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Ex-PBOC Official Wakes Up From The Acid Trip: "U.S. Treasury Market Is A Giant Ponzi Scheme"
After years of being the primary supplier of funding to the US credit-money shell game, one more ex-PBoC member wakes up from the "great normalization" acid trip, and in a Caixin editorial says what virtually everyone now understands all too well: the Treasury market is one "giant Ponzi scheme." Oh, and it wasn't obvious when China was the biggest holder of debt for years (until the Fed became the biggest monetizer of US Treasuries late in 2010)? Sounds like a rather serious case of buyers remorse is creeping into the buying mindset of America's formerly primary enabler. The $64 trillion question now, as always, is whether China, whose holdings have been flat for a year will follow in Pimco's footsteps and actually commence selling longer-dated paper. If so, and with QE3 now expected to end even if temporarily, the aftermath will not be what Congress wants to see.
From Market Watch:
A former adviser to China's central bank said on Monday that China should have retreated from the U.S. government-bond market and instead allowed the yuan to appreciate more freely, warning that U.S. sovereign debt was akin to a giant Ponzi scheme, according to a newswire report that cited an editorial on Caixin Media Group's website. Yu Yongding, a former member of the People's Bank of China monetary-policy committee and now a member of a state-run policy group, said allowing appreciation of the yuan against the U.S. dollar under a free-floating currency regime would have reduced China's need to acquire U.S. Treasuries. He likened the U.S. Treasury market to a "giant Ponzi scheme," arguing that Federal Reserve buying of Treasuries has artificially kept bond prices high, but that they would eventually fall to levels which reflected fundamentals of the U.S. economy.
h/t Tim
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Dump'em and buy gold!
Buy more gold and silver!
That's the price to pay for the participation in the world led by Uncle Sam.
cant Bernanke just give the billions needed to China who in turn buy US treasuries ? This would make it look like china is still buying US debt...
Nobody can trust the Chinese because they have proven themselves the worst fraudsters in the world.
Thats like Capn Jack Sparrow calling Blackbeard a damn thief!
Yea lets debate some more about which outright criminal lying thief thug govt, China or USSA, is the bigger fraudster! LOL!
If China's Treasury holdings have remained "flat" while their reserves have been steadily increasing, does it really appear that China is still buying US Gov. Debt?
The Fed uses British and Caribbean banking centers to launder bogus bills. Check it out here: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/...
Someone needs to print up some money to bribe this guy.
+1 Billion -- what the hell it's only paper, "eat all you want - we'll make more" - The Ben Bernank
An Ex-PBOC member dissing the US is bad, but frankly it's not that bad. One would expect that.
What's really jaw-droppingly bad is when a *current* Fed Chief says that the US is "in a death spiral". Yes, he said "death spiral". It's the kind of thing that Max Keiser would say, not a f*cking Fed Chief. Did it make front page news?
Of course not.
http://www.theburningplatform.com/?tag=richard-fisher
"Our duty is most distinctly not to monetize - or even be perceived as monetizing - the debt of fiscally imprudent government. Throughout the history of nations, monetizing the budgetary excesses of governments has proven to be a direct path to economic perdition. Having already peeked inside that door, I feel strongly that we must now shut it, lock it and throw away the key. "
Not only was this the most eloquent statement I have heard out of the Fed for a long time, but it is a clear sign that some connected people are beginning to wake up. Bernanke is not evil or devious, he's just a simple academic who has been used by the likes of Summers, Rubin et al, to advance their grand plan.... but the situation is far too serious to allow this to continue.
"some connected people are starting to wake up"
Did they wake up or were they allowed to say what they long ago knew? Last week there were several errors on MSM when they were blindsided ( at least the interviewers were blindsided) with a few people telling the truth. Sunday Fareed Zakaria had James Baker on who said for all to hear "the US is bankrupt".
Is this planting seeds of market worries for the retail investor so the banksters can short the hell out of the market, boost their cash profits to plow back in on the long side after a mild down draft? The sell off can't be too severe so retail investors don't get freaked, YET. Then build up confidence as the market goes past current highs, sucking in Mr. & Mrs. retail again before the final death spiral.
Just my simple thoughts.
I don't think this is anything as minor as manipulating the stock market. This is the very issue of the solvency of the US government, the integrity of the Treasury market and the future of the global reserve currency. I know these are the important issues that have been occupying the minds of people like James Baker for a long time, and frankly the equity market is merely a sideshow. Often the stock market is held at absurd valuations so that the sheeple don't worry too much (case in point the run up to the Lehman collapse). This crisis goes to the core of the military financial complex and the US's role in global affairs, and these guys don't really worry too much about the middle classes and their 401ks..
Of course, the Chinese economy is a Ponzi scheme to match anything in the US (although they have got their in record time), with their shadowing lending, state owned enterprises, loss making corporations and local government corruption. The US will emerge the winner, if they take the pain now, stop skewing the game to protect those at the very top and reduce the size and control of the big banks.
Actually it depends on the Ex-PBOC member, more specifically, his age and the individual respect accorded his opinion. Western financial journalism rarely sees,much less comments on, the distinction, and the ignorant sheep are slaughtered. In the US though, Volker might be an exception to rule of granting less weight to an official's words once he leaves office, but in his case it would be more a reflection of his specific stature and the current circumstances than a cultural norm.
They say that the truth....hurts.
great interview with peter grandich on this issue and the sad state of financial affairs in the US: http://www.youtube.com/watch?v=4XtH28M3Bbc
China is working you America...like a Brit po'ten'tatertot on (h)opium.
http://www.youtube.com/watch?v=y1jAByECNc0
Weird. I got a flash of Rudyard Kipling when I read your comment.
Watch out for those "copybook headings"...don't care to scrub-a-dub the frontal cortex with that drivel.
Just wait untill the first rate hikes happen and the farts turn into a shitstorm...
SD..Great Insight, however, your delivery was....poetry...were you quoting Dylan Thomas?
Explosive diahrea FTW.
We're going into a Depression! It is going to be the worst in history. Be warned; be prepared.
Ben's thesis was dead wrong.
I own Gold + Silver, sleep much better at night
BB-you are preaching to the choir.
You may really enjoy reading The Automatic Earth blog, btw. Even more depressing than ZH
Are you trying to teach the clown how to laugh??
:D
Well, she seemed so cheerful already...LOL
What do you mean, "we are going into a depression". We may not technically be in ression or a depression but based on what "adjusted" numbers. My take is we are in a depression and it will deepen making the last Great D look like the previous Mild Depression. If you don't think we are in the earlier stages of a depression it is because you are still earning or have money and your home is paid for.
Yes that is exactly what I meant, we are in the early stages but the WORST is yet to come.
Usually I get junked when I sound like a doomer. It seems like everyone has become a bull latley so I like to balance it out.
Do you sleep better with or without your teddy bear? It may remind you of the Bernanke...
Fucking awesome. My PMs are shining even brighter. And for those fucknuts that will go on about "what do you expect people to do, carry massive bags of silver around?"
The answer is; no dumbass, it is about buying power, pure and simple. Kill all the fiats and you kill the fraud surrounding fiat and its manipulation. I don't hold PMs so I can use them for daily purchases, I hold them so I can make big moves in real equity and security for myself and my business. For example, I dumped half my paper gold holdings in November to buy more real estate and arable land. Both of which are now providing real returns. Yes the is more fiat, but I am using it to buy more PMs. Quite simply, since 2006 in terms of investing for my company and myself. PMs, including copper by the way, have become safer stores of value. Anyone who lived through the 70's saw this coming.
Real estate goes to near zero just like fiat money does. Remember Weimar.
I hope so. I'd love to buy the house next door for a couple of gold coins.
i d love to buy the girl next door for some silver coins
the only true sign of currency failure: hookers won't take paper.
Merely renting is the way to go with that scenario.
Yes, I love collecting rent in this environment.
I think he meant renting the.girl, or at least subcontracting with the vagina.
Following threads is tough for some.
I'd love to buy her sister and mother too for a few silver coins a year.
Maintenance costs on that bitch could be a bitch.
Precisely, people will still need shelter and still need to eat. Regardless of who is killing who. They always have, and always will.
US wants China to let the Yuan move freely against the $...but what the QEs stand for....both countries are sailing in the same boat....
OK Mr. Chinaman... what is it exactly that keeps them in the paper? Do you really think it's the quality of the paper? Is that even in the top 3 considerations? But, I'm sure that illustrious blue water navy will start pushing us around soon...
Uh, Mr Chong,
YOU know this, so why aren't you cashing out and buying assets of value.
If you know you have /are being screwed, WHY continue to be broke over?.
Fwank Fetish?
China has wanted to keep the dollar afloat until they are ready to move. This point is coming quickly now. When they make their move it will be an attempt to kill the dollar and take its place. Whether or not a ponzi is screwing you is a matter of perception and position (if you make 20% a year that you don't reinvest, then did you really lose anything after 5 years?)
What good is manufacturing capacity without ingenuity? What do ghost cities do to faith in the government (who controls the currency)? Without rudimentary property rights, what organically attracts foreign capital?
China wants to do a lot of shit, but isn't remotely in a position to do it.
I think the ghost cities are a form of preparation. I'll bet the Japanese sure wish they had a couple of ghost cities right now.
Kind of like a bridge to nowhere is preparation for....
I think the answer is that it's the necessary derivative of cheap financing... nothing more, nothing less... sometimes easy money finds a good home... sometimes it just gets burned.
And I don't think the Japanese want any ghost cities... I think they wish they had the equivalent of Alaska and could repopulate there... The japanese are going to have plenty of ghost cities shortly if not already.
Tyler: I real do not appreciate your unwarranted attack on acid, especially when most my trips are more like "They Live".
Alright everybody, sing Pink Floyd: C-comf-fortab-l-y numb-b-b....
Oh wow man, he just had a bad trip, man. He's cool now. Far out. Later
WADR, Pink Floyd's song is about heroin, not acid, hence the "just a little pin prick" lyric.
DaddyO
How does China's monetary intervention work in practice? With whom do they trade their Yuan for dollars, western banks?
They trade with the Chinese exporters and citizens who have dollars. They deposit them in the banking system and then the central bank issues swaps yuan for dollars.
Thank you, Ragnar
Seems like a good deal for those citizens and exporters to exchange their dollars for the gradually and maybe someday rapidly appreciating Yuan.
Who (outside of China and the Chinese) is buying and or holding Yuan? I thought Russia was to a certain extent. Someone please comment on this and where you can actually hold yuan or set up any sort of carry trade. Thanks
Why do The Americans give their dollars to China and OPEC? That is the problem.
Because your Government destroyed our manufacturing base, and your Government will not allow use of our known deposits.
We are our own worst enemy.
Well the Marxists in power are anyway.
Why not? There's an unlimited supply of dollars and a limited supply of everything else. Question is: why go the Chinese put up with this?
Everybody knows.Too lazy to say it.
That's it! I want a tee shirt that says "Giant Ponzi Scheme" in Chinese.
ME --> Great idea - would be awesome if the t-shirt also Made in America
Flash of genius, alas, just a flash and then the idea was outsourced to a Chinese company.
Aw c'mon, they were a part of the scheme all along.
Buying our debt gave them influence and access all the way back to the former ambassador to China's reign (Bush 41).
Without playing along, they would never have gotten nuke secrets, spy satellite secrets, industrial secrets, market access and all kinds of influence.
Even if we defaulted they got more than their money's worth.
And don't forget the top-rated box office movies the day prior to US release.
Don't forget showing them how to set up a ponzi equities market, in which you take your own peoples money away.
By the people, against the people.
Most importantly, they were allowed to suppress their currency with full approval of FED and Govt., regardless of how loudly they protested.
Most importantly, they were allowed to suppress their currency with full approval of FED and Govt., regardless of how loudly they protested.
They did a good fake when their US surrogates, Indonesian bag-men and Bhuddist monks bought them their first US president.
Clinton was the first black chinese president?
Aw c'mon, they were a part of the scheme all along.
Buying our debt gave them influence and access all the way back to the former ambassador to China's reign (Bush 41).
Without playing along, they would never have gotten nuke secrets, spy satellite secrets, industrial secrets, market access and all kinds of influence.
Even if we defaulted they got more than their money's worth.
And don't forget the top-rated box office movies the day prior to US release.
WB7, you have snatched marble from hand...YOU are now Master...
That's a quote from James Joyce.
Morning nasal coffee projectile session via ZH complete. Thanks Banzai ;)
...Federal Reserve buying of Treasuries has artificially kept bond prices high, but that they would eventually fall to levels which reflected fundamentals of the U.S. economy.
Fundamentals? What the hell are they?
SWR you remember..those text books & professors who taught that junk never told us that there would be a day when 'leaders' would act do reckless - What would Adam Smith Do?
Q.E. = Quintessentially Erroneous...
Your gold and Silver is worthless when the authorities confiscate it or outlaw it. It will be like 1930, people will hide it. You wont live like a king in your bunker, you will be arrested or shot for being greedy. Whats that bar of silver/round of going to get you? Hell most of you fatasses dont even have a way to melt it into usable form.
Get things you can use. Food. .223 and Wisdom. Organize.
.308 is better.
Time for the Chinese to familiarize themselves with Caveat Emptor...
I pose an analogy...If the PBoC is a manufacturing company & one of its largest, if not THE largest customer goes bankrupt doesn't that leave PBoC with an great deal of EXCESS CAPACITY? Deflation where is THY STING - Mutual Assured Destruction Slappy - China is inextricably absorbed into the Ponzi - US detonates - China explodes just like the IMF, World Bank, EU & any of the other contestants...thanks for playing & Johnny tell them what they just won...
And the Peak Oil doesn't help either.
Sure, but it is a lot cheaper to shut down some production than to keep producing things for your deadbeat client who keeps demanding more and more credit, but has never actually paid you.
23% to the USA...the rest is domestic and other nation's (EU)...bad, but not as bad when you consider they have all the factories and a good chunk of know-how (and will get more now that Japan can't keep everything important on the island).
China will explode anyway, under internal pressure from RE and false growth.
Like we would ever meekly hand over our PM's to Mr. Government man, besides they'll have more on their hands then going from house to house looking for shiny metals...
your stupid metal is worthless buried. You still have to exchange it for FRN jew confetti
Ok, you've had your say, now fuck off....
Everything that's PONZI, is so trendy nowadays!
There is no other species on the planet that "buys and sells."
That should signal the obvious that money itself is a fabrication of imagination, and "ponzi."
Freedom is free, free markets are anything but.
Marginalize money and you strike at the heart of power.
Can't wait to see you eat that massive shit-burger coming down the pike. I'm extremely interested in watching entitlements which feed millions today pulled....oh the riots!
Can't wait, bitchez!
People need to learn how to feed themselves. We didnt have entitlements in the late 19th century and we had some pretty good economic growth.
Let the riots happen. We need to cull a few of the stupider ones anyway.
The parasites are so stupid they burn down their own neighborhoods. Let the ghettos burn.
This is an informed site, but the general public doesn't have a clue. I don't know how many educated people I have talked to who believe the Fed IS the government. The best part of this game is that it is so complicated that the average person on the street cannot begin to even understand. This site and others like it would be a threat to the IF mainstream America could be educated. What's the first thing Ron Paul could do to help people understand? Easy. Pass legislation that strips the century old misrepresentation: they can no longer call themselves The Federal Reserve! When people hear that the Private Bankers Reserve is playing footsie, they will start the slow process of understanding.
hey china would love to buy real assets, but everytime they want to buy australian mine,s they get told, " sorry national interest ." and refused the sale.
same as one of the biggest oil companies i recall, " sowwy we no likey fowein owners."
And the same brilliant politicians allow off take contracts denominated in USD- saves the Chinese from actually having to invest in overvalued Australian real estate.
They will love to buy US highways for their USD, and I am afraid they will. We will end up paying to use them.
they were buying massive amounts of treasuries (supporting the dollar), now we are buying a massive amount of treasuries and they don't like it
they thought they were raping us. turns out we liked it
this will not end with some rightous display of fiscal discipline - its about getting while the getting is good. the man who controls the presses cannot default - we will receive what we asked for - we will all be rich (in dollars)
Most economical growth is a ponzi scheme. It seems to work as long as there is a higher bidding buyer. Just don't be the last one holding the bag.
"...they would eventually fall to levels which reflected fundamentals of the U.S. economy".
Zero?
DavidC
Well, you see, since our dear fascist leaders of repub, dem, and tea bankster fame will cut to the bone for fraud, this will give them the leeway to fool the markets for one more round as they use said blood money to legitimize QE3.
Pucker up seniors, this fascist cut is for you. Next up, every other service the gov't provides under the guise of 'getting our fiscal house in order'...to pay off fraud, for QE4, 5, and beyond. Or else such printing will lead to hyperinflation, and what the idiots don't understand is, it will anyways.
Glass-Steagall, or suck the banksters cock some more. Must taste good or else people wouldn't be doing it.
I am afraid it is more complicated than that. Suck cock or suck ass.
If US dollar is a ponzi scheme, then what does that say of Chinese officials buying into it? SUCKERS?
That depends on who is found to be stuck with them when the music stops playing.
good article about the global meltdown: http://www.thiscantbehappening.net/node/550
Having a one superpower system has failed. It seems though the financial elitards are trying to replace one for another now-- not going to end well.
By the way, this whole global economic system is a ponzi scheme.
We're at Peak Ink, folks!
Crush the banks, buy physical gold and silver.
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