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Russia Dumps 20% Of Its Treasury Holdings As Mystery "Belgium" Buyer Adds Another Whopping $40 Billion
Back in mid-March, there was a brief scare after the start of the Ukraine conflict, when Fed custody holdings plunged by a record $104.5 billion (if promptly bouncing back the following week), leading many to believe that Russia may have dumped its Treasurys, or at least change its bond custodian. We noted that we wouldn't have a definitive answer until the May TIC number came out to know for sure how much Russia had sold, or if indeed, anything. Moments ago the May TIC numbers did come out, and as expected, Russia indeed dumped a record $26 billion, or some 20% of all of its holdings, bringing its post-March total to just over $100 billion - the lowest since the Lehman crisis.
But as shocking as this largely pre-telegraphed dump was, it pales in comparison with what Zero Hedge first observed, is the country that has quietly and quite rapidly become the third largest holder of US paper: Belgium. Or rather, "Belgium" because it is quite clear that it is not the country of Begium who is engaging in this unprecedented buying spree of US paper, but some account acting through Belgian custody.
This is how we explained it last month:
... to clarify for our trigger-happy Belgian (non) readers: it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same "buyer", who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the "Belgian" total to a record $341.2 billion, cementing "it", or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.
In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host's total to an unprecedented $341 billion!
Make that an unprecedented $381 billion because as we just learned "Belgium" bought another $40 billion in March!
Curiously, this happened as Japan sold $10 billion in TSYs, and as China remained unchanged. Further, foreign official accounts actually declined from $4.069 trillion to $4.054 trillion, which means this is what the US Treasury would classify as a "Private" buyer.
So to summarize, of the total $60 billion increase in foreign Treasury holdings, which rose from $5.89 trillion to $5.95 trillion, "Belgium" accounted for two thirds, most likely doing the purchases under the guise of a "private", unofficial account!
And once again, it is Belgium in "", because whoever is buying through the tiny European country, whose GDP is just double its reported total TSY holdings, is neither its government nor its people.
The question remains: who? Who has bought a whopping $200 billion in Treasurys using Belgium as a proxy since October?
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Those boys from Belgium sure have got lots of cash.
Probably have more Belgium buns than cash. The Fed'up work in mysterious ways but will ultimately fail when China sees the writing and poops aswell
The farce is getting to the point where it can no longer be ignored.
We are!
when will the Belgium buyer begin to waffle?
When their toilets are choked with US dollars, Zimbabwe style.
I have a few Trillion ZD lying around somewhere.
In totally unrelated news, the Fed continues to fight being audited.
Is this belgian account preparing for a gigantic dump sometime in the near future in order to blow up the bond market?
Maybe Latvia will then become the new largest holder of US paper?
Just another example of TPTB trying to prop up the rigged and manipulated ponzi scheme.
what is a ponzi scheme when the fraudster has to buy all the bogus investments?
A Federal Ponzi
My vote is on Kevin Henry
In a fractal world, someone's ass just got kicked.
India's ass is getting kicked...
Rant...
http://aadivaahan.wordpress.com/2014/05/15/mera-bharat-mahaan-ahhhaaaaha...
probably true in many places...
ori
It’s amazing what the Fed can do through the magic of $ Trillions in swaps that will not settle at an inflation adjusted valuation and might never settle at all.
Heck, you can back up €1.7 Trillion in LTROs, move the Euro/USD from 1.27 to 1.38, depress PM bullion prices (temporarily), float broke EU banks, buy UST’s in “secret” accounts and even (temporarily) displace the effect of a global dump of dollar assets.
Absolutely f’n genius.
Of course they do not expect to be held to account when it comes time deal with the billions of people they have screwed.
There might be a few incorrect assumptions in their models.
Who ever it is, they are smart. Interest rates are going to have to plummet before all hell really breaks loose.
Rothschild being forced to buy back some of his worthless paper. Gonna piss him off pretty soon.
Is the EU Central Bank the New World Fed?
it isn't QE if belgium does it
Maybe Latvia will then become the new largest holder of US paper?
Ukraine has just had a windfall at the west's expense, so they will be returning the favor in short order, along with Cyprus...
Being ruled by bankers "works" as long as the banker's rules work in their favor. When the rules stop working in their favor however, the bankers tend to change the game to 52 card pick up.
“Is the EU Central Bank the New World Fed?”
No, the IMF with SDR’s is.
(but still Fed/EU controlled er.. Rothschild/Warburg et al controlled)
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Why would they be pissed off? They bought Treasury debt with digital fiat that cost them $0 to create.
Next they will trade these bonds for resources / land in the U.S. when the US Treasury officially declares bankruptcy.
Brilliant!! Until the torches and pitchforks find your extended family.
"Yes We Can!"
Jean Claude
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Van Damme!
why isn't ,the same curiousity taken about even smaller, even broker Irelands massive increase in Treasury holdings
'07---> $19 B '14 ---> $115 B???
But look @ the bigger picture...
BANKING EURO
'00 '07 '14
Ireland $5 B ---> $19 B ---> $113 B
Belgium $28 B --> $13 B ---> $381 B
Switzerland $18 B> $34 B ---> $175 B
Luxemburg <$5 B-> $60 B --> $145 B
TOTAL $56 B $116 B $815 B (1400%+ increase)
Belgium is just the most recent torch carrier for EU treasury buying...
Compare and Contrast
CORE EURO
'00 '07 '14
Germany $54 B ---> $50 B ---> $63 B
Italy $20 B ---> $14 B ---> $31 B
Netherland $13 B-> $15 B ---> $35 B
France $27 B ---> $10 B ---> $57 B
Spain $20 B ---> $<5 B ---> $23 B
TOTAL $134 B $94 B $208 B (55% increase)
Wow... they need to make this a blogpost in and of itself, really puts things into perspective, thanks Hambone. On a side note the countries buying hand over fist are all known for their "discreet" foriegn investment services no?
really after 2 years of watching the ponzi go here and there, there is truely no end to this game.
why would it blow up? they learned in 08 they can paper any problem with more debt. japan is the future.
paper the paper that is being papered til paper is papered like a 300 year old wall...
Using Belgium as a tool must be extraordinarily difficult. A country with universal (and compulsory) voting where only 70% of the citizens turn out. A further 400k votes (the difference between 1st and 2nd place to lead the "parliamentary democracy") were invalidated - 3% of those citizens who did turn up to vote can't read, understand and follow the voting directions. A socialist runs the federal parliamentary democracy under an impotent constitutional monarch. Belgian waffles for everyone!
.
I feel robbed. Put it back so we have someone to beat on.
Must have been good since nobody liked it.
for those of you that missed it " I heart banker cock in my ass and in my mouth. literaly.-MDB"
Heh heh....THANK YOU!
OT, but related: Jim Rickards just commented on his blogspot (http://jimrickards.blogspot.fr) that "Canada should build up it gold reserves".
That would be fine, were it not for the fact that it's ALWAYS been a colony/bitch of the UK or the US. The last time they did this, all the gold moved to NY. So now they choose to keep it in the ground till they need it. IOW: "You want our gold? Come and mine it yourself, MFers!"
In the meantime, shrewd and informed Canucks are and should be "stacking" privately. It's a BIG country, with lots of places to "store" it, or lakes to lose it in.
I"m long Canada, though it, as the case for all, isn't going to be dancing...
A difficulty that resource rich countries will face is that extraction costs will increase dramatically due to lower volumes (less exports), which will kill economies of scale. And given this it would seem that one might reconsider the notion of leaving it in the ground: it's really a tough call.
Your most concise and sensible post ever.
Period.
It's not for lack of trying.
Much the same is true for South Africa as well.
New York and London still have an almost total chokehold on liquidity...ALL liquidity....STILL.
I understand what I say and how I say it makes me a very disliked person...but start telling me why I'm right and why that matters and then I'll stop being a jerk.
I want the USA to succeed...and Canada, and the UK, and Europe, and South Africa, etc.
Their success is my success...I am a free trader at heart.
But in the real world we don't always get sanctity of contract...or just "being honorable."
In the real world we usually get something far different.
How we try and guide those away from the shoals of misfortune is an ugly business. But no matter how ugly my communication I know of no one who would argue I'm not pushing towards a better place where prosperity not only exists but can be shared.
He'll I'm sharing actual success! Try and find that in all your investment newsletters and magazines.
My results are MEASURABLE.
I know that I'm a relative newbie and you've been here for awhile but
can you please study remedial kevinearick
before you comment here anymore.
Does it really MATTER ?
They will continue to play this game until they change the rules to something else.
Everything has been telegraphed that will happen soon .. i guess this is part of the process ... yeah well!
those stories about Obama golfing make a more interesting audience for gladiator fighting ... BRING IT ON !
Vive la liberty! another oxymoron ....
Off topic:
George Washington, something to look into: http://www.breitbart.com/Big-Government/2014/05/14/Dept-Of-Agriculture-O...
Why does the USDA need submachine guns? Could it be for the purpose of controlling food sources?
Sounds like a badass gun!
It is a very dependable one and the rounds are pretty common.
Sounds like they picked the MP5-40 or UMP40 and then put out the bid.
Oh to have one of those.
pods
I have no evidence to confirm this theory, but all of these purchases by random agencies, that on the surface would seem to not need them, could be a way to arm the new "civilian army" we've all heard countless rumors about (not to mention Obama's speech on the topic).
All of those guns will disappear out of the FEDs hands into Organized crimes hands in some fashion either aided by Mr. Holder or not.
The boxes will still be in the warehouse just empty.
I had an MP-40 once upon a time, had German swastika's (sp)
on it and all.......
Then one day I got a little carried away with it, and the feds decided I didn't need any guns anymore .........
You mean an MP5-40 with nazi markings?
How did that happen? The firearm was designed like 20 years after WWII, and the 10 mm and .40 came out in like 91?
pods
Naw, It was like the ones they had on "Hogan's Heros".
German machine gun WWII. Stamped on it = MP-40 ..........
9MM, 30 round clip = worked great .......
https://www.youtube.com/watch?v=O38a_Bx18RU
"Why does the USDA need submachine guns? Could it be for the purpose of controlling food sources?"
That was exactly my thought. Hey Mr Farmer we need to take over your family farm to feed the FSA now that the dollar is worthless. Mr. Farmer, "GO FUCK YOURSELF". USDA, "All right have it your way domestic terrorists". Two round bursts heard for miles around.
to shoot anyone with a garden, or any farmer that refuses to plant monsatan monstrosity crops...
like my children, I will fight to the death for my plants
I heard a possible explanation from a call-in on a radio talk show. The caller brought up the fact that the US Forest Service is an agency of the USDA and they have had problems when the rangers happen upon pot growing operations set up in national forests. Sounds like some of the Mexican cartels like to grow it up here rather than haul it over the border.
http://www.outsideonline.com/outdoor-adventure/politics/Weed-Whackers-.html
That's been going on for a long time. (Cartels growing pot on US soil.) Perhaps prohibition leading to humongous profits for a substance that there is a demand for needs to be reexamined, because if there is a demand, there will be a market. And if that market is risky, the price will rise high enough to justify the risk. Which means violence.
Yeah, I always find it hilarious when news stories explain to me why the Mexican Army has to go to war with the Drug Cartels: "Because what the cartels sell is illegal! Contraband substances! Dangerous!"
Right, so did we ever consider... You know... Making it legal, and then depriving the cartels of profits???? Hmmm??? No? And similarly with the Taliban, why were fields of opium poppies not burned in Afghanistan, to deprive the Taliban of funds (if that was their sole source of funds).
Decriminalize pot, PERIOD! Stop this nonsense! DISCLAIMER: I don't grow, use, or otherwise benefit from pot; I don't do alcohol (though far more damaging than pot) either.
Fortunatly, 40 S&W, in a sub machinegun or not, is going to be useless against a 30 cal at 200yds+. Go ahead, put ceramic plates on. A shot to the head makes them useless and a shot to the hips with what I dropped my elk with means that a person will bleed out unliess they are literally at the door of an operating room with its staff waiting.
Why do you think they are pre-deploying MRAPs all over the country?
The enemey is evil, not stupid.
http://www.bing.com/search?q=MRAP+vulnerabilities
Massive thermite sticky "bombs" over the hood or over the driver will disable those things, guaranteed. PDs will find they are useless without ground support (and fuel,) and that being ground support is going to suck balls. In SHTF, even with all their shiny new toys, I see PDs disappearing.
Just to be clear, I disagree with your assessment on the stupid part. They are stupid, and they are not going to be able to control people in agricultural areas.
Pardon the late continuance ...
They can't control rural agriculture direcrecly. But they can contol fuel supplies, and whatever else is needed, like railcars to get product to market. "Get your ration card right here, Mr. Farmer, and be sure to vote correctly, nudge, nudge, wink, wink." The farmer won't starve, but the cities will get hungry and they will demand that government do something.
The statist/totalitarian viewpoint demands they implement certain policies. To us, statism, the idea, itself is stupid. But that's a different thing than them being stupid as to how they go about it. Any evil technique is valid to them, and I do mean any.
Selling US treasuries is another big impact on America.
Additionally, Russia is pushing Americans away...by asking Mastercard and Visa to pay an expected USD 3bn as 'annual fees' for being in Russia. http://rt.com/business/159196-visa-mastercard-morgan-stanley/
while building a national payment system.
American companies feel the pain already...within weeks.....http://www.reuters.com/article/2014/04/30/us-uscompanies-russia-idUSBREA...
On the other side, Russia, is courting Iran to increase its trade and ties. http://www.presstv.ir/detail/2014/05/15/362770/russia-to-boost-trade-tie...
And the best of them all, not only a mega gas deal between Russia and China to be announced next week but a trilateral summit between IRAN, RUSSIA AND CHINA: http://thediplomat.com/2014/05/iranian-russian-presidents-to-visit-china...
Be ready for next week...and talk about America shooting itself on its foot...But I am sure there is a reason to do it....America never does anything to hurt itself...I wonder what?
Is it the political stance to focus on foreign policy or to keep the sheeple occupied....or is it another way to transfer wealth from poor to the rich.....Cant put my finger on it....With Iran under sanctions...Venezula, Sudan, Syria and North Korea too...why would America want millions of consumers in those countries - who continue to remain in poverty and worsening - even further away from their reach? And then add Russia to the mix....Why?
blow up the bond market?...
Seriously, this anonymous buyer, capable of dropping frn40B a month at the drop of a hat is truly a greater National Security threat than Vlad, imo.
You are right Merlot, what if the Belgium in "" dumps its holdings?
The revenge is underway.
Just a bit backwards Boxed. The true threat in their eyes would be if there was no outlet to procure these bonds outside of the normal fed operating system. A perceived breakdown in fed operations might just lead to a pulling back of the curtain. THAT would be the threat to National Security, mind you, not my national security but surely theirs.
Know your enemy
AD
not my national security but surely theirs...Know your enemy...
It's my understanding the "purchaser" of these IOUs is "unknown". As such, the US is indebted to this "unknown" entity to whom we are now legally obligated to provide contractual redemption out of the national treasury, the likes of which can precipitate the wholesale collapse of the American Dream. If the US gov can coerce a sovereign nation like Switzerland to hand over information on persons depositing wealth in their banks, how can this "Belgium" purchaser remain unaccounted for? If nothing else, I would think a few casinos could figure out who this"whale" is.
The fact the US doesn't view this as a National Security issue is enough to finger the fed.
"For we are not struggling against human beings, but against the rulers, authorities and cosmic powers governing this darkness, against the spiritual forces of evil in the heavenly realm." Ephesians 6:12
Complete Jewish BibleObama says "keeping the buyer private is a matter of national security. You got any rocks?!"
This anonymous buyer is the Fed, or the IMF, or the EU, or the ECB, or some other such similar organization. Who else can afford to dump 8% of Belgum's gdp into US treasuries in a month? This is insanity being partially exposed.
The buyer is Fed of NY and doing it through their shady offshore accounts which in this case are domiciled in Belgium. I wait what happens when China starts unloading this crap that you call US Treasuries.
"Belgium" will just buy moar.
Belgium, aka The William Dudley.
At a certain point "moar" will no longer be an option. Right?
The point at which purchases exceed 100% Belgian GDP is going to be a sticky moment...
That is the most likely scenario.
It would be fun when ZH finds out that the address is an abandoned warehouse and it is leased by a subsidiary of some other dark entity domiciling in Mars.
Correct. One way or another, all that american paper is going to come flooding back to the U.S.S.A. The Fed will make sure it happens. As I have stated before, the Fed isn't lying when they say tht they want inflation. The really do folks. Inflation is fucking theft, theft is what the Fed is all about folks.
Dont tell that to the MMTers, they think that prices are arbitrary and that savings are bad. They always ask, "Who do we owe the money too?" To them debt is not really debt and debt is just some number on a score card.
Yes, they would like inflation. Hyper-inflation, however, is going to do the same thing that mega-deflation would do- end the game.
I wish someone would start investigating how a scenario of the Fed essentially blowing up would unfold. Years ago I tossed the idea out more as a joke, but as time progressed I started seeing this as an increasing probability. Again, isn't it better to have the Fed holding all our debt and then have it blow up and take the debt with it? If a crime is going to happen then I'd think that an exceptional/master-mind crime is something that shouldn't be held back- this is essentially how I'm thinking they see it (they're NOT stupid; they KNOW that this is all going to go very, very bad).
My position exactly ilion. The FED is tapering on our side of the pond to quelch the "How they gone get out of this box" crowd and then buying the Taper and Moar through Belgium. I think the US is well past the point of its ability to finance its debt and the FED knows it. We need MyRA bond contributions or some ObamaWar bonds issues. Or just some friendly confiscation. I can see the "Buy Bonds" posters now. No more "Rosie the Riveter". It will be Michelle the Moocher". If the Putin gets serious and is successful in significantly diminishing PetroDollar transaction, we are in a world of shit overnight.
Fate the Magnificent
"Push the Button, Max"
Most of our military actions over the last generation have been to shore up the US Dollar and to pay off our creditors (gold, oil, contracts, mineral rights, etc.) It just isn't working anymore. They are out of options other than a full reset. My concern is no longer whether global conflict is coming or not but whether it will be nuclear or not.
Nuclear wouldn't be that bad, actually, since it'd take out a lot of the power centers and make localization easier.
I'd be way more worried about biological. Everything else is pretty much localized, but that one is a nightmare on earth. Unfortunately it also solves a lot of the population problems.
The global trade system is imploding.
Blow out the USD and it's paper-shredding only. US STILL is a huge country of resources (though reduction in consumption will always happen).
I figure that Russia is quite aware of this and is making the only moves available to it. EU is broke. China will soon be puckering as global trade continues to contract. Russia and China will pick up the pace a bit, but that's only going to last as long as China's stockpiled wealth and Russia's exportable energy hold up. And keep in mind that things will get tighter for Russia on the margins side of things with them exporting less oil/gas (decreases in EU over time will be slow to be offset by increases to China).
Question: Can the Fed issue dollars "short" - ie. not count it as outstanding on the basis that it will buy back later? That would explain a lot.
Just another branch of the Federal Reserve; San Fran, Dallas, St Louis, Belgium... Nothing looks out of place to me.
You missed the new drive thru outlet they just opened in Kiev, Banderstan.
Don't you follow the news? There is no American involvement in Ukraine and all tension is due to Putin's aggressive actions.
Thanks to networking, you click Ctrl-P here, printer starts in Belgium.
They probably purposefully used a universal driver too to make it print out tons of useless wingdings. What is our currency anymore after all, right?
Thanks to robots and transactional SQL, you don't even have to CTRL+P anymore. You just need to set some triggers.
"Audit" the Fed with guillotines.
@serfsup: haha too funny-i had to sign in just to give that an up! +100
In an Andy Kaufman doing Elvis voice: "Thank you very much."
"My guillotine was recalled. Seems it could cut off your head if you weren't careful."
No kidding, When this Treasury bubble bursts it will be spectacular.
My bet is out. It is the ECB!
ECB buys treasuries, then posts them as collateral to the FED and borrows the dollars overnight to pay for them. With the right term structure they break even or even make money doing it, and they can help their brethen FED to compensate for any amount of selling of treasuries. ANY!
My moto given the crazy staff that goes on in finance, is "if it can be done, it WILL be done"!. So why wouldn't they do this?
Because its a kamakazie mission.
Your above scheme is completely contingent upon interest rates staying essentially zero. If they ever rise (which they will) the FED, the US Government, the US Tax payer, or anyone else on the planet with a pulse are completely rake fucked.
im not disagreeing with you but why will rates rise? If the Fed wants to keep them at zero, it can, even despite a huge selloff by holders of US T bonds. all it has to do is print. i believe what we are seeing is a purposeful destruction of money. the question is why? and who does it benefit?
It benefits those who used those scraps of paper to buy tangible assets.
Tangible assets?
As in Banderstan farm lands?
BITCOIN!
I don't think the FED will manage to keep them at zero.
They think they can, but they can lose control.
"i believe what we are seeing is a purposeful destruction of money."
Less than zero?
How does one go about eliminating something that's worthless?
Not that I don't believe that there's some sort of plan in place. I'm figuring that pressures are being increased to ramp up everyone's nationalism in order to accept drawing back on trade (angry mons are already none too happy with big corporations, and it's big corporations that are able to twist the govt's arms). No one is going to miss the Fat Lady starting to sing...
Oh, Fed goes as long as it can in buying up shit and then blows up. US govt tosses out the "bankers" and declares all debts to this group null and void. It's an "act of god," so any foreign stake-holders will be told that there's nothing that can be done (what? your military isn't capable of coming to the US to try and enforce some claim?)
That's just the point. When people find their comfortable lifestyle destroyed overnight, they will be too busy scrambling for food, etc., to pay much attention to their masters.
Absolutely!
The "smart" people won't wait (and they'll also not be paying a lot of attention to their "masters" because it's really only a waste of time [Party Pussies, however, will continue to focus on politics and wielding stupid logic and engaging in a bunch of childish name-calling]).
And when it gets to this point TPTB will really have lost all control. More folks should reconsider the notion that TPTB are wanting all of this to go down this way.
there is no reason for the ECB to do it and it would be quite difficult to hide it for the ECB
no, the article hints to something that might look obvious, in hindsight: that the "mistery buyer" is...
probably Russia
just shifting the Russian USTs holdings to a neutral place - a repeat of history when Soviet Dollars were held in the UK, giving birth to the Eurodollar market in 1957
---
ah, and perhaps Putin is a follower of Marc Faber, who often predicted that the US might pull a selective default. and who is best to default on then the new/old adversary?
ECB would do it to keep the US Government solvant when printing and traditional debt auctions aren't enough, especially at these stupid low rates. If the US government cannot fund itself, then the ECB has a much larger problem than just burning through less than 1% of "domestic" GDP in keeping the system afloat/delaying the enivitable.
That's the obvious solution, and probably the right one. The major proxy purchases began in December, 2013, once it was clear that Euromaidan could generate problems between Russia and the US; the Russians probably had much better intelligence about the situation than is available to the public. It would have been pragmatic and provident to transfer useful UST assets to an opaque custodian rather than sell them off completely as a token of opposition. A proxy holding of UST's gives the appearance of idealistic defiance of the dollar-standard system but the utility of remaining operative within that system. It think that's what Tyler's hinting with the line, "Russia may have dumped its Treasurys, or at least change its bond custodian."
I was going to suggest purchases by private European banks looking for collateral, but the Russian shell-game sounds more reasonable given the size the money moving around.
There is only one Western central bank. The Fed, ECB, BOE, etc. are just branches of the same entity. The perception that these are central banks of independent countries allows them unlimited abilities to launder, swap, blah blah blah. The huge lie that these banks are buyers and sellers is perpetuated everywhere, including this site.
Exactly. If you are part of the BIS system, you are a branch of THE Central Bank.
Yup, it's The System.
When it gets its feet kicked out from under it.
Time to do the laundry, cause this dirty QE is 4 EVA !
Who does the FED think this is going to fool? The reason they are doing this is so people have faith in the taper (dollar), but this is blatant.
I saw what you did there. LOL!
Paul Craig Roberts breaks it down with Greg Hunter:
http://usawatchdog.com/fed-laundering-treasury-purchases-in-belgium-to-d...
Seriously, time is running out. There are black swans all over the fucking place. The Great Reset looks more and more likely to punch humanity in the face this year. All of the PM's have been slapped down today. Time to trade more of this fiat for phyzz pronto
I pretty much put PCR at the top of my "trust" list.
As I've been saying, the Fed is going to do everything that it can to keep things holding together for as long as possible. We all might get a bit pissed that this is all still going, but, as Greg Hunter says in the comments section: I am braced but nobody will be totally ready for what is coming. I think it's going to be a mix of Mad Max, Godzilla and Hitler. I'm not looking forward to it...
I'm wondering how can anyone knowing about these transactions (and the bond market should know about it in the meanwhile, not only ZH readers) have trust into the system and bet the private money on it?
"Private money", LOL.
The dollar, yen, and euro ponzies are all intertwined, the Western banking system has self interest to keep playing the game of musical chairs. Other countries see the scam but are stuck playing the game because their own economies depend on a fluid financial system and there isn't an alternative.
At least not yet...
+1000
There are only two places: 1) Frying pan; 2) Fire. Not thinking that most are wanting to make the jump...
I have no doubts that the "leaders" are honestly trying everything they can to figure out how to land this crashing System. People make the mistake of thinking that such planning necessarily means that these "leaders" are responsible for a failed System (again, one that's based on perpetual growth on a finite planet is doomed to fail) or are conspiring to fuck everyone else. Time is the only thing we have.
I don't think that we're going to come up with any "new" system. Not saying that it's not possible, just that I have a hard time seeing it not happening w/o some major actions taking place, the kind that are generally associated with wars (wars are for burying mistakes).
The amazing part is the level of monetization all this implies. Money is borrowed by .gov but that money is printed. Guys like Marting Armstrong say that it is not inflationary because there is so much deflation (money destruction) in the system that the monetization just counterbalances some of it.
Worth thinking about, IMO, is that the destroyed money somewhere in the economy is being offset by money created for government operation. This means that a vastly increased amount of global product is switching from private to government sector. This is a much bigger fraction than is obvious by looking at taxation.
"Credit expansion is the governments foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous."
"This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.'
"But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against 'real' goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them."
"It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last."
Ludwig von Mises
Mises was a genius!
The really interesting part about all this is what happens to debt denominated instruments during a collapse like this? Most peple are betting / thinking that the debt would be wiped out, but I would aboslutely NOT be surprised to see language inserted into modern (2005+) mortgage contracts that accounts for a monetary transition.
Or the fucking Congress will most likely pass a law redenominating your debt from old dollars to a new currency and then make it retroactive.
Thoughts / comments?
500 oz. of silver to pay off your mortgage? Will it work? I think there's a better than 50/50 chance.
500? Probably much LESS.
All this works perfectly well (in theory, because it's never really existed in human society in its pure form- feel free to correct me on this point) as long as there are ample physical resources.
Any time capital starts to accumulate so too does power. And once you build a power base theories, laws etc., if they don't serve power they are pushed aside. People will collectively see value and will allow/support transgressions against core law- no fundamental set of laws ever manage to keep from being corrupted, just as no currencies have ever managed to keep from being corrupted.
I wonder if Mises ever contemplated the fact that we're basing everything on perpetual growth and living on a finite planet. And when pressures of diminishing resources comes, as it always does, people will have no concern with observing "economic" laws/philosophies.
Sir John Glubb reviewd 3,000 years of empires (http://www.rexresearch.com/glubb/glubb-empire.pdf) and pretty much concluded that it mattered not what their ideologies were or what kind of leaders they had- ALL failed. The common factor is always that of growth, the inability to continue to push growth.
Well, ya know it's connected to NATO if that helps.
When the Fed stops printing. Who else would even want to buy treasuries anonymously? It's either that or a foreign power stocking up leverage in order to have enough to crash the system and break the US. Come to think of it, that could be the Fed too.
The US is already broken. It's been a walking-dead for decades: went zombie in 1971- it's just that we could never admit it, we could never actually do bankruptcy, so we stretched things out via finaincial wizardry.
The Fed is the only thing keeping the lights on. More and more, and not in praise of them, I see it as being a collector of crap assets and bad debt and will take it to their grave. Yeah, in the end the bankers get liquidated; it might be the deal we make for their lives (and since the System was always going to crash I see it all as pretty neutral- I'd take this deal); and since they're "our" bankers it'll all be in-house. And the trade wars and waring guestures will serve to sever foreign debts. It's not a matter of IF, but When debt jubilee is going to happen. And I think that the luster will be instantly off given that we'll still be broke and hard-pressed to afford things (jobs will mostly be wiped out- they all fed the global System, so they pretty much die with it).
It was the magic money market fairy that did it, I tell you.
Any Belgians reading ZH? Whats their take on this charade, shouldnt they wonder what the fuck their govt is doing with their reserves?.....looks like a house of card being made out of belgian waffles
This is not in the news in Belgium, I got this from zerohedge as well, otherwise I wouldn't know about this. We definitely don't have this kind of money to spend. There are several possible explanations though: Euroclear is in Belgium, SWIFT is in Belgium, Dexia bank might be cleaning up its act, many European-level institutions supposedly act out of Belgium, and so on
And which European institutions, exactly, have tens of billions of dollars to spare?
None, they can't just create money out of thin-air without the consent of all states.... But the FED can! It's called laundering dirty QE money....
maybe this?
http://www.zerohedge.com/news/2013-06-10/how-fed-courtesy-foreign-banks-...
Showing the heart of the Fed is the heart of NATO. Belgium.
um... that's HUNDREDS of BILLIONS there fixed it for ya
Guys, the money isn't real. You just have to get the job of spending make-believe money. There's no limit to it.
"Guys, the money isn't real."
It sure feels real when you have to work 60 hr/wk to earn that fake money. Fuck you people who vote for the likes of Obama or Romney. Your time will come to an end.
Do the guys that voted for Romney own guns, gold, food and ammo?
Take heart in knowing that nothing lasts forever.
And about that "fake" money, take it and buy real stuff with it, that or don't work for "fake" money.
and if you factor in that "nationstates" aren't real either, then the whole game begins to make moar cents.
I see what you did there. ;)
All riding on the belief of perpetual growth on a finite planet. What could possibly go wrong?
"...the money isn't real."
But the theft is.
Doesn't Belgium produce chocolate and beer?
they even produce chocolate beer
https://untappd.com/b/new-belgium-brewing-company-imperial-coffee-chocolate-stout-lips-of-faith/225160
oh wait, those are the New Belgiums
Yep, and Rwandan genocide too.