Just last week our treasury secretary proclaimed, “I am the house.” He said this making an analogy to a gambling casino- an appropriate analogy for our “markets.” In this case the bond “market.” You can test me, but the house always wins. This is eerily reminiscent of Anthony Fauci being “the science” which has been thoroughly debunked.
I believe that this level of hubris will be thoroughly debunked also. The idea here is to scare anyone away from selling our treasuries. So far, every intervention is slowing down our demise but stopping NOTHING. In fact, all of the interventions are nothing but “printing and buying” with no production to back it up. MASSIVELY inflationary.
The only way that this debt-based system has survived for so long is that the entire world was working together under the same assumptions and illusions. As I have said many times, when the cooperation ends- so will the charade of money “printing” being the answer to every question.
Most developed nations are at the point where the only thing keeping the economy and “markets” afloat is a sea of cheap money that allows for buying stocks, bonds, and manipulating prices. The main fear right now is that global interest rates are rising, and this could cause some serious problems for ALL assets.
It is not only treasuries that are at risk but also state and municipal debt along with a SIGNIFICANT percentage of over-indebted companies, many known as Zombie companies which, like our own government, cannot even cover interest payments without new debt. Higher rates could prove fatal.
Right now, it appears that there are so many problems in the Eurozone, USA, Japan, and many other countries that most of these countries are now having to look out for their own interests and the global cooperation that allowed for almost unfettered growth may be coming to an end.
In Japan, the Yen has been in freefall and rates have been rising. This is a toxic combination for a country that measures its debt in Quadrillions. You see that right. That is over 1000 TRILLIONS of Yen and growing. As rates rise the carrying cost of that albatross gets heavier and heavier.
To stall (not stop) the Yen’s demise the USA actually bought Yen and sold Euros. The Fed has also allowed Japan to get dollars using their treasuries as collateral so they do not sell the treasuries which would lead to even greater “printing” by the Fed to suck up the bonds being sold. Uncontrolled selling could lead to massive increases in our interest rates and cause the economy to seize up.
Many say the US bailed out Japan when, in reality, we were trying to save ourselves.
In Europe, their economies are dying because of green energy mandates, sanctions on cheap Russian gas and oil, massive migration, and social spending along with massive spending on “defense.” There is a rise in the population which is waking up to the fact that those “in charge” care only about themselves and not the general population. The same could be said here also.
On Wednesday, the Fed announced a .25% increase in the overnight rate. As the trading robots saw the headlines, many assets were sold off. This is because historically, this would be negative for risk assets.
As I am writing this on Thursday morning many assets are rallying sharply. The reason is that the bots trade on headlines and prices. Those that think can clearly see that a .25 increase in the overnight rate will do NOTHING to stop inflation and that trillions will be needed to keep longer term rates from spiking higher.
In addition, this week the BRICS held their 18th annual meeting. They announced that they are promoting more trade amongst each other in local currencies and establishing cross-border payment systems. Those that anticipate that the US dollar will just collapse may be disappointed in the short run, but the writing is on the wall. In my opinion it is just a matter of time until one snowflake causes an avalanche of selling. In any case more trade in local currencies definitely reduces the demand for US dollars when it is imperative to have huge demand. With $8 TRILLION maturing in treasuries in the next few months this could be interesting. Even without that little fact the Treasury has said they will borrow $739 BILLION from July to September, and they expect $628 BILLION between October and December. That is nearly $1.4 TRILLION in 6 months. This has to be conjured up out of nowhere. The piggy bank was emptied a LONG time ago. If there was ever an analogy of being “built on sand” THIS IS IT!
It is only rational to want to reduce reliance on the dollar when it is being used to punish, bully and sanction.
One of the main themes of this summit was multipolarity. This is where one major power cannot be in charge of the world. I really believe that if we had rational leaders, they would embrace this and try to work with the rest of the world for everyone’s benefit. Unfortunately, our society has become not a win-win society but a win at all costs society.
Our leaders are no different.
While the mainstream media and their handlers pepper you with propaganda 24/7 to keep you uninformed about our true state of affairs the numbers could not be clearer if you take the time to look at them. The chances of many promises being kept with the currency keeping even a fraction of its purchasing power is virtually NIL. This goes for most debt, many companies, cities, states, and individuals.
I have never seen a better case for ASSETS rather than promises to repay.
Be Prepared!
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