$178 Billion In Gross Treasuries On Deck, $118 Billion In Coupons

Tyler Durden's picture

The wealth transfer continues: another $118 Billion in coupon issuance is coming up, the bulk of which will be bought up by Primary Dealers, repoed back to the Fed, and the resulting cash used to ramp stocks to new all time highs, generating short-term profits for the banks and another year of record bonuses as future US generations will experience the kinds of riots caused by debt mismanagement as Greece does today.  Another $49 billion Bills will see the same fate. Also, with the first auction of 5 year TIPS since 2009, is someone telling us something? The Obama plan: Dow 36,000 by the mid-terms or else. In other news, the most recent unmanageable debt load per the DTS is $12,808,961,000,000. This is money that will not be repaid, and includes Trust Fund balances that are amortizing ever faster as America's entitlement state dream joins that of Greece.

As a reminder, this is what the US curve looks like. Guess what happens when Oil hits $1,000/bbl and Bernanke, seeing the pitchforks outside the Eccles building, finally raises rates.

 

 

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mikla's picture

Don't forget that Social Security (and Medicare) are negative NOW.  On paper, Social Security is now drawing funds from the non-existent "lock-box", but in the real world, the US Treasury is issuing bonds each week to cover Social Security checks going out this week.

Cashflow, baby.  It's all about the math, and the cashflow.

Mr Lennon Hendrix's picture

To add, S.S. is pay as we go.  This because GHWB jacked the fund and left an IOU.

Mr Lennon Hendrix's picture

Could you elaborate?  I do not use wiki to fact check sources, only to fact check dates.

AR15AU's picture

 

How do you 'jack' promises to pay? The IOUs predate Bush I.

 

Mr Lennon Hendrix's picture

Reagan toyed with the fund during his presidentcy.  He would pull the fund, and leave an IOU, but would return the money each time.  Then once GHWB stepped in, he did the same 1st step, pulled the fund and layed an IOU, but then never returned the money.  An IOU still sits in the Treasury with GHWB's name on it as collateral.  A Dear John note, in my opinion.

Shameful's picture

There was never a "lock box" .  As it was treasury debt it was in effect always a ponzi.  It's not like they went out and invested the money, they spent it before it was even collected.  From day 1 it was a ponzi scheme, only one enforced by the gov holding a gun to every one's head.

jdrose1985's picture

 As a reminder, this is what the US curve looks like. Guess what happens when Oil hits $1,000/bbl and Bernanke, seeing the pitchforks outside the Eccles building, finally raises rates.

 

When oil hits $1000 a barrel those of us who remain alive will be doing all we can do avoid the roving gangs of raging mad max style hillbillies.

Gold at that point will be nothing other than shit attracting flies. Go long fishing poles and antibiotics, you have a better chance.

Mr Lennon Hendrix's picture

"Gold at that point will be nothing other than shit attracting flies."

That is a bold comment to make with no reasoning.

jdrose1985's picture

Reasoning: are you some sort of total badass who thinks biker gangs aren't going to be prying it from your cold fingers?

 

Doubtful

Mr Lennon Hendrix's picture

How are these biker gangs going to know I have gold and silver?  I missed the part that deems bikers clairvoyant.

jdrose1985's picture

well where ya gonna be spending it, mr smarty pants? Or you just gonna let it set in the ground til things blow over?

I'm just saying, be prepared, have an exit strategy, don't think a pile of gold is going to save your ass. A way to ensure a steady supply of food and live off the land is numero uno.

Mr Lennon Hendrix's picture

Name calling makes me think your arguement is weak before I read it.

I will adress your questions, as they are the most frequent.

Gold will buy land.  Silver will buy food, and oil.

I am prepared.  I do have an exit strategy.  I do not think PMs will "save my ass".  I have a steady supply of food.  I have land to live off of.

jdrose1985's picture

Name calling makes me think your arguement is weak before I read it.

I will adress your questions, as they are the most frequent.

Gold will buy land.  Silver will buy food, and oil.

I am prepared.  I do have an exit strategy.  I do not think PMs will "save my ass".  I have a steady supply of food.  I have land to live off of.

If oil is $1000 a barrel, how the fuck do you think food is going to be produced? I hope you realize that it takes oil byproducts to fertilize the ground and plow and plant it also...if you aren't growing it and finding it yourself, you're doomed. Food will be THE asset class of choice and it is extremely undervalued right now while I see a large pullback as imminent in the PM sector. Checked out the HUI lately on the monthly???

You're talking about silver buying you food that won't be for sale. Are you really prepared or are you just trying to sound sophisticated?

Janice's picture

Not to belittle your rant; however, sophisticated survivalists realize that only in the modern age has food production come via oil.  True sophisticated survivalists understand that when oil cannot be had, shit will suffice as fertilizer.  It is apparent that you have an abundant supply fertilizer as you appear to be full of shit.  I'll sell my excess food products for silver.  I've been planting fruit trees for years.  Buy gold bitches; silver, seeds, & lead.  : )

jdrose1985's picture

I lived in farm country, worked on horse  and dairy farms and cattle ranches the first 19 years of my life. My childhood best friends' family owned a 120 acre apple/pear orchard. I'm speaking from experience.

Have you ever seen fields planted by someone driving a tractor? (using no-till technique)

Have you ever seen the Amish plow and plant a field by manual labor? (plowing with single tooth plow pulled by horse)

The former does in a half hour what it will take the latter 2 weeks to accomplish with unmatched precision. 1 farmer can prepare and plant a 100 acre field in the time it would take 100 skilled amish to plant a 1 acre field. $1000/barrel fuel would wreck the world and mass starvation would ensue.

I've been planting fruit trees for years.

 

That's great, you better have tanks full of fuel and the means to protect that fuel in order to spray them for insecticides (you better have years supply of that too) and harvest your fruit. Your best bet is paying people silver/gold to do the manual labor for you but the results will be extremely lacking compared to having oil to burn.

My original post was talking about a mad max style world and it seems you guys got away from that context. If you weren't mobile you would be a sitting target. It's all hypothetical anyways.

I do own a little silver and gold btw, but the "In gold we trust" thing is getting a little overdone.

Edit...Janice I don't see a logical way to harvest the shit fertilizer and transport it to where it needs to be spread. Sounds pretty labor intensive to me with oil at $1000/bbl. Carrying 5 gallon buckets?

 

Mr Lennon Hendrix's picture

SILVER TRACKS OIL.  Silver, snitches.

dumpster's picture

jd rose a loud mouth with nary a pot to pizz in .

so he makes it up with spit

jdrose1985's picture

jd rose a loud mouth with nary a pot to pizz in .

so he makes it up with spit

Although you don't know me, you're spot on. I don't own much but I have no debt and total freedom. I also have the means to go about anywhere at any time and live my life with no strings attached (besides the wife). I have no stress in life (beside the wife). This has left me feeling wealthier than I'd ever have imagined possible.

Put your faith in riches and they'll sprout wings and fly away, dumpster. (Your name preceeds you)

Mr Lennon Hendrix's picture

jdrose1985.  do you read others' posts?  or do you just like to hear yourself?  I know all about organic compost.  I have spent months covered in bat guano. 

A pullback in PMs you see?

I am prepared.

jdrose1985's picture

Generally I try to refrain from adding static to such an awesome arena of thought and wit here at ZH. Honestly I tend to overlook your posts as they usually all say the same thing but the recent folly of my ways has become evident since I decided to get into a pissing match with you which wasted your time and mine. 

I could ask you the same question (do you read others' posts?)

I have repeatedly stated that I am bullish on PM's. However, they are not my saviour or my god and I put absolutely zero faith in them, I am just biased towards them in the long run and in the short run a great buying opportunity will present itself. I owned HL CDE SLW TCK UEC et al and made handsome profit since Feb 09, washed, now ready to rinse and repeat.

Good luck to you and sorry that I came across as controversial. Just get tired of hearing how gold is some sort of panacea for all the ills which will follow economic collapse.

Mr Lennon Hendrix's picture

I have read ZH religiously for over a year now.  I have not only focused my attention on the articles and contributers, but on the posters as well.  Some on this site blow my mind.  The other day, Hulk and company were discussing how to build log cabins.  I am very well aquanted with posts.  I read them all.  I am also well aquinted with your posts.

Your apology is well received.  I understand, or believe that I am on the right road, how complicated this situation is.  It will not merely take holding wealth in the form of bullion; work ethic, knowledge, and skill will be of the upmost importance. 

Alienated Serf's picture

Gold,Silver,Guns, Ammo, Booze, arable land.  you will need it all.

futboller04's picture

That's what all the pre65 coinage is for. The gold is get me back on my feet again when things settle down. Those bikers probably won't find my stash on my 200 acres in Nebraska

Alienated Serf's picture

If you live out on the plains, there is not forests to provide wood for heat; so what do you heat with? 

Aplogies if this is truly ignorant, I've always lived in eastern woodlands.

AR15AU's picture

If you can't make ethanol, there's always dung.

Alienated Serf's picture

Understood, but am I correct in stating that it would be much more labor instensive and time consuming?

My doomstead will have streams/srpings and plenty of timber.

Hulk's picture

Start planting trees, asap.

Lots of em.

Alienated Serf's picture

Hulkster, I honestly wouldn't live where there aren't trees and water on my property.  North/Central Maine is the place to be, largest uninhabited area in the Lower 48, cheap as hell land and existing farms.  Tons of lumber and 6 hours from any city, and the people are great and are already very independent.  Anyway, I'm gonna stop now, can't be giving up my secret plans too much.

Hulk's picture

Dude, you gave em up twice!

I misread your prior post...

Jim Cramer's picture

Because they will have a gold and silver sensor on their bikes as the roam the countryside looking to pillage you and spend it on........oh wait there isn't anything to spend it on.  Come to think of it, where are they going to get gas?

Mr Lennon Hendrix's picture

The chance of finding which house has gold is like finding a gold thread in a haystack.  Good luck roaming biker gangs!  I bet their profit margin is so low, that if we do go into a Mad Max scenerio, those hunting people for PMs will only last a week until they give up, and go to work on a farm.

kaiserhoff's picture

In Central Illinois, roving biker gangs would be welcomed as target practice, and a crunchy treat for the hogs.

jdrose1985's picture

In Central Illinois

 

how far is that from Chitown?

Central Illinois would be overrun about 3 days after the supply chain failed, tops

Hulk's picture

Hog fed hogs, I like the sound of that!

dumpster's picture

these biker dudes will be prying (if they are in the area) every thing from your fingers and mouth ,

poor excuse not to have gold as a back up.. the only other reason could be a yapper in .  trying to sound mucho  

AR15AU's picture

Gold at that point will be a medium of exchange...  if you have antibiotics and fishing poles and want a firearm, you may need an intermediary to barter if the person with all the firearms doesn't want your expired drugs and glorified sticks.  Get a clue. 

jdrose1985's picture

if you have antibiotics and fishing poles and want a firearm, you may need an intermediary to barter if the person with all the firearms doesn't want your expired drugs and glorified sticks.  Get a clue.

 

So you're going to approach somebody with a firearm with a gold coin in your hand in the hopes they dont point the gun at you and tell you to hand it over?

Get a clue.

 

 

aaronvelasquez's picture

If I were a roving biker gangmember, I would stake out the marketplace and watch who was paying with gold and silver and follow them home. . .

dumpster's picture

and those paying with cash .. the bikers will get ya.

any dumb cluck who takes coin to the market place .. and showing it around for stuff is a dufus .

i bet he takes it to a secure location . set up...  sells the coin for cash then lazys on down to the market place on his harley,, looking hairy

Ned Zeppelin's picture

Confused. PDs hand over CASH to buy Treasuries, then repo to Fed for CASH to then invest in stocks. 

Why not skip a step and just buy stocks instead of Treasuries?

Now, I'm with you if the steps that really occur look like this: PDs gather together whatever cash they can find from hapless investors who think Treasuries are safe.  They then PROMISE to pay the rest someday, but 100% of the bonds etc. are issued (so the auction never fails). The bonds etc. that are not paid for are repoed back, plus the ones paid for (as to which hapless investor expects only the coupons to be paid), and all of the resulting CASH is deployed as mentioned. 

Popo's picture

... or unless they can buy low and sell high to the Fed.   Which would be the same as the Fed just giving cash to the PD's...  but you're right... I'm not sure I understand the order of operations either.

 

 

Tyler Durden's picture

Because PDs are needed for the successful execution of every auction. Without them we may very well have a failed one. This way they keep rates low (steep yield curve especially when buying the short end) and recycle the cash to buy stocks.

boricuadigm-shift's picture

It's called Debt Monetization. 

     1) The FED can't buy the Treasuries they are issuing.

     2) They need the free market to determine the right interest rate (ujum). 

     3) The banking laundry cartel buys Ts

     4) Repo them back to the FED and then hide it in their books. 

     5) The sheeple don't notice and keep thinking is the Chineese who just ran their first trade deficit in years.

 

Can someone correct me?

 

Is it that simple?  Or am I wrong?