The US government is plunging deeper and deeper into debt. To finance this, the US Treasury has been firing billions of new government bonds into the markets over the past few months. The question is: can the global markets absorb this flood of new debt?
Personally, I think so for the near future! The bond market seems stable, interest rates remain stable for the time being and the drama surrounding the Yen also seems to be under control, or so overshadowed by geopolitical concerns that the serious frictions in the global debt markets are no longer on the minds of the markets and their participants. The Treasury will thus continue to satisfy the global hunger for dollars as collateral, without initially causing any major damage. Surprisingly, even the US bonds that Japan recently threw onto the market in the course of its currency intervention or the Chinese sell-off are finding other international buyers. However, it is doubtful whether this can remain the case in the long term. It's always good to be prepared...
Wow You start wondering when peoole are going to open their eyes and stop buying them. Then shit will hit the fan.
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They'll just start forcing people to buy them, in that case.
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73 sats \ 89 replies \ @Cje95 7 May
There were talks about doing something called “baby bonds” where each child would get a bond from the government and then couldn’t touch it till they turned like 18 and I could see that being a “fantastic” way to offload them on the population… idea seemed to have died once the House flipped in 2022 but before it was talked about quite a bit on the hill
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31 sats \ 1 reply \ @TomK OP 7 May
oh my god is that really true? when I was little in Germany, the so-called 'Sparkasse' gave everyone who started school a savings bond with 5 Deutschmarks inside.
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The idea was based off of some other country I think in Europe. I will see if I can find who it was that was a huge proponent of it.
Ah found a link turns out it was reintroduced this Congress as well
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Wow they would be able to offload a bunch. I bet they would be worth almost the same amount after 18 years. That certificate wouldnt be able to keep up with inflation.
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Who has 1k to buy that when they are having a kid?
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31 sats \ 1 reply \ @Cje95 7 May
I’m not sure it’s really a cost since it’s the federal government giving it and they would be off ramping bonds I believe
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Can you imagine the government starting to print their 1000 dollar bills again? I remember a few years back this special one signed by Chase was worth a lot.
Fed printer go brrr.
Thanks
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That's diabolical. I assumed they would put financial requirements on things like pension funds and university trusts that would require them to hold some proportion of US treasuries.
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31 sats \ 65 replies \ @Cje95 7 May
To be honest I am not sure… I think they could be something that take care of the issue and they wouldn’t need to do that however I could see government pensions being another big off ramp for these bonds as well
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Could they do that? Actually, arent they using social security to prop things up? I think the government has borrowed from it time and time again.
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The social security trust was a fiction to begin with, but even so, it's been in the negative for several years now.
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Isnt it because they borrow from it though? It should be highly positive with all the growth we have had in our economy in the past. Just amazes me how mismanaged the money is.
If they got really desperate, they could do a bail-in for themselves and convert people's savings into treasuries.
The one certainty is that they will do something to prop up demand for US debt.
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Is that cheating though? Buying your own bonds, it will just bring the value of the US dollar down even faster.
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21 sats \ 0 replies \ @Cje95 7 May
The US has been buying their bonds in one way or another for 100 years. While other countries use a central bank the US does it via the Fed and bond purchases
Everything they do is cheating.
How would they even enact it? Give each parent a debt of 1000$? That would hurt a lot, considering how much a baby costs!
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31 sats \ 2 replies \ @Cje95 7 May
It isnt a debt! It is $1k set aside for the kid and they get it when they turn 18 it doesn't cost the parents anything!
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They dont just give out free money. There is no such thing as a free lunch.
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21 sats \ 0 replies \ @Cje95 7 May
I mean read the leg... it is free money. What I commented earlier was that they could in theory instead of put it in savings accounts like the legislation talked about instead give the kid $1k in US bonds to offramp some of the vast bond holdings
There are lots of options, but one that comes to mind is that they could make it a refundable tax credit. That would basically let people buy bonds instead of paying taxes.
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Would that actually work? I would buy the bond and sell them right away, because they are worthless. Waiting for them to mature is a losing proposition.
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31 sats \ 5 replies \ @Cje95 7 May
If they used bonds you could not touch them. The kid could do whatever he wants once he/she hit 18 but not before.
Exactly, and then the minimum reserve regulations will be relaxed, sovereign wealth funds and banks will be forced, as you say, to take this junk onto their balance sheets and we will have opened up yet another pond for this slurry.
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We don't have minimum reserve requirements in the US anymore.
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I know, but there is a minimal quota in the eurosystem left. That will be killed soon
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There was shockingly little coverage when they were removed it a few years ago.
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They dont want the people to know that they are manipulating the money to zero.
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the readership of the general media is so financially illiterate that our leading media could basically report on it in detail and there would be no consequences.
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The writership of the general media is too financially illiterate to report on it in detail (which is why they were hired).
How is Sweden doing? They have that oil fund, why cant they take away from that?
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Thanks Tom as always for the great news tidbits.
I may be traveling to Germany this summer, what are the best places to look for btc meetups there?
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you're very welcome. so if you go to Germany, you'll definitely come to Berlin. there's a very old BTC group active there, the so-called Bitcoin Lab. i can strongly recommend it to you. (https://www.meetup.com/de-DE/bitcoin-lab-berlin/). Als kleinen Appetitanreger für Deutschland, wenn du räumlich sehr flexibel bist, würde ich dir zwei Nächte an der Mosel mit entsprechenden Weinfesten empfehlen. Das ist Deutschland pur!
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Thanks for this, looks amazing. Wow, that Berlin group seems to have multiple events a week and sometimes a day! Lots of action there...
Also I did some poking around and found this - https://einundzwanzig.space/meetups/. Lots happening.
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This guy here is responsible. He will explain it to you in under 2minutes.
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They're playing a shell game right now where the Fed and Treasury have basically merged to keep the music going, can't taper a ponzi though so I imagine the catalyst will be shortly after treasury burns down the April tax receipts
Election year, no coincidences!
The US Treasury is launching its first buyback program since 2002, scheduled to start on May 29, 2024. The program is designed to improve liquidity in the Treasury market and is expected to run through July 2024. During this period, the Treasury plans to hold weekly liquidity support buybacks of up to $2 billion per operation, with up to $500 million allocated for TIPS (Treasury Inflation-Protected Securities). This initiative aims to ensure the Treasury market remains the deepest and most liquid in the world, addressing concerns about market functioning and resilience.
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The yen slow train crash is far from over. It's just the canary in the coal mine for all developed economies. Japanification incoming for the USD too. I liked this recent chat on Livera's show:
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What are they trying to prove with their printing machine? Are they saying that it never runs out of ink?
Write it — this will prove to be disastrous for US economy in coming years.
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Federal Reserve is the bond buyer of last resort.
The fundamental problem is spending not debt. Total expenditures or the budget size is the problem. Debt would not be an issue if total government spending was low. Biden latest budget proposal is 8 trillion dollars
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He keeps bloating everything. And we will have to suffer with it long after he is gone.
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As the issuer of the world reserve currency the US needs to provide the world with collateral (USTs). That's the most important as they are flooding the world
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10 sats \ 1 reply \ @grayruby 7 May
Nothing stops this train.
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They do have those things that they put on the tracks. Train Derailers.
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So, more printing!
More because they think they can save the inevitable. But that wouldn't suffice. The recession is kncoking at the door and they know it.
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