• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Candy From Strangers, Or Who Is Buyng All Those Treasuries?

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Tue, 08/03/2010 - 18:24 | 501832 Misean
Misean's picture

"They are a PHANTOM. They don’t exist."

Perhaps they're computers plugged into some rented office space in the Cayman Islands.

Tue, 08/03/2010 - 21:17 | 502076 DarkMath
DarkMath's picture

It's actually one big Household (no S). Don't tell ANYONE, but I've got a friend at the Treasury and he tells me they actually have a picture of "The Household" that is buying all that debt (it's a very very rich family, I won't bore you with the details). Once you see their house you'll understand how they can afford %10 of our Treasury Debt:

http://www.worldofstock.com/closeups/AOB4910.php

 

Tue, 08/03/2010 - 21:30 | 502092 MsCreant
MsCreant's picture

No, that family is bankrupt too. They just have a printer. Shhhhhhh! Don't tell. Or the other countries will find out and want some too. Oh, wait...

Wed, 08/04/2010 - 08:36 | 502537 DarkAgeAhead
DarkAgeAhead's picture

Yep, all of those annoying futurists have been predicting the technological singularity for some time now.  Who could have figured though, when the computers developed AI, they'd start buying government debt rather than converting humans into usuable energy sources ala the Matrix!?

Tue, 08/03/2010 - 18:24 | 501833 NotApplicable
NotApplicable's picture

Ooh, ohh, I know the answer to this question, as it is always the same answer to the question "Who's the sucker?"

We are!

Isn't collectivism wonderful?

Tue, 08/03/2010 - 18:26 | 501836 Rainman
Rainman's picture

Whitney referred to bank revenues as " phantom " . Now this dude uses the same term to describe the non-existent household sector buying Treasuries.

Things are getting spookier.

Wed, 08/04/2010 - 10:31 | 502015 Rusty_Shackleford
Rusty_Shackleford's picture

"I see dead people,... buying Treasuries."

Wed, 08/04/2010 - 14:09 | 502984 MsCreant
MsCreant's picture

With my children's inheritance.

Wed, 08/04/2010 - 15:27 | 503135 Mad Max
Mad Max's picture

"I see Dead Presidents buying Treasuries"

"When?"

"All the time."

Wed, 08/04/2010 - 00:01 | 502259 zhandax
zhandax's picture

Appreciate the sarcasm; Fed prints like there is no tomorrow and sticks the bill up the ass of every household in the US.  What more obvious place to account than the 'household' sector?

Wed, 08/04/2010 - 01:55 | 502336 MsCreant
MsCreant's picture

Indeed. But there is only so much room to stick things before folks finally start to feel it. Something has to give. Has auditing the Fed come down to a colonoscopy? Bet we would learn more truth than what is being proposed.

Wed, 08/04/2010 - 09:28 | 502612 zhandax
zhandax's picture

A true accounting "colonoscopy" of the fed would confuse me to no end...I dropped out of Pre-Med to enroll in the College of Business?

Tue, 08/03/2010 - 18:26 | 501839 poopdeville
poopdeville's picture

'Anality'.  

Tue, 08/03/2010 - 18:31 | 501841 Goldenballs
Goldenballs's picture

Lets just say when this crap is brought and sold its amongst friends in high places some of which will be left holding the baby or will it carry on that long that it is repackaged and sold to a new generation who,ve not been burned.The more figures you see the more unreal it becomes, desperation ain,t the word .................................................... Carry on up the fed .........

Tue, 08/03/2010 - 18:33 | 501846 Waterfallsparkles
Waterfallsparkles's picture

Market Ticker did a piece on this.  He talked about buying Bonds that did not exist and then shorted them.  More supply than demand to short them into the ground?

Who knows. 

Tue, 08/03/2010 - 18:33 | 501848 Boilermaker
Boilermaker's picture

You DO NOT want to know what is in the sausage.  Just eat it.

Tue, 08/03/2010 - 18:35 | 501849 drbill
drbill's picture

Nothing to see here. Move along....

Tue, 08/03/2010 - 23:02 | 502202 FEDbuster
FEDbuster's picture

"Pay no attention to that man behind the curtain!"

http://www.youtube.com/watch?v=YWyCCJ6B2WE

Wed, 08/11/2010 - 15:35 | 516156 andyupnorth
andyupnorth's picture

I love how when the old man says he's actually the wizard, Dorothy replies, "I don't believe you!"

It's hard to believe the truth when you've been lied to all your life.

Tue, 08/03/2010 - 18:36 | 501851 seventree
seventree's picture

Other Investors: Individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and Other Investors.

Let's try some variable substitution. That always helped me in algebra.

Other Investors: Individuals, Government-sponsored enterprises,

brokers and dealers, bank personal trusts and estates,

corporate and non-corporate businesses, and [

Individuals, Government-sponsored enterprises,

brokers and dealers, bank personal trusts and estates,

corporate and non-corporate businesses, and [

Individuals, Government-sponsored enterprises,

brokers and dealers, bank personal trusts and estates,

corporate and non-corporate businesses, and [...]...

Well, maybe not.

Tue, 08/03/2010 - 19:36 | 501956 SWCroaker
SWCroaker's picture

Okay.  THAT got a belly laugh.  :)

Tue, 08/03/2010 - 18:37 | 501856 Shameful
Shameful's picture

Could it be The Phantom?!?!?  http://en.wikipedia.org/wiki/The_Phantom

We all know who is buying it.  Zimbabwe Ben is working the presses.  Man things sure are easy when you have an unelected unaudited organization manning the printing press!  Remember a lot of the foreign purchases came from places like the UK.  So the bankrupt UK gov is buying our debt at record levels...sure why not I can believe that.  Currency swaps are awesome.

Wed, 08/04/2010 - 10:59 | 502738 Gwynplaine (not verified)
Gwynplaine's picture

Or maybe The Shadow.  As Orson Wells said, "Who knows what evil lurks in the hearts of men?  The Shadow knows!" 

http://en.wikipedia.org/wiki/The_Shadow

Tue, 08/03/2010 - 18:42 | 501864 Thalamus
Thalamus's picture

When the Detroit crew runs things you expect the books to balance?  I look forward to 5 years from now, after Marshall law is imposed of course, that this crooked administration be on trial for crimes against our country and be made examples of for future generations. 

Tue, 08/03/2010 - 21:25 | 502087 lewy14
lewy14's picture

It's Martial Law. Martial.

(Pet peev).

Wed, 08/04/2010 - 15:28 | 503136 Mad Max
Mad Max's picture

No, he was right.  "Marshall Law" as in "The John Marshall School of Law."  I think some of chi-town's best politicos have toured it.  One might say we're already living it.

Thu, 08/05/2010 - 00:19 | 503963 Arkadaba
Arkadaba's picture

It is peeve. Peeve

(Pet peeve)

Tue, 08/03/2010 - 18:48 | 501874 InconvenientCou...
InconvenientCounterParty's picture

Bizarro world: Wingnut conspiracies proliferate like tribbles. Reality turns out to be worse than most of the theories.

Tue, 08/03/2010 - 23:33 | 502243 Oh regional Indian
Oh regional Indian's picture

Bizarro world indeed Incon. Up is down just as surely as war is peace.

Reality is blinding for most, which is why it's kept under wraps.

ORI

http://aadivaahan.wordpress.com

Wed, 08/04/2010 - 00:36 | 502287 Problem Is
Problem Is's picture

Green shoot is brown turd and reform is no reform...

Tue, 08/03/2010 - 18:47 | 501875 Snidley Whipsnae
Snidley Whipsnae's picture

Willie also did a piece on this and noted that Great Britan's US Treasury holdings doubled in a 5 month period...while the new GB Gov is cutting gov spending in an austerity move by 40%. Does that make sense to anyone?

"This story is a gem. The Chinese dump USTreasurys and England accumulates them. Or more accurately, the USFed hides its vast monetization efforts in the United Kingdom account ledger item. No way to the reasonable man can Britain purchase $170 billion in USTreasurys in five months from legitimate sources of savings"

http://www.kitco.com/ind/willie/jul222010.html

Tue, 08/03/2010 - 21:02 | 502063 DavidPierre
DavidPierre's picture

Jim Willie lays out some very interesting insights into the rigging of the bond market ...QE.... fraud...etc.

Meet 'The Man' who called all the BS years ago.

..................................................................................

(paraphrase)

"$1.5 Trillion disappeared from the top floors of the WTC on 9/11.  Nobody followed this up."

......................................................................................

His sarcasm is priceless re: JKF and 9/11 in part 2 of the interview.

Jim Willie's life has been repeatedly threatened and he now lives in Costa Rica.

http://maxkeiser.com/watch/on-the-edge/episode-65-31-july-2010-guest-jim-willie/

Wed, 08/04/2010 - 01:50 | 502338 Hephasteus
Hephasteus's picture

Ya he was saying reacting in some really hilarious ways during that interview. I was about to bust a gut.

Wed, 08/04/2010 - 01:58 | 502342 laosuwan
laosuwan's picture

i like shadowstats because they put up some numbers to back up what they are saying. with willie its always, " i have a friend who has a friend who told him..." Now, he may be right but you can be right by guessing. the thing with people like willie (and max) is that they tend to view everything that happens in the world through their biases and their suspicions, so they begin to see conspiracy in everything.

Wed, 08/04/2010 - 03:20 | 502372 MsCreant
MsCreant's picture

Just admit it. You are part of the conspiracy.

Breathe deep. That thing constricting around you is not as bad as you think. You are waking up, that's all. It takes time to start breathing, moving, thinking and eating on your own. We are here for you.

Wed, 08/04/2010 - 16:02 | 503231 RockyRacoon
RockyRacoon's picture

...like being disconnected from the Matrix?

Wed, 08/04/2010 - 16:04 | 503236 MsCreant
MsCreant's picture

Yes, I was being silly and serious at the same time.

Wed, 08/04/2010 - 03:28 | 502375 DavidPierre
DavidPierre's picture

If you want all the numbers and all the details just break into your piggybank and subscribe to "The Golden Jackass"...Willie's newsletter. 

Maybe there is "conspiracy in everything".

  • Conspiracy (civil), an agreement between persons to deceive, mislead, or defraud others of their legal rights, or to gain an unfair advantage
  • Conspiracy (crime), an agreement between persons to break the law in the future, in some cases having committed an act to further that agreement
  • Tue, 08/03/2010 - 21:46 | 502107 laosuwan
    laosuwan's picture

    Or more accurately, the USFed hides its vast monetization efforts in the United Kingdom account ledger item.

    BINGO!

    The only question is how long can it go on? If the government is the only buyer for the government's debt, the game will surely end at some point. But when...?

    Wed, 08/04/2010 - 00:00 | 502258 hamurobby
    hamurobby's picture

    Aaaand if not, how about who is buying equities? its just an anomaly, dont bother with it, just keep on rolling, its a recovery! or a recover up of a broken system. At least in the past we had some semblance of dignity in managing the almighty dohlar.

    Tue, 08/03/2010 - 18:54 | 501883 Boilermaker
    Boilermaker's picture

    ....administration(s)

    Tue, 08/03/2010 - 18:55 | 501888 traderjoe
    traderjoe's picture

    7 cells not filled in? No wonder he couldn't work TurboTax.

    Tue, 08/03/2010 - 19:51 | 501975 Buck Johnson
    Buck Johnson's picture

    I never thought about that Waterfall, it does make a little sense.  Is it possible to Short Sell bonds?  I would think it would be possible, but I don't know if someone could give me an answer that would be super. 

    Tue, 08/03/2010 - 20:19 | 502012 AUD
    AUD's picture

    I think the buyers might be the chumps who got stuck with all the worthless MBS, CDO's, ABCP's and other assorted TP's.

    Thank god the Fed stepped in and bought the job lot.

    Amazingly, you can still buy gold with your USD's (& other currencies).

    Some interesting movements in the gold basis recently though.

    Tue, 08/03/2010 - 22:18 | 502147 mark mchugh
    mark mchugh's picture

    Congratulations on being the first nimrod to completely miss the point!

    And I was having such a good time reading the other comments too....

    Yes, Treasury's data has always lagged.  So what?  The data is available, so why not plop it into the spreadsheet? 

    You're excusing a 3 month lag in available data because "all the other guys did it"?

    Sorry you didn't appreciate my jabs at Geithner, but almost HALF the debt in Q1 was purchased by "mystery" buyers.  THAT was the point.  THAT's something maybe we should be concerned about for a whole bunch of reasons.

    The only question I have (and I'm being totally serious) is did you really not understand what the article was about, or were you looking to change the subject?

    Inquiring minds wanna know?

    Tue, 08/03/2010 - 23:23 | 502227 Nolsgrad
    Nolsgrad's picture

    no, I read it. All of of it. And I pondered for a bit. still, the proof is not in this pooding.

    but, and a big one, I think we'll monetize at some point.

     

    never read your comments, sorry.

    Tue, 08/03/2010 - 20:54 | 502051 fiftybagger
    fiftybagger's picture

    Jimmy Rogers, 1988

     

    What I suspect will happen—and I am just speculating, I don't have to make this decision yet—is that somewhere along the line a recession will develop. Initially, the politicians will say, "We've got to bite the bullet and suffer through this. This is good for us; it will help clean out our system." People are going to buy that for a while. Then it is going to start to hurt. Then it is really going to start to hurt. At that point, the politicians are going to give up, and they are going to start to inflate their way out of it. But the only way to inflate your way out at that point is to really print money! In that scenario, we start off with a recession and end up with very high inflation. Right, but we could have wild inflation first and then deflation. Another very real possibility is that we will eventually have exchange controls. Fortunately, I don't have to make my investment decisions for two or three years forward right now.

    What kind of exchange controls?

    By exchange controls I mean limitations on capital flows. If you want to go to Europe, you can't take more than $1,000. You can't ship money out of the country without the government's approval.

    What happens to the relative values of currencies in a situation like that?

    The dollar disappears. What would bring on exchange controls is the dollar getting weaker and weaker. The politicians would then try to bring in Draconian exchange controls, which would just make the situation worse.

    When you say disappear, are you talking about the dollar becoming like the Argentine peso?

    Why not? Why couldn't it happen? Remember the Civil War expression, "I don't give a damn about a greenback dollar."

    You talk about the collapse of the dollar as if it's an inevitability.

    In 1983, we were the largest creditor nation in the world. In 1985, we became a debtor nation for the first time since 1914. By the end of 1987, our foreign debts were greater than all of the foreign debts of every nation south of the Rio Grande put together: Brazil, Mexico, Peru, Argentina, and all the rest.

    Can I paraphrase the chain of events you imply as follows: Nothing meaningful will be done to change the budget deficit situation. The continued budget deficit will guarantee that the trade deficit situation stays bad or even gets worse. That, in turn, guarantees that sooner or later, the dollar will come under extreme pressure.

    Absolutely. That's why I'm not long the dollar.

    How does the bond market fit into this scenario?

    At some point, foreigners are going to stop putting money into this country because of the weakening dollar. That means the American public will have to finance the debt. We have only a 3 to 4 percent savings rate. To get the American public to finance that debt, interest rates would have to be very high. If the Federal Reserve tries to avoid high rates by printing more money, then the dollar just disappears and the Fed loses control completely. That is the case where you get hyperinflation and 25 to 30 percent interest rates. Either way, we are going to have high rates. You might start out with lower rates first if the politicians decide to bite the bullet by having a recession. But then, they will eventually give up and start printing money. But, sooner or later, the bond market collapses. Absolutely. Sooner or later, we repeat the English experience of not having a long-term bond market. But I don't know when sooner or later is. It could be three years; it could be ten.

    How far did British bonds fall in the situation you are referring to?

    About 70 percent

     

    THE MARKET WIZARDS

    CONVERSATIONS WITH AMERICA'S TOP TRADERS

    JACK D. SCHWAGER

    Tue, 08/03/2010 - 23:25 | 502228 Nolsgrad
    Nolsgrad's picture

    my favorite books!

    Do NOT follow this link or you will be banned from the site!