Trillions flying by so fast, it’s hard to even count them. But somebody had to buy these Treasury securities. And it wasn’t just the Fed. Here’s who.
By Wolf Richter for WOLF STREET.
In the 12 months through February, before the Pandemic started – those were the Good Times when a government shouldn’t have to borrow heavily – the US government added a breath-taking $1.4 trillion to its already huge pile of debt. And then came the Pandemic and the bailouts and the stimulus payments and all the other stuff, and over the six months since then, the US government added another $3.3 trillion to the Incredibly Spiking US Gross National Debt that now amounts to $26.8 trillion:
With the release yesterday afternoon of the Treasury Department’s Treasury International Capital data through July 31, Fed balance sheet data, bank balance sheet data from the Federal Reserve, and the Treasury Department’s data on Treasury securities, we can sort out who bought those trillions of dollars in Treasury Securities over the past 12 months.
Foreign investors:
Foreign investors all combined – central banks, government entities, companies, commercial banks, bond funds, other funds, and individuals – added $287 billion to their holdings in July compared to July last year, including $48 billion during the month of July. This brought their holdings to a record of $7.087 trillion (blue line, right scale in the chart below).
But due to the Incredibly Spiking US National Debt ($26.5 trillion on July 31), their share of this debt (red line, right scale), after plunging in June to the lowest since 2008, only held steady in July, at 26.7%:
America’s biggest foreign creditors, Japan and China: Japan increased its holdings in July by $32 billion, to a total of $1.29 trillion. Over the 12 months, its holdings increased by $162 billion.
China whittled down its holdings further in July. Over the 12-month period, its holdings fell by $37 billion, to $1.07 trillion, following the trend (green line) since 2015, with exception of the plunge and recovery around its capital-flight phase.
Combined, Japan and China held 8.9% of the Incredibly Spiking US debt, the second-lowest share in many years, with the lowest having been in June (8.8%):
The next 10 largest foreign holders (in parenthesis their holdings as of July 2019):
- UK (“City of London” financial center): $425 billion ($406 billion)
- Ireland: $330 billion ($257 billion)
- Hong Kong: $267 billion ($235 billion)
- Brazil: $265 billion ($309 billion)
- Luxembourg: $265 billion ($229 billion)
- Switzerland: $251 billion ($228 billion)
- Cayman Islands: $213 billion ($233 billion)
- Belgium: $211 billion ($203 billion)
- Taiwan: $210 billion ($179 billion)
- India: $195 billion ($160 billion)
This list is studded with tax havens and financial centers, including those where US corporations have mailbox entities that hold assets in an effort to dodge US taxes. So some of these “foreign” holders are US entities, such as Apple in Ireland, with accounts registered in their mailbox operations there.
Missing from this list are Germany and Mexico, which hold only $78 billion and $48 billion respectively in Treasuries, despite their mega-trade surpluses with the US.
US government funds
The Social Security Trust Fund, pension funds for federal civilian employees, pension funds for the US military, and other government funds shed $15 billion in July and $21 billion over the 12-month period, which whittled down their holdings to $5.89 trillion (blue line, left scale), amounting to 22.2% of total US debt (red line, right scale).
Even though the Treasury holdings of these government pension funds have more than doubled over the past 20 years, their share, given the Incredibly Spiking US National Debt, has dropped from over 45% in 2008 to 22.2% in July:
These Treasury securities, often called “debt held internally,” are assets that belong to the beneficiaries of those funds. They’re an actual debt of the US government, despite the old nonsensical saw that “it doesn’t count because we owe this to ourselves.” These are funds that the US government owes American beneficiaries, just like the funds that the US government owes Japan and China.
The Federal Reserve.
In July, the Fed added $89 billion to its Treasury holdings, bringing its total holdings at the end of July to $4.29 trillion (blue line, left scale), amounting to a record of 16.2% of the Incredibly Spiking US National Debt (red line, right scale) – that’s the portion of the US debt that is has monetized. Over the 12-month period through July, the Fed added $2.18 trillion in Treasuries to its holdings, most of it since March, doubling its pile:
US Commercial Banks.
US commercial banks added $66 billion in Treasury securities to their holdings in July, and $228 billion over the 12-month period, to a total of $1.14 trillion, according to the Federal Reserve’s data release on bank balance sheets, amounting to 4.3% of the total US debt.
Other US entities & individuals
Above, we covered all foreign investors, plus US government funds, the Fed, and US banks. What’s left are other US investors – both individuals and institutions such as US bond funds, US pension funds, US insurers, cash-rich US corporations, private equity firms to park cash, hedge funds to use them in complex trades, etc.
During the market tumult, they all piled into Treasury securities, some possibly in panic, others to engage in or get out of risky trades, adding $1.8 trillion over the three-month period through June. But in July, they shed $93 billion, bringing the holdings down to $8.1 trillion (blue line, left scale), amounting to 30.6% of total US debt (red line right scale). The surge in holdings was followed by the spike in the US debt, and the percentage that these investors held in July (30.6%) was roughly level with their share at the end of the year (30.5%):
The chart below shows Treasury holdings by category of holder combined into one chart, with the US debt piled up in all its majesty:
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Although there is some truth to that, pretty much the whole world would call major foul and cause a serious deficit of goodwill.
Unless something is mutually agreed upon, it is, by definition, a unilateral demand. Demanding reparation for an event that occurred decades ago is scarcely better than demanding money “because we say so”.
Perhaps you were joking. It’s hard to tell on the Internet unless you include one of those emoticons with a tongue sticking out.
HD,
Here it is ?
Didn’t the Fed send a bunch of money to the foreign central banks through on of their “lending facilities?” Wonder what they did with those “loans?”
Doc Shock,
Those weren’t Treasury securities, but “liquidity swaps” (dollar cash for foreign cash), and they’re being wound down, from the peak of $449 billion in early May to just $52 billion as of yesterday:
Looks like inverted Nasdaq chart.
Maybe they used swap accounts for day trading:)
Wolf,
I’ve always though that the breaking point would be when this is forced to matter. It doesn’t matter that people just think it’s a problem because we’ve been denying the inevitable for so long … but when, or what, will be the breaking point when this really matters and we have to change or do something drastic? Same question for all the over indebted companies out there because they keep just paying the interest but at what point will it overwhelm them, forcing the issue and produce the consequences that we talk about here all the time? Thanks.
BatHelix:
When “it” happens you won’t know anything about it because it will have happened “yesterday” and we most all be “grand-slammed!”
Stay safe and healthy!
The rest of the world says No Mas!
@BatHelix
‘but when, or what, will be the breaking point when this really matters and we have to change or do something drastic? ‘
When the minimum REVENUE/Cash FLOW to service the debt (public/private) is NO LONGER sufficient to pay and or in-competition with other Federal spending (SS#, defense++) in the annual budget.
OR
when majority holders lose confidence in US $ and collectively or individually, REDUCE their holdings/ no more addition!
Negative rate (?) + rapid increase in inflation
Oh, Yeh
Forgot to add PRETEND & EXTEND along with JAW BONNING to continue the ‘the SMOKE & Mirror’ game ( being played/re played NOW since 2000!)
Good point Mr. Richter with respect to currency swaps. If I remember correctly, under then Federal Reserve chairman Bernanke, the Federal Reserve entered into a neutral agreement to swap dollars for euros when there was a massive squeeze on euro dollars i.e. dollars in Europe that were in short supply. Apparently there were a lot of entities/people who wanted dollars in exchange for euros. The swap was neutral meaning the beginning exchange rate and ending exchange rate were the same, in other words no currency appreciation or depreciation advantage to either central bank.
Wow. So It Is foreign flows getting in the USA market which are driving USA economy?. If UK is the main source of Money, they are the ones driving the financial markets, and the ones printing the most of Money?.
What a joke. The British economy is on the ropes*- you think they’ve got the money to buy $425 billion worth of anything? Ireland $330 billion? BALONEY! (what next: Lesotho $100 billion)
* and if their capital these days being referred to as Londonistan weren’t bad enough, they stooped to importing a CANADIAN to run their central bank into the ground.(just when you thought it could not get worse than having Gordon Brown selling off the gold reserves for $250/oz, they call for a relief pitcher from a country with NO gold reserves, where what passes for money is called The Loonie.” God, it’s Ozymandias all over again.
My father was in the US Army in WWII. He was ANTIFA before ANTIFA!
He would roll over in his grave if he knew the US President felt Nazis were “fine people” and was trying to build Europe’s biggest skyscraper in Moscow with murderous former KGB agent, Putin.
I greatly appreciate your writing, Wolf. Please keep up the good work!
PS: These matters are not being covered very well by the mainstream media. I’m a naive SOB…actually thought W would be the intellectual basement for US presidents in my lifetime. I guess I’m sort of a sucker…..
I must have missed the day in history class where they taught us the US fought the Nazi’s and Japan to free Brazil, Switzerland, India and the Cayman Islands. Maybe Ken Burns has a documentary I can watch.
James Rickards, author of several financial books, yesterday mentioned on Twitter that the US will seize China’s Treasury holding and turn it into the Covid 19 reparation fund.
Foreign holdings might just go to zero. But it won’t matter I think.
Yeah, not sure I believe everything that James Rickards says.
I believe everything he says, I am not always sure why he says it.
I wonder sometimes if he isn’t still a paid agent for a three letter agency
When you’re broke, not paying back debt doesn’t help much, as that won’t happen anyway. The problem is cash flow to keep spending. Hence the printing presses going full bore and constant ramming for inflation.
Not likely.
With a couple of months advance notice, why was America’s response so ineffective?
Thailand was one of the first places exposed to it by Chinese tourists, but lockdown, masks, contact tracing, and social distancing has resulted in only one confirmed local transmission in the past three and a half months.
Nah, we know Tom Yum soup is an effective remedy for Covid 19. Side effect can even be controlled by drinking plenty of water ;)
Man, I miss going to Thailand. Thai food in the US just doesn’t quite compare.
Agree. I figure I am 2/3s of my way through retirement so I got a lot of travel in before the foolishness. Yeah, Thailand is hot but still the best destination. I’d go expat again but my wife has too many friends here now. Asia is real life and not virtual politically correct garbage existence.
MonkeyBusiness,
ha, that’s funny. That would be the INSTANT death of the entire US Treasury market, and total chaos in the financial markets, followed by the collapse of everything. So the answer is: only in Rickards’ wildest dreams :-]
MonkeyBusiness, in simpler terms, Wolf is saying this:
We are hanging on, barely, due to the money printing and digital money creation that has allowed the US government to keep paying its bills, albeit with a generous funnelling/gifting of part of its money each time to the “Fed” banksters. If foreign investors thought that the US might take away their holdings if they were naughty, since so many of the billionaires/trillionaires have the morals and background of Pol Pot, and got their money by thieving like the US banksters, they would pull out all their investments and not invest more in the US.
Preventing the CCP’s China from using the Swift banking system is more likely. It is essentially a terroristic, criminal entity. Boycotting it, when that becomes possible in the future after companies transfer their supply chains to Vietnam, etc., would also be a great tactic for the US.
China and Russia already have alternatives to the SWIFT system. America will just be shooting itself in the foot. Again.
Yep, a UST default to the Chinese is like shutting off your own electricity to avoid putting the bill on credit card.
What is the alternative?
The US workforce going to make stuff it can export and make actual earnings to pay off those debts?
Also, in your wildest dreams.
It looks like there is no alternative for anything anymore. Exporting debts is too easy. When the export of debt starts to falter, then and only then there wil be a need for change.
I think the plan was to balance off US Treasury debt to China with unpaid Chinese debts owed to the US back from the war.
That is a very dangerous narrative. One thing saving us is being the world reserve currency.
If we chose to default on treasury bills held by particular countries I can’t imagine the US dollar would continue to be.
We defaulted in 1971, though they didn’t call it that. Where do you think all that high inflation came from and the need to raise rates to around 20%?
Well put, Mr. House.
China has been expanding credit, such a move would be self destructive in the extreme. That would start a global depression. It would send the US credit rating diving, and the dollar. It would almost surely be the end of his reelection dream and frankly I don’t think there is a coalition of the willing inside this administration to support such a thing. It almost certainly would draw bipartisan rejection.
Yeah but based on how crazy the “mainstream” narratives have been lately, i wouldn’t be surprised if we null in voided their treasuries to pay for “covid”. Good way to start a war too if you’re hankering for one.
@MB – Rickards, yeah. Would that be before or after China doubles the price of all the manufactured goods we need to live, or after they buy all their soybeans/grain from Brazil and Argentina and Russia?
Surely you jest. Rickards is the other half of the Mutt and Jeff act with Harry (“$700 gold”) Dent.
There’s a greater likelihood China will sue the United States in the World Court for $10 trillion reparations for Chinese workers killed under lax safety regulations while blasting out the intercontinental railroad. (“Yellow Lives Matter Too!”)
Wolf – “The Treasury and Fed, are in Bed”…that is your answer…
More proposed Fed 2020 Slogans:
“Fight the Fed, Wet the Bed”
“Bow down to J-Pow or Risk a K-Pow”
“Climate Change is a Fiat Thing”
“Broken Windows have WoKe the Millennials”
“(M)agic (M)oney (T)rain is a J-Pow Thing”
How about a quick poem (never made a poem before, so bear with me, HA):
J-Pow is God, over Earth and Sod
Then I thing, I can’t blink
Least my earnings, end up burning
At the alter, of Fed fiat falter
When the game, of lies and blame
End the perception, which ruled the deception
Of those old days, so far away
Played by rules, today ridiculed
By folks who wink, and insanely think
Free lunches are real, and will never reveal
Capitalism was fun, but now is done…
It’s been bad since President Nixon took us off the gold standard. The national debt to GDP is the highest it has been since WWII. The current administration is no better than the last one in terms of debt financing.
Debt service-to-GDP is like a record low. But hey – we’ve got wars and billionaires though. These guys aren’t cheap.
“Debt service-to-GDP is like a record low.”
Because the G prints the money to buy its own sh*t debt and blames the resultant inflation (housing, med, education, asset) on Dr. Evil Billionaire.
So we can blame all this mess on Nixon? Maybe send J. Powell a text/Tweet on this! LOL
My theory is that both GDP and national debt *per capita* have been going down when measured in real money, aka gold, for at least 3 decades. Why? US living standards have only decreased (at the median) due to globalization. I am not talking about quality of living which is affected by deflationary effects of technology. I am talking about how much the output of a US person is worth, in real money. The real value of the median US person in the global economy is in free fall, which explains the need to ‘borrow’ (print) more. But the real living standards have been deflating – eg that’s why a record number of people in the US now live in multigenerational house holds. Millennials still living in their parents’ basement despite the record debt. Real inflation is reflected in the national debt, it will never be paid back, just eventually inflated away as Americans’ standards of living collapse into a 3rd world country.
like ‘frog in slowly boiling water’ + Smoke & mirror games to deflect the critics away from truth. Already happening now. MSM in complicit!
Nothing here, just mov on!
LOL thanks for the laugh
Wolf, What’s the best protection from collapsing public pensions? Mobility?
Being independently wealthy.
Money can solve most problems.
Move to Mars?
I like you’re thinking here Wolf. Maybe we can all take a ride on the Tesla stock price there together.
Elon Musk has an offering for that.
The more economic option is New Zealand.
I’ve never been there but Peter Thiel and many of his Silicon Valley buddies swear by it, so …..
It’s great here. Fresh snow last night. Air New Zealand brought back it’s cheap domestic flights this week. Sold 160000 in one day. Domestic tourism is doing okay. Had a record trade surplus during our lockdown. Life could be far worse!
New Zealand?
Why?
It’s even further away from the ‘civilized world’ than Australia!!!
Can’t remember if my post about the country was allowed a while back and I’m not going to check or repeat the data in the post, but other than a a few places the country is empty.
It also suffers from having a left wing ‘darling of the moment’ who has megalomaniac tendencies runnig the country.
True, it’s the most normal of the anglo societies.
Just had our worst ever GDP collapse. Years of nil growth ahead of us. PM is Jacinda Adern. Google Jacinda Adern comrade speech and u will c what were up against. Plus she will need the greens to form her next government. Their not greens there actually a combination of all our communist/ultra socialist groups. It’s alright for Thiel and his cohorts. They just leave whenever things get tough.
New Zealand is fantastic. Ardern’s leadership was exemplary during the pandemic–they’ve had about 25 deaths total. They do have a few right wing crazies, but that Aussie mosque shooter was a wakeup call. It’s paradise, with earthquakes.
Leanfire: and which is the least normal?
LOL Let’s call that “ultra-mobility”.
Have you seen this precedent?
I rather see current retirees getting their benefits cut instead of affecting the young, Dutch-style.
“That playbook is to steal contributions made by members to their DC (defined contributions) accounts to cover the rising costs of DB (defined benefits) pension debt.”
https://thelens.news/2020/08/19/new-legal-precedent-set-for-public-pension-policy/
I wonder if Illinois will do something like this? Theft from current employees! Damn, everyone in Gov is stealing these days!
“Move to Mars?”
What’s the currency gonna be there? Gold-backed Elons?
It’s too hot there.
Like most of the Dallas PD, panic first, cash out take the lump sum.
An old RV will give you all the mobility you want.
Yeah sure, and maybe African American get “reparations” for several hundred years of slavery. Maybe Native Americans get “reparations” for the loss of their land. Maybe Mexico gets “reparations” for losing California, Nevada, Arizona, New Mexico, Utah, and Colorado.
No disrespect meant to anybody, but in the big picture, American casualties were insignificant.
There were multiple individual battles on the eastern front where more people died than American in the entire war.
Poland lost 20% of its population, Soviets lost 27 million…..
How can gov’t “funds” buy gov’t debt? What do they buy it with? SS has no money. Fannie and Freddy have no money. Pension funds are broke. Makes my head hurt.
The US government owes Social Security about 5 trillion, held as a special class of treasuries. Over the years, SS ran a surplus which the government borrowed and spent, so it is not correct to say that SS is broke. Also, Social Security still has a steady cash flow from withholding payments and has enough to keep up payments until about 2035, if the Treasury permits them to steadily cash in what the system is owed. Those special treasuries can only be liquidated with the approval of the US Treasury.
SS isn’t broke. The people that owe it money are broke.
Well done!
Being a retired engineer and math kind of person government finances always make my head hurt. In my mind I can see an algebraic equation for goverent finances that has two k factors. K1 is government debt and k2 is interest rates. K1 and k2 are levers the government can plug in to make sure the equation is always numerically solved (and allows politicians to over promise). The equation can be solved to ensure there are always dollars, but that is not the same as real goods and services.
Old School,
But one you have too much government debt ( K1 ) you cannot increase interest rates ( K2 ) and while K2 is positive only increase K1.
Henry Ford,
The Social Security Trust Fund balance rose by $6.5 billion to a record of $2.9 trillion at the end of fiscal 2019. This money is invested in the most conservative investment in the US, namely US Treasury securities, and they pay interest too.
The funds bought these securities with moneys from the contributions to the funds made by workers and employers.
The only difference between the Treasuries I own and the Treasuries the SS fund owns is that mine are “marketable,” meaning the price changes on a daily basis, which is not good for a pension fund; whereas the SS holds “non-marketable” securities whose price doesn’t change, which is good for a pension fund that holds them to maturity. Don’t fall for all the BS that is circulating around out there. There are plenty of real issues to get headaches over.
https://www.ssa.gov/oact/progdata/fyOps.html
I’ve heard a rumor that the US Treasuries that SocSec has been “investing” in lately don’t yield very much.
Yes but you sell them for a 20% gain when the Fed implements negative rates.
SS payments are a tax, just like the income tax and all the others, theoretically funded by the same group of debt slaves. Just like the government, I have a savings account (SS) and a credit card (debt). My savings account has $2.2T, while my credit card has a balance just shy of $27T. I am flush, right?
We can dance around the issue using words like “marketable”, but the “securities” are all government debt, which can be valued all the way to zero.
This… “the “securities” are all government debt, which can be valued all the way to zero” is obliterating BS.
Good point Mr. Richter. When holding a US treasury to maturity the principal is always 100%. It’s my understanding that the Social Security Fund is restricted to only buying US treasuries and other specific US government debt.
Debt is never repaid in a depression they trade your savings for real estate then in 5 years sell it for one payment of taxes as told by grandma who was there
Clean & clear charts. thanks.
First of all, almost all of these issues were resolved long ago by treaties, etc., with foreign nations. Second, we cannot pass laws and enforce them on foreign nations or foreign citizens not in the USA, although the Assange prosecutors apparently do not get that.
Third, I hate to tell you but, while I despise the Soviet mass murderers who operated under Stalin to kill millions, they are probably more responsible for defeating Hitler and suffered far more of the casualties. Indeed, it might be that our wily leader, FDR, delayed the western allies’ invasion of Normandy (and only allowed the invasion of North Africa and then of Italy, which would be stopped at the Alps) to ensure that the Soviets’ strength was significantly decimated by the Nazis
That is just my pet theory because FDR reportedly had an unrealistically positive view of the Soviet Union, but FDR could manipulate people beautifully and may have deceived the commies in his own administration by pretending to love the Soviets, while he let them get pounded by the Nazis. Keep in mind also that until the results of the testing of the nuclear weapons were given to Truman, he was going to go hat in hand to the genocidal Stalin to ask that the Soviets to also attack the genocidal Imperial Japanese government.
Fourth, we profited from bailing out many of our current allies: a subjugated, communist Europe or a communist Japan might well have resulted in our nation being taken over by the communists. I like my organs where they are, thank you.
(The commies believe that your organs belong to the “community”, i.e., are their organs, like the CCP cadres believe in China when they murder Falun Gong, etc., to “harvest” their organs then sell them for huge profits for those CCP cadres.)
Moreover, in the US, we are now not running on fumes but on the memory of fumes. If our allies did not keep buying our debt, we would be in even worse shape.
Fifth, that said, I suspect that at least part of the massive volume of this foreign aid by purchasing our funny money debt (when even a dullard could see that hyperinflation is only being delayed temporarily) is probably because the “Federal” Reserve bankster cartel is giving the bankster parasites or their central bank at the UK’s City of London something in exchange. We will see someday what was actually happening. See https://goldstockbull.com/federal-reserve-secret-bank-bailouts-topped-16-trillion/ and https://wallstreetonparade.com/2020/03/the-dark-secrets-in-the-feds-last-wall-street-bailout-are-getting-a-devious-makeove/
I predict that as in the 2008-2012 bailouts, what we are also seeing is only the tip of the iceberg.
Sixth, hyperinflation is how this massive US debt will be handled. That means that bonds/treasuries will become worthless.
The same applies to the stock of many companies, which are being kept alive via ultra-low interest rate loans and forbearance. Thus, there is no safe harbor visible now for US investors.
On the subject of hyperinflation and gold, I agree with Lynette Zang’s prediction that there will be a currency reset (probably within five years), removing zeros from the dollar or making a new dollar to replace the current dollar when hyperinflation occurs. However, all gold proponents miss or forget Executive Order 6102 signed on April 5, 1933, by US President Franklin D. Roosevelt “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”
The government thereby effectively told gold investors, your gold is our gold and bought their gold out at what was reportedly way below the FMV of the gold. Thus, in advance, let me say: good luck, gold bugs and your nation thanks you for the almost-free gold donations.
Trillions… stop thinking local… we need to get to national… quadrillions or quintillions. That’s when we will know we made progress.
We need to properly apply the following adage to this country. When you owe the bank a few thousand, it’s your problem, when you owe the bank a few hundred million, it’s the bank’s problem.
Quintillions seem to be the right ballpark.
?
As of 2019, there were about 128 million households in the U.S.
$3.3 Trillion is about $25,780 per household. Your family – that is, you and your kids, just racked up $25K in debt.
Did you feel like you got your money’s worth?
I’m trying to figure out what I have to show for blowing $25K since March.
Shouldn’t we have some new parks, or some light rail systems, or a few square miles of solar farms down in west Tejas?
I realize that some of that money went to families to pay the bills when the Show stopped. And I’m all for that – people needed that money to put food on the table. I like to eat, too, so I get that.
Next time we spend $3T in a quarter, I want to see some tangible social-good build-the-commons sort of thing happen. I want our money spent on something that does the country good while it keeps the good people afloat. I’m pretty sure we can do both at the same time. If we actually did walk and chew gum at the same time, it would really help morale.
Everyone’s morale. And we sure could use a few morale boosters.
Gold is a shiny metal coin, if a collapse happens & people need food do you think someone with food will want a metal coin, or maybe they will see ya nice gold coin & offer you a bag of $3 rice, the first thing Gov will do is ban gold & take it away, they like society to hold gold so they can take it by force, you don’t declare it jail, you transact in it jail, they’ll offer $100 for people to bring it for 3 months then deem it illegal, anyone holding it will have it taken & 1 year jail. in the US i think gold is $42 an ounce, that’s the Gov price, that’s what they will give you. So gold bugs will save it & the Gov loves that, they can use it in an emergancy, I’d rather bags of rice, lasts decades & safer, not that I have any :)
Sorry I put this comment above in the wrong place :)
Boy people are really going tinfoil!!
ASk the people in the folwoing countries if they would rather have an ounce of gold bought years ago or a bunch of paper currency from the same time:
1. Zimbabwe
2. Turkey
3. Argentina
4. Cuba
5. Venezuela
6. Mexico
Or even here in Australia!
Tin foil?? Gold didn’t rise in those currencies the currency collapsed, even toillette paper went up the same as gold, when they didn’t collapse people starved they wanted food not metal, you’ve been watching to many Youtube videos.
So tell me, what did we get for the previous US$8 trillion that the previous administration ran up in debt?
Nothing I can see there either and that was also accompanied by 8 years of interest rate repression which saw hundreds of billions, if not trillions of dollars sucked away from ordinary Americans right into the combined cesspool of Washington and the big money center banks.
And as soon as interest rates started to go up, they were slammed down by the Fed taking away the first growth in income for savers in almost a decade.
Ever wonder why?
You got more billionaires – those guys aren’t cheap – where’s your loyalty? /s
We got a pair of $5 trillion wars…
I want to see the Death Star. I think that’s fair.
We can use it to solve the climate crisis.
Tom: “I’m trying to figure out what I have to show for blowing $25K since March. ”
You bought food and rent for 30 million people who lost their jobs due to the pandemic. Remember photos of soup kitchens back in the 30s? It’s the same now, except we pay them to buy their own meals.
Please take the time to actually read the comment before reacting.
Thx.
It’s complicated. Hard money people don’t like what was just done. That’s $3.3 trillion of real goods and services that was taken from producers somewhere. They say production also known as investment also known as savings was just depleted $3 3 trillion by slight of hand hurting future production.
We will see how it all works out. You do need a safety net, you just can’t let it get so big that people don’t want to participate in the production system.
Stupidly I spent 40 years building and maintaining my own safety net and not doing a lot of fun things I saw others doing. How was I to know that when a safety net would be needed one would be provided for free.
It is gratifying when mistakes are acknowledged.
Admit it though….you liked the process and used the safety net story as cover.
You know, like Walter White said it was all about suppoting his family…when in reality, he just loved what he was doing.
Tom…
and here’s your $600. Take it and like it, they tell us…
All we have to do is look at what the government actually spends money on. The vast vast majority of it is on military and transfer payments. What little gets invested in infrastructure is probably mostly the result of subsidies that indirectly lead businesses to build x amount of (tangible) capital for their own use. Publicly owned infrastructure is just left to rot until local issues lead voters to charge themselves property tax. However, you get the case where in a lot of poor or rural communities they refuse or cannot afford to even fund decent education for their own children.
Why fight the factory farm and automated manufacturing? Move to an overcrowded city near you, and refuse to vote for investment in commuter trains so you can spend 2+ hours a day commuting or living in a cramped expensive highrise. Well… Covid is killing the office. We have years to see if people won’t just form isolated suburban pods connected with fiber (provided this doesn’t go hand in hand with downward wage pressure). Won’t need no stinkin infrastructure.
All my property taxes are spent on maintaining pensions for retired administrators/teachers, except for a few bucks spent on miscellaneous and sundry.
Got to vote with your feet if your family circumstances allow. I know of a few good places, if you can make the cultural shift. One is mountain area of tennessee and another is northern coastal area of south carolina. Low taxes and freedom loving people.
Regretting not being a teacher, eh?
Regret and envy….they do eat at the soul.
@OTB – Were I to regret anything of that order it would be not retiring at 55 as high school administrator with 2-3 times the pension of a teacher. Fortunately regret and envy have never been components of my character. They seem to be necessities of the current crop of youth.
LH
Character is its own reward.
Yet the elderly….as always…..lament the lack of character in youth.
Maybe…or not…
Way too often the elderly are misguided as well.
It’s an insurance company with an army.
stock market went up! and rich people got richer, just don’t say that part outloud ;)
I like you.
I own a few shares of a govt bond fund so I bought some of it I suppose.
Yes. Thank you! Your help in keeping the government afloat is much appreciated :-]
Now I wish I bought some long dated treasuries back in 2006. Risk free 4+% (think that’s where things were) sounds really good now.
The last of my grandfather’s 30 year treasuries just matured. 8%.
I remember when a friend bought some Treasuries at 15% in ’81. I was young and didn’t have any “spare” money.
There’s always whole life insurance if guess…
I had most of my next egg in short term treasury fund as well. It wasn’t a bad place to hide out the last year as interest rates dropped it had a 5% plus annual return, but that’s all over now and it’s got to find a new home eventually.
Feb prints money, gives to treasury who hands it out to Covid unemployed so they can pay their rent. Landlord pockets rent but has too much money to spend already so buys new US treasury that’s just come up for sale.
Govt goes yay we supported you. Fed goes yay someone bought the treasury. Inflation goes nowhere. Future tax payers are even more indebted to billionaires, who will accept whatever remaining real wealth said taxpayers might have to pay off the debt the fed created for them.
Let it all burn.
The road to slavery. If you can make laws, tax and print and hand out money you have got the power. As an individual you have to remember your strength is being what the government is not which is being creative and fast.
I don’t think that’s true, I think it’s rubbish to be honest, sure 27 trillion over 20 years or whatever might have gone missing but believe me it’s well gone, you think these people will steal & then leave aside for manipulation?? No, I don’t think so, if that figure of missing money is true it went on black opps, bribery, stolen by people, expenses, black projects, to fill wholes in secret missions, all sort of shady business, if it’s true, all it takes is 1 trillion a year or so over 20 years of stealing and what I described to have that shortfall, no way in the world they would steal it as a lump sum and hold it, life doesn’t work that way, this is tens of millions of trasactions and thousands of people skimming & doing clandestine activties, you got that from a gold bug I bet, I would say even more money than that has been wasted, the US does a lot sof shady things that ain’t cheap. Lets steal 20 trillion to maipulate gold is just a gold bug hyper story, why would they want to manipulate gold?? It’s been in the toilette most of history, just gold bugs want to believe gold is going to 20k, not worth $500 if you ask me, that’s where it’s going, lower than $500.
Gold is a shiny metal coin, if a collapse happens & people need food do you think someone with food will want a metal coin, or maybe they will see ya nice gold coin & offer you a bag of $3 rice, the first thing Gov will do is ban gold & take it away, they like society to hold gold so they can take it by force, you don’t declare it jail, you transact in it jail, they’ll offer $100 for people to bring it for 3 months then deem it illegal, anyone holding it will have it taken & 1 year jail. in the US i think gold is $42 an ounce, that’s the Gov price, that’s what they will give you. So gold bugs will save it & the Gov loves that, they can use it in an emergancy, I’d rather bags of rice, lasts decades & safer, not that I have any :)
And here in Oz:
“Sydney Airport’s passenger traffic has again nosedived due to the closure of interstate travel caused by Melbourne’s second coronavirus wave.
The ASX-listed airport said that 129,000 domestic and international passengers passed through its gates in August, down 96.5 per cent compared to the same month last year.”
Of course, unemployment fell across the country over the past month too………according to ‘official government statistics’.
Freight rates into SYD are again in excess of 7.50 / kg. Near the Covid peak back in April, after having softened in July-August.
Real ugly. Wish I could get into the freight futures market, could make a killing. But access to the Nodal exchange is limited to primary brokers. Oh well.
One of the few ‘benefits’ to Japan from ‘Abenomics’ was the fall in the value of yen from around the 80 yen level when he took over as PM of Japan to a low of around 125 in 2015.
It has bounced around since then in a range of a high of 101 in 2016 to around 105 now.
That fall in the value of the yen resulted in a huge revaluation in yen terms of the US debt and other overseas assets being held by Japan.
Add in the capital gains from seeing interest rates plunge and the carrying value of those foreign assets exploded upwards even more in yen terms.
It also brought millions of foreign tourists to Japan which helped out a lot of the domestic economy as well. (GUess that has pretty much disappeared from that country as it has in others so that ‘benefit’ has gone up in smoke.)
“The fertility rate”
( babies per woman per lifetime )
has been lower-than-expected,
destroying pension plans.
The Ponzi scheme is unraveling.
due to the cost of living going up and the semi intelligent realizing its too expensive to have kids.
For those having babies, watch the movie idiocracy
Sixty years ago, a day in the hospital wasn’t $35k.
Jeff…..absolutely everything is a Ponzi scheme.
If all of the above happens, who will buy the junk coming out of China? They will go down too! Maybe that’s the Grand Plan?
Only 15% of China’s exports go to the US. They are scrambling to replace American customers with domestic customers and Belt & Road customers in the former USSR and Eastern Europe.
Yup. And that explains all the anti-China rhetoric in one paragraph.
Well-done.
And a naval blockade isn’t going to work. The supply lines are over land. There appears to be a lot of railroads being built in that part of the world.
“They are scrambling to replace American customers with…Belt & Road customers in the former USSR and Eastern Europe.”
That’s a tough row to hoe! Not much money there…and probably won’t be much in the future.
Congress passes these bailout packages and the president then signs them. Why do you think Pelosi is throwing a $3T tantrum? Your rabid TDS is showing.
TDS…LOL… You mean anyone who disagrees with your divine glorious dear Dotard leader… Is incomprehensible to you…as a Cult45 member.
Pelosi knows if this is her only shot at compromise… If she gives Moscow Mitch anything he will pass, he will not allow another vote.
Does botox brain or creepy Jo know anything at all?
The US indentured slaves (oops meant the taxpayers) ‘bought it.’ (the new debt). By the time they actually realize it, it will be too late for them and the already insolvent US financial ‘system.’
Your post shows you know nothing about Japan and in turn that makes the rest of nothing more than a bunch of BS.
The japanese and chinese central banks have trillions because they have a trade surplus. Every time consumers buy a toyota or chinese trinket, we lose a job here and increase their surplus.
America is a hollowed out economy. Soon the only work available will be plumbers, fast food servers and amazon delivery drivers. That is, until amazon figures out how to outsource drivers to robot trucks.
Your comment about Chinese trinkets stands. But pretty much all Toyotas are “more built” or “as much built” in the US as any US car companies.
A lot of older people on this thread will remember how we Americans used to make fun of the Japanese “cheap trinkets”.
Then Toyota happened to Detroit, and before long Japan, the size of CA, was the 3rd largest economy in the world, and made some of best products available.
It’s a well-known economic path from “cheap” to “highest quality”. Japan, then S. Korea and Taiwan, now China.
China is moving up the quality and quantity ladder faster than any other country did.
Please keep in mind that Japan went from ”trinkets” to world class as a result of them following the process engineering policies that Professor Deming FIRST tried to convince de twa to follow without success.
His quality improvement process advances were finally adopted by de twa and other manufacturers in USA, but only after the Japanese quality became very apparent.
Reading lately that USA still leads in innovation and engineering, likely good evidence as to why ambitious folks from the world over want to study at USA colleges, so far…
Yet, till now no one asks for Made in the USA except for patriotic people. No one overseas will ever say : “I want something Made in the USA”. On the other hand, Made in Japan still retains that smell of quality.
The US lead in “innovation” and “engineering” is a double edged sword. As a society we can do without Twitter and Facebook. Also don’t forget our “innovation” in finance including Private Equity, Mortgage Backed Securities and other financial “engineering” techniques.
Must be nice seeing the world with one eye closed.
MB,
Maybe true others don’t want made in USA these days, but I worked for couple of guys who were very successful selling entire house packages in Japan in the 80s, loading the entire house, from underfloor girders and all framing to all finishes and cabinets, plumbing, electrical, roofing into containers in the order they were to be used; everything but the concrete.
Boss told me of going there to close a sale, riding in clients new Buick that was rattling all over, etc., while client was delighted with it.
Now a days, seems to me every person able to do so in the world wants at least one home in USA?
As for your argumentum ad hominem,,, that is usually/always one of the responses of those without valid support for their ideas, eh?
One of the reasons that the Japanese attained heights of quality was sociological and not just good business. Long before Deming and Toyota the Japanese have been obsessed with quality for the sake of quality. Examples are knives and swords, china, fruit as gifts, Sushi, classic timber framed homes, Sake, Bonsai scissors, etc. The Chinese, the Koreans, the Indians and others will achieve acceptable quality standards , but not to the levels of the Japanese .
Agree with a lot but have to disagree about China moving fastest on quality.
Way, way behind the pace of Japan, which to me was one of the 2 post- WWII miracles, the other being the comeback of West Germany.
In fact at their present rate, China will never catch up with Japan in consumer goods quality.
Years ago I ordered a ‘window’ or ‘box’ fan. These are the unfashionable square things, 2 ft x 2 ft.
When it arrived it was different: it was 2 by 2 alright but instead of being 5 inches deep like my Taiwan fan it was 3 inches. How had they done it?
By flattening the cupped blades. Smaller motor, with thinner winding wire. ( I refused this one but have closely examined others)
That was decades ago. But a few months ago I dropped in on my old buddies at the gro-shop where I bought my first gro-light also 25 years ago.
On a side- room floor about 14 by 14 the floor was completely covered with big industrial size Chinese ‘Hurricane’ fans, some stacked sideways minus their cords. They had all been returned after burning out.
The world’s most famous travel writer Paul Theroux was at a dinner in China when one of the Chinese guests said ‘we can fool anyone’
OK not all Chinese think that way but the difference with Japan is that Japan offered more quality than the buyer expected. Like suddenly the cheap sh%t- box cars of the seventies were lasting 100 K + (the econo rear- drive Datsun 510 has become collectable) .
But to be fair, apart from cars, Japan and Germany are pretty much out of the consumer market. They sell to industry and let China supply Walmart. The Germans especially will tell you they don’t compete on price. This doesn’t bother the astute industrial buyer who will be suspicious of a low bid.
I expect China to be a price taker, not a price giver for a long time.
You can get very high quality manufacturing done in China. But you have to pay attention.
Different times. In the past, consumers expected good quality and they were willing to pay for it. Nowadays between the limited income of consumers to planned obsolescence (Big Thanks to Corporate America!!), true quality has no chance.
As an engineer when I was working in the oilfield, one common theme was not to buy (or approve) imported Chinese drill pipe, well casing, or production tubing. Ends up full of holes after a short while.
The Chinese are not schooled in material science and don’t know crap about metal applications, etc. We ended up yanking all that bad crap out of the wells and replacing it. Cost us millions.
You gotta give your allies something so they allow you to continue to occupy their country, duh
I have bought Chinese knock-off carburetors for small 2-cycle tools, and they are of fantastic quality. Very cheap now, but how long can we in the US buy such things for next to nothing?
U.S. is still a very big manufacturer. We’re not hollow yet.
What we’re most conspicuously missing out on is the creation of new industries.
This is what we should be doing; we’re rich, well-educated, relatively free to think new thoughts.
Why is our new-industry-creation restricted to Elon Musk? What are the rest of the 330 Million minds doing?
We should engage ourselves, set some great goals, and get with the doing.
Lead ourselves.
Good point, I think the answer is profitability or more specifically the its absence. No return on investment means no investment.
And taxed and regulated into BK.
Come on Tom, we have lots of innovation: Facebook, Instagram, Twitter. Things that enhance the “experience” or something. I don’t use them so I don’t know what it is.
On another note – no room on the homestead to play with a backhoe, not even a rubber-tracked sub-yard-bucket mini. There was the time I was going to buy some desert land and a used belly-scraper to build my own hill, but that’s another story.
Dunno what it is either. Never touch the stuff.
But the desert land belly-scraper notion…that’s somthing I’m interested in. LH, you sound like someone that left the main sequence a while back, and have been rowing hard ever since.
A very interesting person, indeed. When Wolf has another of his little shindigs, pls make sure you find a way to attend.
And for the rest of you nefarious WS posters, when the vaccine arrives – or even if it doesn’t and we have to tuff it out…we need to descend upon poor old SF and lift it from its lonesome streetcorner blues.
Industry consolidation, increasing CEO pay, secular stagnation. After the Macintosh, Steve Jobs swore he’d never manufacture another machine in the US and then he conspired to hold down wages.
Oh you are going to trigger someone by criticizing Saint Steve Jobs.
The interesting thing is that the percentage that the Fed owns is actually a relatively small percentage.
Now I understand that many of the non-Fed holdings are quite sticky (there is no alternative), but it means that even a small shift in holdings of the investors outside the Fed can have big consequences that the Fed will not necessarily be able to counter.
We are now accustomed to the idea that the Fed can always step in and buy treasuries to suppress yields, but this only works in a dis-inflationary environment. If yields should ever rise because of (perceived or real) rising inflation, the Fed cannot print money because that just adds oil to the fire.
The only option to suppress inflation and yields on the long end is then to raise interest rates on the short end and shrink the balance sheet or remove liquidity by raising interest earned on reserves.
Right now this looks inconceivable to many, but external shocks such as geopolitical events (causing shortages etc) could bring this about. China invading Taiwan for example. This is also a scenario where you would want a stronger currency, not a weaker one, to pay for your imports.
Nobody seems to discount this kind of scenario, so here is a massive potential black swan. But with tensions rising everywhere in the world a scenario like this is really not so unlikely.
YuShan
If one country sells it’s share(Treasuries), there are many other Countries’ out there, whose currencies are being devalued faster than US$. It will be gobbled up soon.
Study all the previous BEAR mkts, find out where the cash went after the sell of equities? To treasuries especially 10yr bond!
TINA!
(Been in the mkt since ’82)
1) No black swan under Trump.
2) Suppose SPY will dive to 300 in Oct, turn around, dance drunk
above red flatbed cloud, on the way to Jan 2021 lower high.
3) $25K/ in accumulated debt per household to save the unemployed from eviction and starvation, while wall street was celebrating.
4) People consume food every day. That number will grow.
5) After Dr. Faust put US in coma, until we know what we don’t know, we cannot hide the the ugly bumps on our forehead and the dark stains on each side of our eyes.
6) They came from the swamp in our shrunken brain when we have been comatose.
1) No Trump under Black Swan
2) 1% pulls S&P down to 3000 until after the election
3) The liability per taxpayer is 80K?
4) US agribusiness creates 21st century high protein C rations, for free distribution at food banks.
5) CDC panel gets up and walks out during press conference. Fauci takes a knee when they play hail to the chief.
6) Touting vaccine cures only brings up more stories about drug company price gouging. Free vaccines, for whom? Stories about the wealthy taking their own private spa cures.
#3 – Soylent Corporation provides Soylent Orange to the population while Soylent Green is under development.
Oops. I meant #4. Drat!
I would love to see a Venn diagram of anti vaxxers in general and pro-covid vaxxers specifically.
How many anti-vaxxers don’t ask if a puppy they want to buy has had his shots?
Wonder how they think small pox was eradicated? ( The first vaccine: inoculating with cowpox)
They are a subset of ‘the moon landing was faked’, chem trail cults etc. and a symptom of the decline of science or even basic tech knowledge. Try asking an anti-vaccine type why we use AC instead of DC in the grid.
To hide those ugly bumps on your forehead and the dark stains on each side of your eyes pull up your mask.
I think he had 500 plus businesses going so 7 isn’t too bad. It’s standard practice in real estate to borrow money at one rate and pencil out the project to make a much higher rate of return. Some don’t work out.
The US being the reserve currency economy isn’t so different as the government borrows at a very low rate and you hope to get it out into the real economy where it will earn a higher rate. In some ways it’s all about incentives. The government has got to incentivize people to want to participate whether capital or labor. I think it’s good that we have someone from the private sector for a couple of terms to make the US more competitive.
Since neither party has any intention of slowing down the train, it really is a question of when you hit the wall and not if. As a parent it’s disconcerting. It’s one thing to worry about oneself but if, and I assume most do, care about the future generations it’s hard not to be very worried.
We repeat this process ad nauseum. Stocks go up during earnings seasons, earnings are good, that is why they call them earnings. Bonds are money government buys, their earnings. (There is more voter fraud in treasury sales than in general elections, just type the name, of someone living or dead.) The top four on that list makes you a bit queasy. City of London, international, is okay. An offshore tax shelter, a former democratic constabulary trading hub, now being sucked into the vortex of Bejing, and the largest SA economy, voted most likely to have a Cuban style revolution. (See rest of BRIC by comparison) This was the issue on trade with China FORTY years ago, and now we are walking down the same path with financing of our deficits, which is food and shelter for the unemployed, bond holders who are widows and orphans mind you, not just a few high flying stocks. Nothing new here however.
Wolf,
If US Investors are the largest holders and buyers of the US debt. What drives them to purchase these debts. As I see it, there is no upside. If the Treasury rate is near zero and the Feds want to see inflation at 2% or higher, then holding them means your funds will depreciate if held to maturity. Also, if treasury note rate increases, then you would not be able to unload them at face value and you would have to take cut to transfer to other investments. Seems that just holding cash would still be preferable. So why do they buy them at all, especially when unprecedented amounts of securities are being offered? Is there something that forces these purchases?
How many billions in treasuries does Apple have on account at Wells Fargo?
The real debt time bomb is the private debt, not the public one.
That time bomb already blew up and the Fed went haywire to douse the flames.
1) QQQ(L) took out previous 34TD(C) on the left. Same volume, double the size of the previous bar. Something is wrong.
2) Today selling tail might indicate a bounce higher. Room to go slightly higher, on Mon(C) & Tues(C) without changing a potential downturn trend.
3) QQQ(C) < dma50. QQQ can build a cause all the way to July 13(H). A cause for what ?
4) QQQ breached the cloud (9,26,52) and bounced back up < T&K.
5) T in the last 9TD established a now low today. K also established
a new low today, the lowest point of the last 26TD.
6) The top line A of the front end of the cloud is the halfway the distance between T&K. It's trending sharply lower.
7) The cloud almost flipped, but It didn't. That might happen next week.
8) Today SPX(L) almost touched the cloud and bounced backup, inside Feb 21/24 gap, backing up.
9) SPX & NDX might glide higher above the cloud in direction of the spitz at the top of the cloud.
Volume :
1) QQQ the same volume, twice the bar size // NDX almost 50% higher volume.
2) SPY the slightly higher volume // SPX 50% higher volume.
3) The Dow almost 60% higher volume on slightly larger bar.
4) Somebody was buying today, preventing the DOW from sliding further down.
This might sound like a novel idea – what if all these nations are enslaved by the US by being forced to hold their debt? Ever wonder why these countries just don’t buy up the entire Google or Microsoft or Berkshire or Exxon with their money instead of buying Treasuries? Is it money if you can’t spend it on what you want? Saudis Japan and China were only allowed to buy unproductive assets like real estate in NYC or the wildly unprofitable ventures like WeWork. The moment you try to run a profitable slice of social media like Tik Tok BAM you outta here. All I’m saying is the more foreigners hold US debt the bigger sucker they become. And that’s the definition of an empire.
Devils advocate,
Foreign entities hold a HUGE chunk of shares in US companies. The tiny Swiss National Bank alone holds $118 billion in US stocks, including $6 billion in Apple and $6 billion in Microsoft. The Japan Government Pension Investment Fund holds a big junk of US stocks. The Norwegian government pension fund holds a ton, as does the sovereign wealth fund of Saudi Arabia. They all do, everywhere.