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China Sold Second-Largest Amount Ever Of US Treasurys In December: And Guess Who Comes To The Rescue

Tyler Durden's picture


While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December - the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper - one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! 


This was the second largest dump by China in history with the sole exception of December 2011.


That this happened at a time when Chinese FX reserves soared to all time highs, and when China had gobs of spare cash lying around and not investing in US paper should be quite troubling to anyone who follows the nuanced game theory between the US and its largest external creditor, and the signals China sends to the world when it comes to its confidence in the US.

Yet what was truly surprising is that despite the plunge in Chinese holdings, and Japanese holdings which also dropped by $4 billion in December, is that total foreign holdings of US Treasurys increased in December, from $5716.9 billion to 5794.9 billion.

Why? Because of this country. Guess which one it is without looking at legend.


That's right: at a time when America's two largest foreign creditors, China and Japan, went on a buyers strike, the entity that came to the US rescue was Belgium, which as most know is simply another name for... Europe: the continent that has just a modest amount of its own excess debt to worry about. One wonders what favors were (and are) being exchanged behind the scenes in order to preserve the semblance that "all is well"?


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Tue, 02/18/2014 - 11:32 | 4448047 Jumbotron
Jumbotron's picture

Well....we did bail out Europe's banks during the whole TARP and MBS buyback  scheme.  This is just part of the complete financial ponzi circle jerk.

Move on.....nothing to see here.....and nothing to do about it.

Tue, 02/18/2014 - 11:36 | 4448069 CrashisOptimistic
CrashisOptimistic's picture

Exactly.  This obsession with monetary ebbs and flows, looking for evidence of the Big Smash, is wasted time.

MONEY is not going to cause the upheaval.  Money can be changed and created by decree.  It didn't exist in the garden of eden and it doesn't have to mean anything you don't decree it to mean.

Money is not going to be the source of devastation.  Oil is.

Tue, 02/18/2014 - 11:44 | 4448104 nuclearsquid
nuclearsquid's picture

Tylers, was this selling, or maturities that weren't rolled over?


Tue, 02/18/2014 - 12:17 | 4448259 NotApplicable
NotApplicable's picture

That's what I was wondering. I know they've been moving to the shorter end of curve over the past few years.

Tue, 02/18/2014 - 12:48 | 4448443 Doubleguns
Doubleguns's picture

The difference is very subtle. Not buying more not rolling over more. Effect is the same however. 

Tue, 02/18/2014 - 13:00 | 4448505 nuclearsquid
nuclearsquid's picture

I am not a fixed income guru, so I have not a clue. But suspecting a sublte nuance, I was hoping that a commenter may be said guru (and give us any buried tea leaves).


Tue, 02/18/2014 - 13:23 | 4448612 TruthInSunshine
TruthInSunshine's picture

I fear that there's more at play here, and that Belgium may be aggressively moving to corner America's chocolate reserves.

Tue, 02/18/2014 - 13:28 | 4448632 zaphod
zaphod's picture

As the EU countries trust each other less and less, the logical thing for them to do is to sell the bonds of other EU countries and buy US bonds.

Yes US bonds are going down, but if you were Belgium or France would you want to own Greece or Italian debt or US debt?

Tue, 02/18/2014 - 13:38 | 4448700 Doubleguns
Doubleguns's picture

What greater fool do they sell the EU bonds to. That is the problem. 

Tue, 02/18/2014 - 13:48 | 4448752 Son of Loki
Son of Loki's picture

Hu bought them?

Tue, 02/18/2014 - 14:11 | 4448846 SWRichmond
SWRichmond's picture

Sum Ting Wong

Tue, 02/18/2014 - 14:22 | 4448922 Dr. Richard Head
Dr. Richard Head's picture

Uh-ohhhhh......ZH made it to Drugge.  Cue the Republican party enamoured....

Tue, 02/18/2014 - 14:48 | 4449029 TruthInSunshine
TruthInSunshine's picture

Drudge has posted 3 exclusive ZH articles on its front page for 3 out of the last 3 days, now.

This one, the article on Soros' put positions, and another one I can't think of at the moment.

Tue, 02/18/2014 - 15:00 | 4449092 nuclearsquid
nuclearsquid's picture

Ha! so THAT's your contrarian indicator!

Tue, 02/18/2014 - 15:02 | 4449102 TruthInSunshine
TruthInSunshine's picture

No (it's not THAT much more complex, though).

Tue, 02/18/2014 - 15:20 | 4449162 MillionDollarBogus_
MillionDollarBogus_'s picture

There is a reason why you will see the same headline in Drudge and Zero Hedge...

The more sensational the story, the more likely the return vistor traffic goes up...

Sensation sells...

Could even be the same editors...

Tue, 02/18/2014 - 15:27 | 4449210 TruthInSunshine
TruthInSunshine's picture

Are you saying...

Tyler DurdenS = Matt DrudgeS ???


Tue, 02/18/2014 - 15:31 | 4449221 Jack Napier
Jack Napier's picture

US Treasuries bought by Belgium. Bank of Belgium receives money from ECB. ECB receives money from Fed via dollar swap lines. Fed creates more Treasuries.

Headlines read - Fed not monetizing their own debt!

Tue, 02/18/2014 - 15:40 | 4449254 TruthInSunshine
TruthInSunshine's picture


Everyone is raggin' on me for not dropping more clues as to what my unproven warning sign is (1st mentioned in Soros' put thread), so, only due to my weakness to popular pressure -

A simple algorithm indexing Dan Zanger + Barrons, bitchez.

And that's the only clue I'm dropping, though it should be all anyone who is remotely familiar with irrationally priced (very much so) markets that are near their culling needs to know - IMO, YMMV, ETC

Tue, 02/18/2014 - 18:17 | 4449979 Keyser
Keyser's picture

What do you call it when you print your own $$$ to buy your own bonds through a 3rd party?  

Tue, 02/18/2014 - 18:21 | 4449998 Arius
Arius's picture

F&$) you Chinamen!


Tue, 02/18/2014 - 18:24 | 4450008 TeamDepends
TeamDepends's picture

A circle-jerk?

Wed, 02/19/2014 - 00:13 | 4451407 HyBrasilian
HyBrasilian's picture

they've got the cluster fuck surrounded...

Wed, 02/19/2014 - 03:25 | 4451645 mt paul
mt paul's picture

plan B 

Wed, 02/19/2014 - 05:44 | 4451735 SilverSavant
SilverSavant's picture


Tue, 02/18/2014 - 19:56 | 4450341 SAT 800
SAT 800's picture

I would agree with you. you want to monitor the mass mind; not some kind of statistics. I'm short the S&P, too; again. neutral today. have to get up early, tho. to keep an eye on the damn thing; not sure it's worth it.

Wed, 02/19/2014 - 03:54 | 4451672 satoshi411
satoshi411's picture

QE is a complete success, and finished.

Taper continues until FED no longer buys US-DEBT.

USA now self-sufficient.

Taxpayers in the USA off the hook on USA debt. ...

US Treasury disbands IRS, ... Europe to cover USA debt,

The USA FSA to made good with EURO's as the good European people pity the US public.



Wed, 02/19/2014 - 03:47 | 4451661 satoshi411
satoshi411's picture

Same owners, ZH & Drudge are both MSM mainstream clearing for AIPAC to feed shit to MUSHROOMS.

ABC-MEDIA follow the money to goldman-sacks, ... follow the money to AIPAC.

Wed, 02/19/2014 - 03:49 | 4451665 satoshi411
satoshi411's picture

Drudge is right-wing zionist DEBKA.COM bullshit and so is ZH.

Must be some consolidation coming down the line, or perhaps its just the old maximize links which GOOGLE-ALGO values.

It's all in the ABC-MEDIA family, aka AIPAC oligarchy, keep it simple stupid.

Wed, 02/19/2014 - 00:56 | 4451490 CSA
CSA's picture

3 times in 3 days equals advertising.  Tyler paid him.  Been watching this for a while, when Zero gets some play time, it always happens in bunches.

Drudge = capitalism

Tyler gets a few more readers which drives up his advertising.  A smart man would look at the time of month or year and see if there is some correlation for when advertisers are buying or contracts are up.


Tue, 02/18/2014 - 17:55 | 4449881 Cacete de Ouro
Cacete de Ouro's picture

Do not think that the US and Europe are ever really at loggerheads in the central banking world. Maybe the simplistic politicians are, but not the central bankers at the BIS.

The central bankers meetings at the BIS, are, in the words of Nathan Sheets:

"“You are there with like-minded people, and there really is a sense of central bankers' brotherhood. At many other international meetings there is a sense of 'You Americans are doing this' and 'You Europeans are doing that'. At the BIS, the questions are what kind of challenges do we face. Those relationships make it easy to pick up the telephone and call counterparts. The governors know each other, they like each other and they know how each other think, thanks to these meetings."

Tue, 02/18/2014 - 18:05 | 4449921 Cacete de Ouro
Cacete de Ouro's picture

What I really mean by this is that Belgium is a front for the BIS in its purchase of US Treasuries. The old G10 states take turns in being the fall guy.

They draw straws for being fall guy. Seriously, they do it in a bar beside the Rhine. Whoever chickens out might have to swim the river.

Ok, seriously, they drew straws for European gold sales (to the Saudis) in the 1990s and 2000s. Belgium first, and Sweden, and Netherlands, then Suisse and then (the UK for bailing bullion bank reasons), after that France; in the meantime Germany did secretive swaps because they were chicken shits about sales for political reasons. Same with the spineless Italians, lots of gold gone there, but they won't admit it.

Tue, 02/18/2014 - 22:12 | 4450999 balolalo
balolalo's picture

this is the most expensive game of hot potato ever.

Tue, 02/18/2014 - 23:40 | 4451286 rbg81
rbg81's picture


Tue, 02/18/2014 - 23:38 | 4451287 rbg81
rbg81's picture

This will not come as a surprise to anyone who has been paying attention.  This is a global Ponzi scheme and therefore requires global cooperation to make it work.  Everyone is bankrupt, but as long as the sheeple believe all is well, the System will continue to function.  Which is why they will continue to push globalization and, eventually, a global currency.  With a global currency, there is no competition, no one to call the fiat bluff, and (best of all) everyone has no choice but to use it.  If things get sufficiently desperate, private ownership of precious metals being outlawed as well--impractical as that is.

Tue, 02/18/2014 - 15:43 | 4449277 Urban Redneck
Urban Redneck's picture

In their attempt to corner America's chocolate reserves, did the Belgians meet settlement terms with one of Janet's PDs with the old stash of exported BennyBucks or newer issue Greek/Italian bonds?

Tue, 02/18/2014 - 17:31 | 4449770 BoNeSxxx
BoNeSxxx's picture

UNBELIEVABLE.  The Central Banks have taken to kiting checks.  

Check kiting is illegal if the citizens do it... but, then again, so is printing money... 

Tue, 02/18/2014 - 18:48 | 4450088 Keyser
Keyser's picture

So now we know the end game. The Fed creates $$$ out of thin air and has a 3rd party buy US bonds, therefore keeping the game going when China pulls the plug and stops buying. As long as they can do this they can hedge any market, out spend any investor and stack the derivatives market any way they want. It is all smoke and mirrors. 

Tue, 02/18/2014 - 17:45 | 4449842 Dugald
Dugald's picture


Belgium has that kind of mony, really?  bet they paid with gold foil wrapped chocolate pretty string sacks.



Tue, 02/18/2014 - 18:24 | 4450007 Arius
Arius's picture

typical ungreatful reaction!


don't look a gift horse in the teeth ...

Tue, 02/18/2014 - 22:52 | 4451076 deflator
deflator's picture

There actually are cocoa reserves, believe it or not.  I picked up 12 ginormous bags(grossed out at 80,000lbs) of cocoa in Pennsylvania going to California in a hurry(48hrs). I was a team driver trainer with a new apprentice and was sweating being 4 hours late for delivery appointment because of snow storms across I-80 and my apprentice was afraid to drive in snow.(had to chain up over donner pass, mandatory dot check for chains) Got there and there was a warehouse full of those giant bags! I asked them why the rush to get these? He said dont worry about it and gave me a slab of chocolate an inch thick and about 2 feet by 2 feet square.

Wed, 02/19/2014 - 02:26 | 4451597 magne13
magne13's picture

No those are not reserves, those are goldmans warehouses that store the supply so they can manipulate the price, charge hersey a higher amount and drive futures prices higher, they won't release the supply till the price goes up.  same story different day.  release the address of the warehouse and find out who owns the warehouse, buy cocoa futures and wait till you are instructed to pick the cocoa back up, sell your futures. you are an insider you just don't know it.

Wed, 02/19/2014 - 01:45 | 4451550 Shazam342
Shazam342's picture

America has chocolate reserves???  How sweet! Maybe we can all have Hershey Bars as legal tender now!

Tue, 02/18/2014 - 19:46 | 4450286 screw face
screw face's picture


Tue, 02/18/2014 - 11:46 | 4448116 SAT 800
SAT 800's picture

You're completely wrong; as are most members of "cults"; but aside from that, you're doing pretty well.

Tue, 02/18/2014 - 11:51 | 4448137 fonzannoon
fonzannoon's picture

We don't want an echo chamber in here right? 

Foreign CB Treasury holdings went up by $78bil in that one month, and November's increase of $62bil was already huge...

key take-away

-Highest ever recorded foreign CB Treasury holdings at just under $5.8 total

Maybe the fed can taper after seeing that foreigners are foaming at the mouth to buy UST's.

Tue, 02/18/2014 - 12:04 | 4448201 kito
kito's picture

well fonz, that blows a hole in the well accepted theory on ZH about "nobody wanting our paper anymore",  that the reserve currency is on its way out. looks like the u.s. is more popular than ever. 

so taper schmaper. what a fool the fed has made of the doubters, the doomers, the naysayers. everybody who said it couldnt be done. too funny man. too funny because its so sad all i can do is laugh. 

i wonder if the fed looks at blogs like zh and think "such silly naive children, they just dont understand"

Tue, 02/18/2014 - 12:13 | 4448224 fonzannoon
fonzannoon's picture

"Bulls can only hope that Birinyi is correct (and it's the stock that matters)..."

so far, so good.

anyone who is junking feel free to jump in here. I look forward to it.

Tue, 02/18/2014 - 12:19 | 4448270 max2205
max2205's picture

And Yellen gave the money to Belgium to buy them...what a clusterfuck....the Fed is cornered but somehow its still got glue holding it together

Tue, 02/18/2014 - 12:24 | 4448295 optimator
optimator's picture

When you can wire money that doesn't even exist anything is possible.

Tue, 02/18/2014 - 12:41 | 4448386 DeadFred
DeadFred's picture

Of course all this took place before the "F- the EU" phone call was released. I'll be curious to see numbers we see in April. By the way USD is on support and not looking too bouncy. Tank the S&P to strengthen the dollar or let FX hell break loose while stocks hit new highs, what's a manipulator to do?

Tue, 02/18/2014 - 12:59 | 4448498 kito
kito's picture

are you really naive enough to think the central banks give a f* about some little spat between diplomats?

Tue, 02/18/2014 - 17:50 | 4449857 Dugald
Dugald's picture



about some little spat between silly little diplomats?

Tue, 02/18/2014 - 18:28 | 4450025 Arius
Arius's picture

these are not diplomats!  last time i checked Merkel occupied the highest office in Germany!

you can call ZH audience naive but not the Chancellor of Germany!

Tue, 02/18/2014 - 15:49 | 4449297 Urban Redneck
Urban Redneck's picture

1) you can't actually wire money, the receiving institution is actually just giving you some of theirs for a few hours...

2) the "money" that people think they are wiring across international borders doesn't even exist.


It is impossible to wire money to another bank that actually does exist.

Tue, 02/18/2014 - 12:29 | 4448321 eclectic syncretist
eclectic syncretist's picture

China sells 3.5% of their holdings and Belgium's triple?  Should have been Holland next door, cuz that's where the story about the boy with his finger in the dike comes from, and that's about what Belgium did here.

Tue, 02/18/2014 - 14:12 | 4448855 SWRichmond
SWRichmond's picture

Belgian Tripel? 

Westmalle, bitches.

Tue, 02/18/2014 - 15:51 | 4449305 Annoyingserf
Annoyingserf's picture

I'm partial to the Gouden Carolus....haven't tried Westmalle.  

Tue, 02/18/2014 - 18:39 | 4450057 TeamDepends
TeamDepends's picture

Excellent choice.  Enjoying a Leffe Brun right now.

Tue, 02/18/2014 - 19:19 | 4450185 SWRichmond
SWRichmond's picture

Westmalle is pricey, so a treat every now and again.  The Gouden Carolus and Karmeliet are available in four-packs of single-serving bottles.  Both are excellent, the Karmeliet prob better IMO. 


Tue, 02/18/2014 - 16:30 | 4449490 fockewulf190
fockewulf190's picture

I thought Belgium has a debt to GDP of 100%.  Great idea, let´s go more in the hole with paper that destroys principle.

Tue, 02/18/2014 - 17:53 | 4449873 Dugald
Dugald's picture


Oh yukky, finger in a dyke......that's taken care of my breakfast....

Tue, 02/18/2014 - 17:54 | 4449874 Dugald
Dugald's picture


Oh yukky, finger in a dyke......that's taken care of my breakfast....

Tue, 02/18/2014 - 18:20 | 4449991 Stuck on Zero
Stuck on Zero's picture

Did China sell the Treasuries are let them expire without rolling them over?  It's a fundamental difference.


Wed, 02/19/2014 - 00:28 | 4451445 logically possible
logically possible's picture

Good point, but either way I don't think they are in the market to buy them back anytime soon.

Tue, 02/18/2014 - 21:09 | 4450725 jerry_theking_lawler
jerry_theking_lawler's picture

I've always wanted to stick my finger in a dike.....

Wed, 02/19/2014 - 01:41 | 4451544 effendi
effendi's picture

Would that dyke have a name like Hillary, Moochele or Janet?

I thoughr only Barry liked little boys sticking fingers in him.

Tue, 02/18/2014 - 12:21 | 4448277 RSloane
RSloane's picture

I think it was Slaughterer who outright warned people not to short the S&P. Meanwhile, back at Daneric's, they're busy counting resistance floors should the slinky meet the edge of the stair after discounting that as a likely scenario.

Tue, 02/18/2014 - 12:30 | 4448324 fonzannoon
fonzannoon's picture

Well I don't follow Daneric's but I hope for their sake it's just one giant echo chamber. Because that is the way it should be. They definitely should not evaluate themselves on any level. That would be bad.

Tue, 02/18/2014 - 12:47 | 4448428 RSloane
RSloane's picture

Their statement last week: "Varying degrees of rebound. A lot of divergence and crosscurrents.  The rally is stretched." Daneric puts up a graph, fierce fighting ensues re what it might mean to traders. There is, however, an absence of the doomsday scenario or the belief that the market will crash horribly and a greater depression will ensue. There is also the total absence of the hyperinflation scenario as we all know wage supression, unemployment, and underemployment are all handy devices for controlling inflation.

I'm still of the "thousand papercuts" mind which will take place over the next thirty years and not tomorrow. Automation will have a lot to do with any demise we might be staring in the face.

Tue, 02/18/2014 - 13:19 | 4448588 Oldwood
Oldwood's picture

As a complete market rube here, explain how a crash would happen? I assume that a crash would be the result of people selling, trying to get their money out, but if this was based upon actual stinky data, that we all know already exists, what good would the cash be that they extracted at such a heavy cost in the first place? My point is there must be someplace for the money to go, and there isn't. As screwed as it all seems, our government's ability to print more faster than anyone else is what is now considered safe ground. Again, I know nothing, but that is how I see it. Regardless, I see it all as corrupt and find it difficult to imagine getting back into it, even it did profit me. Stupid I guess.

Tue, 02/18/2014 - 13:22 | 4448609 fonzannoon
fonzannoon's picture

One of the big underlying theories out there is that the world is divesting itself of Treasuries. If you read the headline of this article you would think that is happening. The guts of the report (Belgium aside) indicates otherwise. That's all I am saying. 

Tue, 02/18/2014 - 13:37 | 4448694 Oldwood
Oldwood's picture

It just feels like we are trapped by the financial world that prevents us from acting in a natural rational way to defend ourselves. Its like we are sitting on top of a bomb with a pressure switch which will detonate if we try to get up and run. In order to divest a person must move from one store of wealth to another, but when all stores of wealth are ultimately evaluated by the same entity, what is the point?

Tue, 02/18/2014 - 13:38 | 4448696 Overfed
Overfed's picture

I wonder why yer get junked so hard. Maybe yer just not tellin' the gallery what they want to hear? There may be a crash coming, but this isn't it. I do wonder, however, how much of China's treasuries that the EU could possibly absorb.

Tue, 02/18/2014 - 14:03 | 4448810 James_Cole
James_Cole's picture

I wonder why yer get junked so hard. Maybe yer just not tellin' the gallery what they want to hear? 

buy UST = antithetical to zh. The funny thing is the UST buying has been on like donkey kong. Perhaps china has other reasons to sell? hmmm

Tue, 02/18/2014 - 23:53 | 4451351 Ness.
Ness.'s picture

If you didn't buy UST when the 10yr was sniffing 3% you derserve to lose your money.  3% on the 10yr is the 'be-all-to-end-all' for the US eCONomy. It can never breach that level.  Mr. Yellen, with the help of the CIA, will make sure of that.

Tue, 02/18/2014 - 14:34 | 4448978 1000924014093
1000924014093's picture

The fastest way to collect down arrows is to post what ZHers do not want to hear.

ZH is only valuable as a resource to the extent that it is NOT just an echo chamber for doom mongers, financial apocalypse fantasists, folks who stray in from infowars, etc.  I've moved over the last two years from one of those very people to someone who thinks our financial disaster will be long drawn out, with lots of smaller black swans till the eventual and completely unpredictable end game scenario.

Oh, and thanks Fonzanoon.

Tue, 02/18/2014 - 17:36 | 4449797 JeffB
JeffB's picture

"I wonder why yer get junked so hard"

He has a 12 to 1 up arrow to down arrow ratio at the moment on the post you replied to. That doesn't seem like piling on to me.

Tue, 02/18/2014 - 14:36 | 4448833 Ham-bone
Ham-bone's picture

Fonz - right you are that there seems little to see here on the Treasury front - China proper holds $50 B below their all-time highs and exact amount they held last August...since August HK has increased their holdings by $30 B and are at record holdings...and as Fonz sez, despite slower issuance of Treasury's, "foreigners" continue to increase their holdings of US paper. 

Also very noteworthy is that "foreigners" are holding an ever larger % of outstanding public Treasury debt...particularly as intra-gov (SS) holdings may peak this year and all growth in US debt is going into the public debt...intra-gov debt has flatlined and will begin ebbing over coming years due to slower SS payments and greater payouts.  (Takeaway is all new debt will be on the public side and the only willing buyers are "foreigners" and the Fed...domestic holdings continue sliding both in total and as a %.

IE., this would seem a really dangerous place for "foreigners" and the Fed to own almost 80% of all Notes / Bonds of outstanding public debt...would seem with a simple decree those silly "foreigners" could be paid off in $5 T in "funny money" hot off the digital printer...but something tells me these "foreigners" aren't that dumb.  They are being rewarded for playing along.

But such a policy of ensuring ever lower rates and ever ready buyers of US debt does have it's points of leakage - primarily PM's and the dollar...and both are very precariously showing "leakage".  No need to watch the Treasury market...the dollars created from nothing and passed around to CB's / PD's do have an achilles heel and that weakness is more vulnerable than ever right now.

Tue, 02/18/2014 - 17:20 | 4449726 DrunkenMonkey
DrunkenMonkey's picture

Has anyone ever really imagined what systemic financial collapse would be like ? i.e. Cards not accepted, and no access to fresh cash etc.

Perhaps they (the pols and central bankers) have worked out that their countries will be swallowed whole by predators giving birth to a new feudal age, should the system fail ?

Sooner or later we all pass through the 5 stages of grief (Kubler-Ross) and arrive at acceptance, for better or worse.

Tue, 02/18/2014 - 14:33 | 4448975 JeffB
JeffB's picture

"One of the big underlying theories out there is that the world is divesting itself of Treasuries. If you read the headline of this article you would think that is happening. The guts of the report (Belgium aside) indicates otherwise."

In a sane world, I think people should be divesting themselves of Treasuries whose yields are artificially held way low, particularly given the massive and growing debt as well as the deteriorating financial condition of the U.S.

But this doesn't seem to be a sane world, and the world banksters seem to be playing shell games, trying to trick the sheeple into believing that all is well.

Does it really make any sense for Japan, who is itself in debt in excess of 200% of GDP and who barely receives enough in revenues to pay the interest on their own debt, despite it also being held artificially low, to be buying tens of billions more in U.S. debt? Or Great Britain to be doing so despite their own significant financial troubles?

There appears to be a significant amount of subterfuge in trying to hide the fact that governments around the world are monetizing their deficits. The U.S. loans hundreds of billions of $ to Europe, and then England, also up to its eyeballs in debt buys 10s of billions of US Treasuries. They buy each other's debt and it doesn't look so bad.

If Japan had money to burn, why not pay down some of its own debt before buying hundreds of billions of Treasuries at near zero rates?

Tue, 02/18/2014 - 15:45 | 4449269 nope-1004
nope-1004's picture

Exactly.  It's a giant circle among anglo bankers.  It's a complete shell game and farce.  Looking at figures and charts is a  waste of time.  The world is broke.  The US and EU are insolvent.  All the headlines indicating buying of UST's is done by the US itself.


Tue, 02/18/2014 - 15:57 | 4449314 Ham-bone
Ham-bone's picture

Jan '08 Belgium held $13 B in Treasuries...had never held more than $30 B...

Amazing Belgium used it's gigantic trade surplus of dollars and focused them in high yielding Treasury's that are sure to not be paid back in inflated dollars.

BTW - these assignments of Treasury's to "foreign" nations seem to be of dubious TIC notes

"The data are collected primarily from U.S.-based custodians. Since U.S. securities held in overseas custody accounts may not be attributed to the actual owners, the data may not provide a precise accounting of individual country ownership of Treasury securities"

Tue, 02/18/2014 - 16:35 | 4449421 Ham-bone
Ham-bone's picture

this data really is utterly

Long and short of this is we have no idea who bought these, who owns these, only where they are purchased and being held.  Nothing to stop the Fed or ESF or whatever to buy all the Treasury's they want with free money and hold them in China or Japan or Belgium to attribute them to "foreigners" rather than Fed???  If this is 10% right, be very very afraid of the dollar.

Questions on country classification in TIC data:

7. What are the problems of geographic attribution for securities holdings and transactions in the TIC system?
The annual Survey reports and the monthly table on Major Foreign Holders of Treasury Securities (MFH) report estimated foreign holdings of U.S. Treasury securities.

Beginning with data for end-September 2011, which were first reported at end-February 2012, the MFH estimates are based primarily on custodial data from the TIC SLT. These data help provide a window into foreign ownership of U.S. Treasury securities, but they cannot attribute holdings of U.S. Treasury securities with complete accuracy. For example, if a U.S. Treasury security purchased by a foreign resident is held in a custodial account in a third country, the true country of ownership of the security will not be reflected in the data. The custodial data will also not properly attribute U.S. Treasury securities managed by foreign private portfolio managers who invest on behalf of residents of other countries. In addition, foreign countries may hold dollars and other U.S. assets in offshore accounts that are not captured in the TIC data. For these reasons, it is difficult to draw precise conclusions about changes in the foreign holdings of U.S. financial assets by individual countries from TIC data.

The country attribution of foreign holdings of U.S. securities as reported in the position surveys and in the SLT is imperfect because some foreign owners entrust the safekeeping of their securities to institutions that are neither in the United States nor in the owner's country of residence. For example, a German investor may buy a U.S. security and place it in the custody of a Swiss bank. In the surveys of foreign holdings of U.S. securities, such a holding is recorded against Switzerland rather than Germany. This "custodial bias" contributes to the large recorded foreign holdings of U.S. securities in major financial centers, such as Belgium, the Caribbean banking centers, Luxembourg, Switzerland, and the United Kingdom.

In addition to the shortcomings of the position data, the country allocation in the data on transactions in long-term securities as reported on TIC Form S is also imperfect because transactions are recorded against the country of the foreign transactor dealing directly with the TIC Form S reporter. For example, when a U.S. resident purchases Japanese securities and the transaction is executed by a financial intermediary in London, the purchase of foreign securities is recorded against the United Kingdom rather than Japan. Likewise, if an Italian resident purchases U.S. securities through an financial intermediary in Switzerland, the sale of U.S. securities would be recorded against Switzerland, not Italy. Because cross-border securities transactions take place disproportionately in major international financial centers such as the United Kingdom and the Caribbean banking centers, large net transactions in those areas do not necessarily reflect acquisitions or sales by investors in those areas.

In data prior to January 2012, the beginning of monthly SLT data, this "transactions bias" can further distort the country allocation of foreign holdings of securities when estimates of holdings are made for months not covered by the periodic surveys. These estimates have typically been made by adding net transactions recorded against a given country to the most recently reported survey position for that country. (Adding estimated valuation changes can produce more reliable estimates, especially for some types of securities such as stocks.) For some countries, the transactions bias will lead to an under-estimate of holdings, as some of the net purchases of U.S. securities recorded against international financial centers reflect net purchases of residents of other countries. Conversely, for other countries, the transactions bias will lead to an overestimate of holdings by residents of those countries.

A useful example that illustrates both custodial and transactions bias is that of estimated securities holdings by residents of the United Kingdom. The June 2011 survey measure of U.S. Treasury securities held by residents of the United Kingdom is $135.7 billion. This relatively high level of U.K. holdings primarily reflects the custodial bias of the United Kingdom: at $135.7 billion, the United Kingdom was the fourth largest recorded foreign holder of U.S. Treasuries. The estimate derived from the previous survey as of June 2010, adjusted forward by adding U.K. net purchases over the 12-month period until June 2011, however, is much larger: $347 billion. The difference between the 2011 survey measure and the estimate based on the 2010 survey measure primarily reflects the additional transactions bias of the United Kingdom as a major international financial center.

Custodial bias is not a problem for measured U.S. holdings of foreign securities in the periodic asset surveys, because the security-by-security construction of those estimates allows for accurate attribution of the country of issuance of the foreign securities.  END.


Tue, 02/18/2014 - 17:05 | 4449553 Ham-bone
Ham-bone's picture

What makes more sense -

that the Fed ran (runs) a secondary QE program (perhaps equal to the on-books QE...perhaps double) through foreign financial centers of the world through countries like Ireland, Belgium, Norway, Taiwan, UK, HK, Russia, etc, etc. to maintain the US Treasury bid / yield and these purchases are "attributed" in the nation where they are purchased (not to purchaser)

ie, who believes that our good friend Russia increased their holdings from $8 B in Jan '07 to $140 B today???  Make sense???

ie, how bout China increasing from $400 B in '07 to $1.268 T now in US Treasury debt???

ie, how about Norway who held $0 in June '07 now holding $97 B in Treasury debt???  Make sense???

ie, Ireland held $10 B in ' holds $125 B???  Make sense???

And on and on...


These countries love american debt that yields nothing, will be paid back in inflated dollars, and ties them to a dollar based global system they are trying to move away from???  Since '08 they have all supposedly massively increased their holdings for somebody???


Tue, 02/18/2014 - 17:29 | 4449762 JeffB
JeffB's picture

Thanks for those posts, Ham-bone. I for one found them informative and on point.

Tue, 02/18/2014 - 18:22 | 4449986 Ham-bone
Ham-bone's picture

If above is even remotely correct - Dollar may be the dirtiest dirty shirt!!!

These nations are de-dollarizing asap via removing dollar trading (particularly China/ Russia), talking dollar down, but strangely their attributed holdings only go up...perhaps they really are moving away and we only see the facade of dollar stabiliteeeee'

The biggest "red flag" in this is the Fed tapering.  The Fed were buying all medium term Notes / all Bonds (up to their 70% limit) but on their stated exit from QE, "Foreigners" who own $5 T+ (double the Fed's holdings) would have seen rates would be rising and prices falling...if they were "investors" they would have been selling.  The Fed would have known they could never taper without a rate shock.  But no yields to the moon.  These "foreigners" are not "investors".  This is someone unconcerned with taking losses.

Tue, 02/18/2014 - 20:36 | 4450556 JeffB
JeffB's picture

Yeah, I see red flags all over. It seems so obvious that it's a little baffling to me when I see so many seem to think that things are fine, or that we're just going through a little rough patch and we'll be humming along soon.

It is especially puzzling given that in the years leading up to the financial crisis that exploded onto the scene in 2007/2008 a number of economists, the Austrian economists in particular were jumping up and down warning of the danger of the big run up in debt. I remember getting literature in the mail a few years earlier warning about the bubble in housing prices, and the rising defaults and how this was going to result in catastrophe.

The mainstream economists mislead virtually all of the public into thinking that things just couldn't be going better economically... and on the surface they were right. But the fundamentals were completely unsustainable and they should have known that. The classic YouTube clip juxtaposing Peter Schiff warning about the coming collapse in real estate and the havoc it could cause, and the TV pundits, not to mention Ben Bernanke pooh poohing such an idea, with some of the talking heads even making fun of Schiff after he was off the air:

YouTube - Bernanke was wrong while Peter Schiff was right

Even Paul Krugman admitted that the mainstream economists were completely caught with their pants down on this one:

How Did Economists Get It So Wrong? -

It was rather disconcerting to see the mainstream pundit applaud Bernanke after the disaster he not only didn't see coming, but had been one of the main architects therof. Time even made him "Man of the Year". Meanwhile the Austrian economists, who had been warning of what was going to happen, and then watched it unfold almost exactly as they had predicted, albeit not on any exact timetable, were still seen as the fringe nut cases.

Worse yet, was when the Fed put any dispute about their role in the crisis to rest, at least as far as the mainstream media was concerned, and the people they lead by the nose, when they exhonerated themselves from blame in their investigation of themselves.

Peter Schiff had a nice article on that topic, I think:  Fed to People: It's Not Our Fault

Even some of the mainstream economists had finally begun to fret about the housing bubble, and I remember a conference hosted by The Economist, where the editor of the magazine asked the rhetorical question, ~ "How far ahead of a crisis can you sound a warning without losing your credibility?". She lamented that some economists had warned about the crisis a few years before it hit, but then began to lose credibility as the bubble continued on unabated. They looked somewhat foolish in their predictions of a housing crash even as the housing prices continued to climb month after month, year after year... until it finally popped.

They say that those who don't know, or forget, their history are doomed to repeat it. Unfortunately, it seems we're heading for an even worse disaster this time, as memories of the last crisis seem to have faded so quickly for so many. Now we're having a number of folks on ZH making fun of the ZH morons who are all chicken littles warning that the sky is falling. That seems a little brash to me given our recent history, particularly given that we still have many of the same folks running the economic show, and virtually all of them have doubled down on the same bubble blowing strategy that brought us the last series of ever increasing crises. I think it's all the more reprehensible given that their economic strategies would have been ridiculed by any common man on the street of a decade... or a century ago. In my opinion it is a very reckless gamble that is likely to have catastrophic consequences and it really seems to make little if any sense, other than a last ditch gamble to try and avert a catastrophe in the very near term, but making the underlying problems pushing us towards disaster all that much worse.


Tue, 02/18/2014 - 21:54 | 4450930 Ham-bone
Ham-bone's picture

the ZH in-fighting is interesting...those who believe manipulation has no bounds vs. those who expect a bond collapse or dollar collapse or PM spike...something is bout to give but which one is really a political determination and not based on laws of supp;y demand or the like.  My worthless two cents is were bout to see that dollar collapse and PM superspike.  BTW - I'm 0 for everything on my predictions...

Tue, 02/18/2014 - 22:40 | 4451089 JeffB
JeffB's picture

If you put time frames on those predictions you're more likely to be wrong.

Of course, if you can't get the timing at least reasonably close, it takes away much of any investing advantage.

and, the Fed and the various governments around the world are the elephants in the room that can change the landscape in a hurry, making predictions all the more precarious.

But I don't see how things can just continue on as is ad infinitum. Something's going to have to give eventually.

Tue, 02/18/2014 - 19:57 | 4450347 thestarl
thestarl's picture

Likewise even though my fucking head is about to explode but the circle jerk analogy rings true to me

Tue, 02/18/2014 - 18:30 | 4450033 waterwitch
waterwitch's picture

Re-hypothecated QE!

Tue, 02/18/2014 - 23:30 | 4451268 DaveyJones
DaveyJones's picture

well said

Tue, 02/18/2014 - 15:58 | 4449333 Solon the Destroyer
Solon the Destroyer's picture

Does it really make any sense for Japan, who is itself in debt in excess of 200% of GDP and who barely receives enough in revenues to pay the interest on their own debt, despite it also being held artificially low, to be buying tens of billions more in U.S. debt? Or Great Britain to be doing so despite their own significant financial troubles?

Absolutely it does when your name is Abe and your mission is to devalue the yen against the dollar. If you do the converse and sell UST's to repatriate into yen and pay your own debt...

If Japan had money to burn, why not pay down some of its own debt before buying hundreds of billions of Treasuries at near zero rates?

This should be obvious, but if they were to take that measure, the resulting upticks on the interest on their debt would cripple the country and servicing that debt would eat up ALL government revenues.  Also, see the converse situation above.

Friedman Fucked all Folks with the Faulty Forex Story he sold to Nixon, FFS.

Tue, 02/18/2014 - 16:38 | 4449531 odatruf
odatruf's picture

Solon - please explain how there would be a "resulting uptick" in the interest on their debt if Japan took some cash that they used to buy US Ttreasuries and instead either bought back some of their own debt or didn't sell as much of it at their next auction. Thanks in advance.


Tue, 02/18/2014 - 20:13 | 4450424 Solon the Destroyer
Solon the Destroyer's picture


Foreign reserves are often used to judge the risk a sovereign's bonds represent. A reduction of foreign reserves, especially of a substantial amount, would likely have an effect on a sovereign's bond market (although Japan is a bit of a weird case, so who knows in practice).

Not to mention the concomitant effects of increasing the value of the yen against the dollar and thus worsening exports, and of reducing the money supply by paying off debt and all the deflationary impact that strategy represents.

Friedman fucked everyone up. Once his theory that FOREX reserves would be non-existent or limited in a floating exchange world were disproved in practice, the whole shebang should have been abandoned and a return to settlement by gold payment enforced internationally.  Instead we all are importing and exporting both inflation and deflation left, right and center.

Tue, 02/18/2014 - 21:29 | 4450781 JeffB
JeffB's picture

Thanks for the followup, Solon, but it still doesn't convince me.

"Foreign reserves are often used to judge the risk a sovereign's bonds represent. A reduction of foreign reserves, especially of a substantial amount, would likely have an effect on a sovereign's bond market (although Japan is a bit of a weird case, so who knows in practice)."

That's true, but debt is certainly used to judge the risk a sovereign's bonds represent as well. If I was evaluating such risk, I would probably consider a country in effect borrowing money to buy another country's debt more of a risk than one that just issued less of its own debt. At best I would consider that tradeoff a wash.

"Not to mention the concomitant effects of increasing the value of the yen against the dollar and thus worsening exports,"

That's probably the best argument for it, and yet the results in practice seem to be far less beneficial for them than many predicted. They have to import almost all of their energy after all, so it also has a big impact on their production costs. That must be at least a pretty big factor on why their trade deficit has hit record after record even as they devalue the yen month after month.

Japanese Exports Drop More Than Expected Smashing Adj. Trade Balance To New Record Low

It appears Abe and his henchmen had better stop doing things and say something as the huge devaluation of the JPY so far is NOT having the effect he had hoped for. ... on a seasonally-adjusted basis, the Japanese Trade Balance just hit a new all-time record low (negative).

Abenomics Humiliated Again As Japan Posts 15th Consecutive (And Record) Trade Deficit  10/21/2013

Every month we say it, and every month it just keeps getting worse: RIP Abenomics... until next month, when it will be RIP-er. Overnight Japan posted its latest, September, trade numbers which were absolutely abysmal, as the trade deficit rose to a fresh record high of 932 billion yen ($9.5 billion), the 15th consecutive monthly shortfall.


JPY Dumps And Nikkei Explodes As Japan's (32nd Month In A Row) Adjusted Trade Deficit Hits Record High

The Japanese trade balance (adjusted) shows a deficit for the 32nd month in a row and has surged to its largest (worst) level on record.

For what it's worth, that strategy of devaluing the yen as fast as possible has hardly been the big boost to exports and the economy that had been predicted.


"and of reducing the money supply by paying off debt and all the deflationary impact that strategy represents."

It wouldn't have to be deflationary, if they bought their own bonds, which is after all, "monetizing their debt".


Tue, 02/18/2014 - 16:41 | 4449541 JeffB
JeffB's picture

"If Japan had money to burn, why not pay down some of its own debt before buying hundreds of billions of Treasuries at near zero rates?

This should be obvious, but if they were to take that measure, the resulting upticks on the interest on their debt would cripple the country and servicing that debt would eat up ALL government revenues.  Also, see the converse situation above."

It's not obvious to me why paying down their debt would result in an uptick on their interest rate.

But I do understand the theory of Abenomics on trying to print in exponentially rising fashion to match the exponentially rising debt in order to steal the shortfall from the debt holders via the hidden inflation tax. Of course I think that's an immoral attempt at a way out, and I think it will still cause them much pain in the end.


Tue, 02/18/2014 - 16:08 | 4449371 caShOnlY
caShOnlY's picture

There appears to be a significant amount of subterfuge in trying to hide the fact that governments around the world are monetizing their deficits.

The CBs who are "allies" are monetizing each others debt, when needed.  In this case the call came.  How long can this game play?

Tue, 02/18/2014 - 14:18 | 4448897 JeffB
JeffB's picture

"there must be someplace for the money to go, and there isn't."

I suppose there's always someplace for money to go, at least there always has been in the past:

German Marks fuel the fire

Question about past hyperinflations



Tue, 02/18/2014 - 16:46 | 4449566 caShOnlY
caShOnlY's picture

questions about past hyperinflations

What will make this one so very different is there will be no pictures of paper dollars piles up.  No photograph of a desperate mother buying a loaf of bread with a wheelbarrow.  No, this time it will be DIGITAL hyperinflation.  For this very reason hyperinflation will come hard and quick as the FED/GOV can load digital cards quickly with no need to wait in line at the bank. 

Tue, 02/18/2014 - 18:05 | 4449925 css1971
css1971's picture

Fundamental misunderstanding about money. You assume it exists. It doesn't.

Money is the counterparty to debt. They anhialate each other. ~97% of money is borrowed into existence so, when it gets paid back, it vanishes.

Lots of valuation of the markets is based on borrowed money. It doesn't have to go anywhere. When the margin call comes in, the debts get paid off, and vanish along with the money.

Tue, 02/18/2014 - 20:39 | 4450572 JeffB
JeffB's picture

or when the debt is defaulted upon, the 'money' vanishes as well.

Tue, 02/18/2014 - 23:00 | 4451163 AllWorkedUp
AllWorkedUp's picture

You get junked because you're like me, you've given up. There are no markets anymore, just computer entries and algorithims.

Gold was the only true monetary instrument that could set the board straight, and thru monetary shell games and derivatives they've defeated real money. Nothing matters anymore. Banks own govt's, courts, legislatures, presidents, King and Queens. We live in a monetary matrix that bleeds every breathing thing.

The only thing left is poverty and war and complete submission or death.

Tue, 02/18/2014 - 12:20 | 4448274 NotApplicable
NotApplicable's picture

I'm assuming that Benron found a way to get some money to Belgium, as the idea that Belgium represents true demand is ludicrous.

Which, of course, fits the ZH narrative precisely.

Tue, 02/18/2014 - 12:23 | 4448286 fonzannoon
fonzannoon's picture

it would have been the highest recorded UST holdings even if you CANCEL OUT Belgium.

W/ Belgium (who was buying all year): Dec 2013: 5794.9 billion
W/O Belgium (just cancelling it for argument): Dec 2013: 5738.7 billion
2nd highest month ever recorded: Mar 2013: 5725.0 billion

Doesnt quite fit the doom porn narrative though does it...

QE4eva. The fed can never exit. That narrative.


Tue, 02/18/2014 - 12:57 | 4448488 kito
kito's picture

how odd that the truth you put forth elicits red arrows. some people just cant handle the truth. 

Tue, 02/18/2014 - 13:02 | 4448518 RSloane
RSloane's picture

I was just thinking the same thing, Kito.

Tue, 02/18/2014 - 13:22 | 4448603 kito
kito's picture

this is ruining the "reality" for so many on here. fonz does us a favor by giving us the other "half" of tylers truth, which actually seems to provide a clearer picture of whats going on, and so many mindless doomers are wetting their pants over the thought that the status quo is quite alive and quite "healthy".


dont worrry though, im sure michael synder will be along any minute with 20 new intelligible signs of doom that the below average iq reader will take to heart........

Tue, 02/18/2014 - 13:31 | 4448646 fonzannoon
fonzannoon's picture

To add to that...I take very little credit for what I bring to the table here (except fart jokes, they are all mine). Most of what I post on the Fed/UST conversation comes from someone that I speak too offline. Who has been booted from here for having a dissenting opinion, and could seriously back it up. ZH also seems to be warming up to that idea that most of what we are seeing from the world's CB's is being done to combat deflation, which Kito got cursed out for 3 years for pointing out was a significant threat, and still is. So all I have ever been asking for is some self examination instead of using whatever rationalization we can find to fit a narrative that does not seem to be taking place.


Tue, 02/18/2014 - 13:37 | 4448691 fuu
fuu's picture

The rise in treasury holdings by foreign cb's also puts a dent in the deflation scenario. Money supply is still expanding...

Tue, 02/18/2014 - 13:42 | 4448728 fonzannoon
fonzannoon's picture

I can't even define what we are seeing. I tried to define it as barflation. People are coughing up their assets just trying to hang in there at this point. I just notice that when anyone tries to explore these issues they get shouted down. As Chinit13 eloquently put it on the banker thread..."Such is the analytical skill level and knowledge of the current Zerohedge crowd that they make Dick Bove seem like a combination of Isaac Newton and Hercule Poirot".

Tue, 02/18/2014 - 13:53 | 4448770 silverserfer
silverserfer's picture

well the money printers dont need the 99% anymore, they can print everything they need. defation as amonetary term is DEAD doesnt exist any more in a broken market such as this. Its lower income  poeple not being able to afford anything anymore. Then trickle down isint trickling down. Corportaions make more by  triying to nudge in closer to rub elbows with the money printers.  

Tue, 02/18/2014 - 15:39 | 4449257 The Limerick King
The Limerick King's picture

Holy shit...when did all these status-quo Klepto shills start organizing their asinine posts...complete with green arrows???

Tue, 02/18/2014 - 15:43 | 4449279 fuu
fuu's picture

110 weeks ago.

Tue, 02/18/2014 - 16:13 | 4449411 fonzannoon
fonzannoon's picture

haha thanks. I have been here a lot longer than that. I'm surprised at the limerick king jumping in. I guess Tyler needed some help. You guys really seem to be unable to handle a little introspection.

Tue, 02/18/2014 - 16:28 | 4449480 kito
kito's picture

limerick it must be a conspiracy, replete with the ability to print green arrows.  would it be better if we just go mehhhhhh tyler, mehhhhhh??? i guess fight club has gone the way of america, the loss of spirit to challenge anything anymore, just graze and move on. 

Tue, 02/18/2014 - 17:04 | 4449272 yrbmegr
yrbmegr's picture

@fonzannoon:  Posters here are hair-trigger hyper-analysts.  Every microsecond is a new apocalypse.  Shit goes up.  Shit goes down.  What's really happening happens over at least months, if not years/decades.  One data point does not a trend make.  People need to look at the big picture.

Tue, 02/18/2014 - 14:17 | 4448889 kito
kito's picture

@fuu, no it doesnt. it shows that trillions of dollars still cant light wet wood. the cbs are wasting their time trying to build a fire with unseasoned wood. you can stoke and stoke but all you get is some smoke and a fizzzzzzz...

Tue, 02/18/2014 - 22:45 | 4451107 JeffB
JeffB's picture

What seasoned wood should they be using kito?

Any prescriptions you recommend for getting us out of this economic quagmire?


Tue, 02/18/2014 - 15:44 | 4449282 chubbyjjfong
chubbyjjfong's picture

"Money supply is still expanding..."

I don't believe money supply is expanding at all.  The Fed is printing to replace that which is not lent out by banks to the real economy, and they cannot keep up.  Money supply is contracting along with money velocity. 

Tue, 02/18/2014 - 21:41 | 4450858 JeffB
JeffB's picture

If the Fed's numbers are accurate, it looks to me as though the money supply is increasing, albeit not as fast as they're printing it, since they're sucking some of it back out of the economy by paying the banks interest to put it on deposit at the Fed, rather than lending it out.

Here are some Fed graphs:

Monetary Base

M1 Money Stock

MZM Money Stock

M2 Money Stock




Tue, 02/18/2014 - 22:46 | 4450861 JeffB
JeffB's picture

Oops. Duplicate. Sorry 'bout that.

Tue, 02/18/2014 - 13:55 | 4448741 silverserfer
silverserfer's picture

it sounds like you got a fever, and the only cure, is more down arrows. You gota have more down arrows!

Tue, 02/18/2014 - 13:56 | 4448781 silverserfer
silverserfer's picture

I think Fonestar went frothy mouth and is on a serial junk rampage! 


Tue, 02/18/2014 - 18:02 | 4449882 JeffB
JeffB's picture

fonzannoon: ..."ZH also seems to be warming up to that idea that most of what we are seeing from the world's CB's is being done to combat deflation, which Kito got cursed out for 3 years for pointing out was a significant threat, and still is. ..."

Well ZH itself has been posting articles warning about the possibility of deflation for years.

I did a quick search of their front page using "deflation 2010" to get some of the articles from 3 to 4 years ago, and there were some 5 pages of links to articles that at least included "deflation" in the story. Many of them warned of the danger of same.

From the 1st page of results:

2010: Inflation Or Deflation?

(Brait Capital Management, Reality) With every deep-thinking pundit looking out at 2010 ... of one simple outcome: do we have inflation or deflation. Numerous opinions have been set forth ... [deflation/inflation] will be the dominant theme in the year to come, accompanied by pretty charts and convoluted ...

Story - Tyler Durden - 12/31/2009 - 13:46 - 109 comments - 0 attachments

Nobel Winner Dares To Go There: "No Reason To Fear Deflation... Greece May Benefit From Gold Standard"

"Historically, there is no reason to fear deflation," Nobel Laureate Thomas Sargent explains ... companies cutting prices, "this is not a dangerous deflation, but part of the necessary correction so that ... result, unit labor costs go back, and the company may cut prices. This is not a dangerous deflation, but ...

Story - Tyler Durden - 11/16/2013 - 12:45 - 340 comments - 0 attachments

Japan Pummeled By Soaring Food And Energy Prices, Plunging Wages And Ongoing Core Deflation

the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 percent ... extended the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 ... no longer even afford gfasoline, and oh, we almost forget, core deflation. But, hey, look over ...

Story - Tyler Durden - 09/27/2013 - 07:22 - 46 comments - 0 attachments

What Wage Inflation? Unit Labor Costs Have Biggest Annual Drop Since 2010

costs plunged by 1.3%, the most since the second quarter of 2010, and prove that not only is the Fed's ... it great that the Fed is protecting us from deflation? Unit labor costs are measured Unit labor costs are measured in burgers flipped per hour, here. Boy, deflation a little Boy, ...

Story - Tyler Durden - 02/06/2014 - 12:32 - 48 comments - 0 attachments

Abenomics Leads To Worst Core Deflation In Three Years

2010 , missing expectations by the most in 10 months! But wasn't Abenomics supposed to be... ... inflation/deflation false dilemma. This binary way of looking at an entire economy will be the ruin of the modern ... central banks, inflation and deflation are very much as binary as life and death. When the system becomes ...

Story - Tyler Durden - 04/25/2013 - 18:48 - 60 comments - 0 attachments

Jackson Hole Presenter Warns: "Bottom Could Fall Out Of The Economy As It Did In The Great Depression"

is back to normal. " And, again, life every economist, he present the catastrophic deflation ... not even Hank Paulson come up with on short notice. The deflation ... early 2009 that rapid deflation might break out and  cause the economy to collapse as in 1929 to 1933 ...

Story - Tyler Durden - 08/23/2013 - 11:49 - 219 comments - 0 attachments

US Resumes Importing Inflation, Exporting Deflation, As Annual Import Prices Increase Highest Since August 2008

side, where prices posted the first drop since July 2010. "The downturn was led by a decline in ... inflation and exporting deflation. What does that mean if you are a chairman of the Fed reserve? Why, that ...

Story - Tyler Durden - 08/16/2011 - 07:45 - 30 comments - 0 attachments

Why It's Going To Be A Whole Lot Worse Than In The 1930s

economies. His - so far - spot on projection that " first the threat of deflation (1), followed by a helicopter drop (2), followed by big reflation (3), followed by a real deflation (4), and then followed by ... Maloney explains in this brief clip, while we have seen great deflations before, in the '30s one-third of ...

Story - Tyler Durden - 12/01/2013 - 17:33 - 219 comments - 0 attachments

How The Middle Class, Or The New Rentiers, Is Stuck Between Deflation And Hyperinflation

(default, Equity Markets, Eurozone, Gross Domestic Product, Hyperinflation, Investment Grade, Sovereigns) "In 2010, the authorities seem to have only two choices: allow defaults, which lead to deflation and tremendous stress to the political system and public order; or inflate so that debts ...

Story - Tyler Durden - 06/24/2010 - 08:25 - 83 comments - 0 attachments

St Louis Fed Explains Why The Fed Has Cornered Itself Between Deflation And (Hyper) Inflation

every debate over hyperinflation/deflation: the money multiplier, and its current reading of well below ... in reserves of over $1 trillion, total commercial bank loans were some $200 billion lower in May 2010 ...

Story - Tyler Durden - 08/24/2010 - 11:20 - 85 comments - 0 attachments

Is This Why Gold Prices Are Rising?

increasing and then decreasing uncertainty since 2010 have coincided with gold prices risisng then falling. ... really match..   are Tyler's kids working the front desk now? Deflation deflation Deflation deflation deflation.  Gold is dead, bitches. It was not stupidity or by It was not stupidity or ...

Story - Tyler Durden - 02/11/2014 - 21:16 - 71 comments - 0 attachments

Morning Gold Fix: July 6, 2010

With regard to Gold appreciating during deflation. Generally speaking, it will sell-off if deflation is ... deflation threatens to unravel into a default. Greece fallout would be a classic example of that. Gold is a ...

Story - Tyler Durden - 07/06/2010 - 07:52 - 64 comments - 0 attachments

As Bitcoin Soars Over $300, A Question Arises: Could It Become A Global Reserve Currency?

Oh, and each new idea built on top of bitcoin will further expand its usage and further deflate the ... who seek Not good for those who seek inflation to deflate away debt. > No there ... an interesting thing to watch though.  Yes, that point was in 2010 Yes, that point was in ...

Story - Tyler Durden - 11/07/2013 - 11:40 - 398 comments - 0 attachments

Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World

February 2010. To say that this data conflicts massively with all the rumors, fairytales and lies about a ... lowest since February 2013, and then, going back all the way to 2010. But at least the Fed is tapering ... bag.......DEFLATION !!!!!!!!! It would be interesting to It would be interesting to see if Deere, Hitachi, ...

Story - Tyler Durden - 12/19/2013 - 09:35 - 47 comments - 0 attachments

End Of QE?

debt deflation but maybe debt deflation is what is needed . QE is nothing but heavy-handed market ... explained QE to the American public in 2010 by announcing that his job was to occasionally manipulate ... bring in super deflation by ending QE so the rich are even richer while the poor get screwed even ...

Story - Tyler Durden - 06/22/2013 - 16:55 - 121 comments - 0 attachments

Bill Ackman's HKD Revaluation Trade As Predicted By Deutsche Bank In 2010... And Why DB Thinks It Is Wrong

as November 2010. To wit: "Public complaints against inflation are already loud, and may ... deflation as low as -6%. The current inflation rate of roughly 3% looks benign in this context. In 2008 when ...

Story - Tyler Durden - 09/16/2011 - 21:46 - 39 comments - 0 attachments

US Import Prices Post Surprising Jump, Rise 0.2% In May Despite First Decline In Fuel Import Prices Since September 2010

the H2, this is just the beginning) making the push for "deflation combating" ... Imports prices, May saw the first Fuel Import price decline since September 2010, dropping -0.2%, with ... September 2010. In May, a 0.4 percent drop in petroleum prices more than offset a 4.1 percent increase in ...

Story - Tyler Durden - 06/10/2011 - 07:41 - 20 comments - 0 attachments

JPM Sees "Most Extreme Ever Excess Liquidity" Bubble After $3 Trillion "Created" In First 9 Months Of 2013

the period between the end of 2010 and the beginning of 2012 when excess money supply was negative. ... residual): 1993-1995, 2001-2006 and Oct 2008-Sep 2010 . These were periods of strong asset price inflation ... relics and other deflated hard assets. Let the mad dash for the last Let the mad dash for ...

Story - Tyler Durden - 10/28/2013 - 14:04 - 138 comments - 0 attachments

An "Austrian" Bill Gross Warns: "The Days Of Getting Rich Quickly Are Over... Getting Rich Slowly May Be As Well"

the IMF and other model-driven forecasters might assume. Perhaps the whisper word of “deflation” at ... one trillion dollars in 2009–2010 equaled a 2% growth rate of credit by itself. But despite that, ... assume. Perhaps the whisper word of “deflation” at Davos these past few weeks was a reflection of ...

Story - Tyler Durden - 02/05/2014 - 13:03 - 64 comments - 0 attachments

Daily Highlights: 10.29.2010

(Chicago PMI, daily highlights, Daimler, Economic Calendar, Egan-Jones, Egan-Jones, Exxon, General Motors, Hong Kong, Japan, Las Vegas, Mexico, Yen) Asian stocks decline as Sharp, Samsung Electronics stoke earnings concern. Japan Factory Output slide, deeper deflation are 'negative surprise' for ...



Tue, 02/18/2014 - 18:10 | 4449951 fonzannoon
fonzannoon's picture

Jeff I appreciate the work you put into that rebuttal. Fair enough about ZH, my point was more about Kito getting shouted down and trashed for arguing the deflation apect.

Tue, 02/18/2014 - 23:11 | 4451197 JeffB
JeffB's picture

I can't really comment on the Kito kicking. I didn't see it or don't remember it. Of course context can be crucial.

Wed, 02/19/2014 - 00:52 | 4451127 Deathrips
Deathrips's picture



I was talking to a friend of mine earlier today about the current situation and how it will unfold.

We think we will see deflation in dollars when it comes to financed assets (ie homes, cars etc) and inflation in real assets that are not financable necessities ( store of wealth Silver and Gold, Food, Water and Energy). I agreed in principal that it could be deflationary and inflationary at the same time....although, I think that the financed markets will seek equilibrium with a free market when the subsidising of the interest rates either goes out of control or corrects to reflect the true risk. I didnt want to argue that position with my friend..hes a meat and potatoes guy...and prefered to call it deflationary environment cause the dollars would buy more. WTF do i care in principal theres agreements. No need to argue symantics.


The logic is that as interest rates go up financed assets will be less affordable and the consumers purchasing power will be diminished and the actual dollar will buy more. ZIRP is what is holding up the value of financed assets. Think 20% interest in the early 80s and what that did to housing. Meanwhile, what happened to silver and gold? They went up cause when real estate isnt viewed as a savings tool..but just a place to live in..people need to put their earnings somewhere to save. Tangible unleveraged assets have less counterparty risk than interest rates and are viewed as a safer store of value (as long as you have your basis covered and arent desperately selling)..bolstering prices for real things.


Another factor is that the government is subsidizing up and down the price of commodities. They keep food prices low by replacing whole foods with ever diluting food for the past 30 years. If they dilute anymore..people will die from the food..and some food out there right now will kill you in its present form. When monies are taken away from them TPTB/FED, they cannot continue to subsidise food... so it goes up. Likewise, they subsidise Energy to keep the costs down- petrodollar. When they have to focus the money at UST or the stock takes away their ability to subsidise energy and if they print more money they loose international credibility. Although I think that they are all in cahoots in a bigger game of western bankers vs the BRICS. So in that thinking they cant loose credibility of anyone but the BRICS.

They subsidise metals by allowing their partners JPM et al to dilute the market by selling unbacked paper (like diluting food).


SO my question is. What should we call a market where financed commodities go down and unfinanced neccesities go up?


Sorry to cut it short at the end...dinner time.



Wed, 02/19/2014 - 02:13 | 4451582 Groin
Groin's picture

Interest is an interesting thing, it is cumulative as a portion of the money supply. Thus interest rates can't go up in any meaningful way, so forget that happening. If you see them going up then the end of that money supply is close at hand.

Tue, 02/18/2014 - 13:45 | 4448735 Oldwood
Oldwood's picture

Just because we be below average, don't mean we don't have nothing to contribute! Besides his posts help me with my countin lessons.

Tue, 02/18/2014 - 20:48 | 4449031 JeffB
JeffB's picture

But the idea that it is somehow prudent management by Belgium to be borrowing money they don't have, while running untenable deficits themselves so that they can buy in excess of an additional $50 billion in treasuries last month, more than 10% of their GDP, seems suspect at best.

Why buy a bunch of U.S. IOUs when they're under fire from the EU for their own deficit?

and they're paying 11,780,502,218€ in interest on their own debt, and have a debt to GDP ratio of 105.60%.

It's gambling pure and simple, if they're paying 4%+ on some of their own debt to purchase U.S. bonds at less than that... unless of course they're being given that money by the Fed or the Treasury to make those purchases on the sly... not unlike the primary dealers who can make a quick profit by buying bonds and then turning around and selling them to the Fed within days on a cost + basis.

Tue, 02/18/2014 - 19:05 | 4450116 Everybodys All ...
Everybodys All American's picture

Your time frame is more than a little small. Lets' just see how long they can keep interest rates and inflation down as they exit stage left with 4 trillion on their known public balance sheet. I'd be willing to bet they hold more "off" their balance sheet at this point through various proxies The ponzi must continue as long as possible. How this continues to play out in major disruptions are through the foreign currency markets where major major leverage exists. This will end in an epic storm as you know if history is any indication.

Tue, 02/18/2014 - 22:45 | 4451095 mickeyman
mickeyman's picture

"There is one word still, which is beyond the pale--one word, whose mention will send adults shrieking in horror and disgust, and its usage has been banned on every planet in the galaxy except for one, where they don't know what it means. That word -- is Belgium."

Tue, 02/18/2014 - 12:34 | 4448349 EscapeKey
EscapeKey's picture

Two things:

- Total increase over the past year: $220bn. Ie, a fraction of the deficit.

- GDP of Belgium: $486bn. So, in one month, Belgium SUPPOSEDLY spent over 10% of annual GDP on US debt, and over $118bn (24%) over the past year. Yeah - fucking - right.


Tue, 02/18/2014 - 12:38 | 4448379 fonzannoon
fonzannoon's picture

the bottom line is this month had the highest foreign CB Treasury data ever recorded at just under $5.8tril, up from $5.57 in Dec. '12, so much for that "buyer's strike", if anyone is going on strike, its the Fed, with its voluntary tapering because it has already reached 33% and anymore absorption will make it tough for foreign CBs to buy even moar from here, unless they manage to get it out of foreign retail and institutional hands, which has been going fine so far.

Tue, 02/18/2014 - 13:33 | 4448674 EscapeKey
EscapeKey's picture

That depends on whether it's a statistical anomaly, or an event you can expect to annualize.

Given that 10 of the previous 12 months have been largely static, I think it's a little early to celebrate just yet.

Tue, 02/18/2014 - 14:16 | 4448688 fonzannoon
fonzannoon's picture

I think the statistical anomaly is China/Japan.  You can find several instances of Chinas holdings trending down month-month slightly though the upward trajectory is undisturbed (see July-Aug).

Thanks for opening this up for actual conversation. 

Tue, 02/18/2014 - 14:51 | 4449045 EscapeKey
EscapeKey's picture

Chinese holdings as of Dec 2013: 1268.9, and Jan 2012: 1166.2

That's a growth of (1268.9-1166.2)/23 = $4.5bn/month.

As for Japan, the numbers are (1182.5-1080.8)/23 = $4.42bn/month.

So, combined we're talking $9bn/month, or $100bn/year.


Still doesn't change the fact that Belgium supposedly investing the equivalent of 24% of their GDP within a year frankly ought to raise a few eyebrows. But then again, they do have a leveraged-to-the-hilt banking system.


Sorry about attempting to engage in actual debate. Perhaps I should question your sexuality, and insult your mom for good measure, to sort of fit in more with the ZH crowd?

Tue, 02/18/2014 - 18:28 | 4450028 Karl von Bahnhof
Karl von Bahnhof's picture

Belgium isnt foreign country, its US colony, something like Canada or Puerto Rico.

Tue, 02/18/2014 - 13:38 | 4448686 LMAOLORI
LMAOLORI's picture


kito lol hard for some to handle but ....

China Is Dependent On Our Fiscal Health


–What would happen if China, to damage us, decided to dump its trove of Treasurys? Prices might wobble, but not for long. There are trillions of dollars’ worth of financial securities scattered around the world, and smart asset buyers would gobble up Treasurys if they thought they were underpriced. Moreover, the Fed, which already has a bloated balance sheet of $4 trillion, could easily absorb what China owns in Treasurys–$1.3 trillion.

–If China did sell Treasurys, it would be paid in dollars. Then what? Would it dump the dollars for, say, yen or euros? The European Central Bank and the Bank of Japan, not to mention the Fed, could take countermeasures if they so desired, to make sure currency ratios didn’t get out of line.

The idea that a government gains strength by piling up dollars or other foreign currencies is a mercantilist holdover from the 16th to 18th centuries, when France, Spain and others thought amassing gold and silver was how a country became wealthy. Trade, not hoarding, makes for a powerful economy–an insight Adam Smith understood but one that too many people today don’t.


Rich Chinese line up to leave China


Coincidently, at a Chinese New Year lunch last week, one of the diners said he had this very discussion in Shanghai with colleagues the previous week, and all 10 of them said they would shift their savings to U.S. dollars if they were they free to do so.


Aside from that without the power of the printing press most of the other governments would also have trouble paying their debt.

Tue, 02/18/2014 - 15:20 | 4449175 g speed
g speed's picture

if the China drop was a mature/end of rollover--and there is a line you stand in to buy then maybe Belgium was ahead of China in the line??   or put another way maybe its better for the US if Europe holds our debt. Asia seems a little shaky lately. Maybe the FX rate says its a fine time to buy US debt with marks/ euros----just a lot of questions on this --- we're not done with extracting our debt from China IMHO---just saying. China may be in the tank with shoring up their banks and the shadow banking thing. A lot of % of GDP is going to be needed for that --Its more likely China is broke than they don't want to hold our debt. 

Tue, 02/18/2014 - 15:49 | 4449298 LMAOLORI
LMAOLORI's picture



Look below where I posted some articles about China's debt they have massive problems (lol I got junked when I posted that link in 2012).  They were able to hide it in the past and only now many are waking up to how bad it really is.  The BBC just did a couple of reports on it. The Chinese leaders have also offshored their wealth and you can bet its not being held in the Yuan. Developed countries would never trust China to hold the world's reserve currency IMO and for good reason you can't believe them and their figures aren't open to review.

Tue, 02/18/2014 - 17:06 | 4449650 yrbmegr
yrbmegr's picture

Add up GDP from the provinces and compare to national GDP.  The difference is bigger than Indonesia, lol.

Wed, 02/19/2014 - 20:03 | 4454917 goldinpenguin
goldinpenguin's picture

Russia needs Ukrain for geo-political heft just like France needed Belgium and you better believe Vlad is working on it. There is a basic divide between the Russian leaning (and speaking east) and the western leaning "real" Ukrainians in the west . Vlad will foment discord in Ukrain and then either set up an Ulster-type rump Russian state in East Ukrain or go for the whole thing with a puppet in Kiev. (As a bonus a rump Russian state in the east could leave Ukrain landlocked!).

Vlad has an interesting set of political mischief tools in his tool box and I'm sure he'll put them all to use. The west is preoccupied with their own set of financial challenges (including high level name calling by low class state dept bitches) and probably won't offer effective counterbalance to Vlad's manifest destiny.

Tue, 02/18/2014 - 14:09 | 4448839 youngman
youngman's picture

When everyone has Tulips....its time to get out

Tue, 02/18/2014 - 14:17 | 4448890 RSloane
RSloane's picture

I would actually cheer if the world reserve currency was a basket of currencies instead of the USD. In terms of global economic stability and trade negotiations it would make far more sense. I don't think the loss of the USD as the reserve currency would cause a market meltdown in the US or bring about catastrophic economic changes. It would merely give legitimacy to that which global firms are doing already.

Tue, 02/18/2014 - 14:22 | 4448921 Nels
Nels's picture

Basket of currencies?  You just exchange a local set of Banker Overlords for a global set of Banker Overlords.   Read Taleb's Anti-fragile book for a view of how larger systems have larger crashes, and how  it's way beyond a linear growth in crash impact. 

Tue, 02/18/2014 - 14:32 | 4448971 RSloane
RSloane's picture

Hi Nels, my post above yours was in response to a post by Kito. My point is global businesses are trading with a basket of currencies already. That is business as usual for most countries South of the US.

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