interesting.

As I understand it, this is banks and other large financial institutions trying to get excess cash off their books, by exchanging cash for Treasuries. For a bank, $1 of customer deposits is classified as a liability. Normally they turn around and lend that $1 to a borrower, and that loan is classified as an asset. But right now they have more cash deposits than they have loans to make. So they exchange that $1 of cash for $1 of Treasuries. Owning a Treasury bond is like making a loan to the US govt, it is classified as an asset for the bank. And they make a percent or so of interest on the Treasury bond, as opposed to nothing on the cash. These are overnight actions, i.e. the exchange lasts a day. It all takes place electronically, just numbers moving from one of the bank’s accounts at the Fed to another of the bank’s accounts at the Fed.

I am not sure that I consider RRP actions to be particularly important, in themselves. RRP activity reached these levels around 2016-ish as well, and didn’t signify anything horrible. It does indicate that banks have more deposits than they have loan opportunities, at the moment, but that could change in a day - these are just overnight moves.

The bigger picture is that the economy is awash with cash, or liquidity as they say. That’s not unique to the US. China is dealing with the same thing, as is Europe.

The bigger picture is also that the economy is awash with debt. That is also not unique to the US. China’s debt, on a whole economy basis, is soaring and actually they are facing a huge bad debt problem because their economy isn’t as good at allocating credit to productive and creditworthy uses
as the US economy is.

And, at least in the banking sector, the cash is outpacing the debt - hence RRP.

From an individual person’s perspective, debt is often bad. To an economy, debt is a key driver of growth. It moves money from unproductive uses - piling up in vaults doing nothing - to productive uses - starting companies, growing businesses, building wealth. Without debt, there are no loans and no interest. Sometimes it goes bad (2008, etc) but between those episodes, it is good.

The FED CAN NOT RAISE INTEREST RATES...debt Service and Equities would have a hissy fit. So how can they curb inflationary pressures..without ruffling feathers? They tighten monetary supply by siphoning off excess liquidity..



This is being done on a daily revolving door basis...it is an arcane mechanism that they can use to achieve their policy aims. creativity

Banks, FED and Treasury are working in a coordinated effort...either they do it or it is or else.

[wdfifteen]

We are obviously domed, so, so domed.

[tabs]

Originally Posted by black73

Wile E. Tabs thinking he has finally captured US economic devastation.

Peter Schiffty has just used that metaphor in a Utube vid with Gammon where Wiley is the holder of USD....