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What Would Happen If Everyone Joins China In Dumping Treasurys?
On Tuesday evening in "Devaluation Stunner: China Has Dumped $100 Billion In Treasurys In The Past Two Weeks," we quantified the cost of China’s near daily open FX operations in support of the yuan.
As BNP’s Mole Hau put it on Monday, "whereas the daily fix was previously used to fix the spot rate, the PBoC now seemingly fixes the spot rate to determine the daily fix, [thus] the role of the market in determining the exchange rate has, if anything, been reduced in the short term." And a reduced role for the market means a larger role for the PBoC and that, in turn, means burning through more FX reserves to steady the yuan.
Translation and quantification (with the latter coming courtesy of SocGen): as part of China's devaluation and subsequent attempts to contain said devaluation, China has sold a gargantuan $106 (or more) billion in US paper just as a result of the change in the currency regime.
Notably, that means China has sold as much in Treasurys in the past 2 weeks - over $100 billion - as it has sold in the entire first half of the year. Today, we got what looks like confirmation late in the session when Bloomberg, citing fixed income desks, reported "substantial selling pressure in long end Treasuries coming from Far East."
The question or rather, the series of questions, that need to be considered going forward are:
"What happens when China liquidates all of its Treasury holdings is anyone's guess, and an even better question is will anyone else decide to join China as its sells US Treasurys at a never before seen pace, and best of all: will the Fed just sit there and watch as the biggest offshore holder of US Treasurys liquidates its entire inventory…"
And make no mistake, these are timely questions, because the combination of collapsing commodity prices, China’s devaluation, and the threat of a Fed hike have put enormous pressure on EM currencies the world over and that, in turn, means a drawdown of EM FX reserves and pressure on DM bonds. As JP Morgan put it last month, "the sharp reversal in EM FX reserve accumulation between Q1 and Q2 is consistent with the sharp reversal in DM core bond markets. Core bond market yields collapsed in Q1 but saw a big rise in Q2. This is a good reminder of how important FX reserve managers remain in driving core bond markets."
Indeed. And just how important, you ask, is that for US Treasurys and, in turn, for Fed policy going forward? For the answer, we go to Citi:
Taken in isolation, a reserves drop of 1% of USD GDP (=$178bn) would infer a rise in 10y UST yields by 15-35bp based on a range of academic studies.
And more to the point:
Suppose EM and developing countries, which hold $5491 bn in reserves, reduce holdings by 10% over one year. This amounts to 3.07% of US GDP and means 10yr Treasury yields rates rise by a mammoth 108bp (35bp*3.07).
In other words, if EM currencies remain under pressure - and there is every reason to believe that they well - the reserve drawdown necessary to stabilize currencies and maintain unsustainable pegs means more Treasury liquidation and massive upward pressure on yields. Here's a look at EM reserve accumlation vs. the yield on the 10Y (inverted):
As for what this means in the US, we go to Citi one more time:
These moves are unlikely to happen in a vacuum. For instance, any move by these magnitudes would choke off the US housing market and see the Fed stand still or ease.
Of course one of the catalysts for the EM outflows is the looming Fed hike which, when taken together with the above, means that if the FOMC raises rates, they will almost surely accelerate the pressure on EM, triggering further FX reserve drawdowns (i.e. UST dumping), resulting in substantial upward pressure on yields and prompting an immediate policy reversal and perhaps even QE4.
And as we never, ever tire of reminding readers, it all harkens back to last November...
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Do you want it in sunshine units, or rads?
Ron Paul is a decade or two ahead his time. If he lives to a hundred, he may see it.
I was reading books on the death of the dollar in the seventies. It'll happen. But economic time moves very slowly like geological time.
Agreed, even though I like Paul. The U.S. dollar is still the best looking currency among all the other ugly contestants.
The dollar can only fall as long as there is something to replace it.
The British Pound did not fall because Britain fell. The American economy and currency became stronger on the world markets. There has to be a trust factor, as well.
One other point $18+ trillion America owes, it's biggest creditor is..............................the American citizen.
Not even close. Add in 97 TRILLION OF UNFUNDED LIABILITIES!!!!!!!!!!!!!!!!!!!!!!!!!!!
WWW.USDEBTCLOCK.ORG
Outlaw zeros.
More like the American money market/savings accounts
Irishcyclist,
So American One owes Amercian Two $1Billion dollars, American Two is just going to say, "Oh, no problem, don't pay me back American One" because we all owe the $$$$$ to each other?
Wow. What a Statist.
I don't owe anyone $18Trillion. This "government" owes it. This government is a separate entity. I have nothing to do with it.
QE to INFINITY, for Barry's UTOPIA psyops.
QE to infinity. I fear so - quickly followed by bail-ins to your bank accounts, pension funds, annuities, and 401K's.
The Chinese government has above all an interest in convicing the populace (to avoid Tiananmen square discord) that their government and money is safe...they need their Treasury holdings to supply that
In a word, USD (petro) collapse ..
Which is in fact in progress. See Jim Sinclair. It is not Sep/Oct. It started on 8/24/15. They don't call Black Monday for nothing with the 4500 point move.
https://youtu.be/u7tTdO6oxUA
When Sinclair mentions "reset," Lon Gibby for Lee Wanta will explain the rest ..
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp
I think it's reasonably predictable that the US Treasury would refuse to honor the bonds. If bond prices crash in the secondary market. So what. They always have the printing press. That would be the time when we get Weimer inflation. Not before. Right now the dollar is perceived as a safe haven currency.
It depends to who it is selling. Is it selling to the US? Then the US would suddenly have a massive trade surplus, they are buying goods and services and using their US $ reserves. Not selling to the US? Not much would happen.
Then Deez Nuts will have no more "nuts"!
But Americans are collectively the problem why that will never happen, because they are too stupid, selfish and spineless to make those kinds of sacrifices in order to make the system change for the better to become equitable again!
So they will remain sheep until the grass gets collectively pulled out from underneath them...
Hitting the bottom of the deep end of the pool without water never felt better!!!
Captain Nemo,
The middle class taxpaying American citizens are not the problem. Voter fraud preventing election of honest representatives is the problem.
This middle class has been taxed and regulated out of existence. Their income has been destroyed while government spending on entitlements, useless bureaucrats, illegals, unending wars, and "green energy" has destroyed the incentive to work, save, and produce.
The middle class taxpaying American citizens are not the problem. Voter fraud preventing election of honest representatives is the problem.
Last I checked SweetCheeks it's technically a Republic.
In the immortal words of Officer Malone in the "Untouchables".
"What are you prepared to do" to fix what you just mentioned!
So far, it appears there is nothing short of secession that can be done. That did not work out well when the North considered it at the Hartford Convention in 1814 or when the South tried it in 1861.
So far, it appears there is nothing short of secession that can be done. That did not work out well when the North considered it at the Hartford Convention in 1814 or when the South tried it in 1861.
But SC since 1861 there was this enormous technological advancement in weaponry that took the cannon ball much further than we probably wanted or needed it to go -called a nuclear warhead.
Ask the Japanese. They have first hand knowledge with it twice as a bomb and the third time in it's commercial application that's busy destroying the entire Northern Hemisphere.
I think it might be prudent for us to hang every member of Congress and the Senate along with the "white chimp" in the oval office before they get one started 70 years later again but this time for selling their own Country out through exportation of U.S. technology and labor along with the destruction of the U.S. dollar which is something they didn't do before WWII!
Son of Captain Nemo,
We don't even need a nuclear bomb for destruction anymore now that we have CERN's Hadron Collider and EMPs. God only knows what that Collider will usher in because the physicists in charge have admitted that they don't. (I know an EMP is launched by a bomb, but still, you get my point. And besides, Russia has a new model Khibiny that disabled the USS Donald Cook on April 10, 2014 with just a fly by from a Russian SU-24." http://endoftheamericandream.com/archives/will-the-large-hadron-collider...
SC,
I see that nuclear physics is not one of your areas of expertise. Most of the energy in the LHC is tied up in their SC (heh) magnets.
And if you are worried about opening up a portal to another dimension you ought to worry about high energy cosmic rays. So far as we know no portal to another dimension has been opoened up by them.
I think Super-PACs, the revolving door, and unlimited campaign contributions from corporations are the problem.
Voter fraud doesn't matter when there is nobody to choose from.
-double post-
Well, for sure one thing that happens is that China will be sitting on a pile of dollar bills it takes in return for those treasuries.
What's it going to do with those dollars to avoid the current 4+% annual inflation leak in value the Fed has delivered over its history? And when the USA government inflation lies no longer work and that 4% inflation leak goes to 14% and higher (where it really is now), how can it get rid of those dollars? The country that creates those dollars has nothing to sell.
Withglee,
I fear what the government has to sell is land out west or what it takes from citizens unable to pay taxes without jobs or unearned income. What a misnomer unearned income is - as if investors were thieves or thugs.
the point is the pboc sells the bonds to get dollars, and in turn sells the dollars to mop up yuan, to halt a sliding exchange rate. of course. if they mop up one on one hand, they will want to sell with the other so that internal interest rates don't rise. i've been asking zh to comment on the 'impossible trinity' or so called 'trilemma'.
just as yields went down, not up, when qe3 stopped, there is no clear answer as to what would happen if there was a sudden selling of em (including china) reserve us bonds.
(that is i don't think anybody can say).
just as yields went down, not up, when qe3 stopped, there is no clear answer as to what would happen if there was a sudden selling of em (including china) reserve us bonds.
All the QEs are monetization ... plain and simple ... but with a twist. They direct the counterfeit money to go directly into taking bad bets off the hands of the insiders ... and delivering them to taxpayers.
Regardless, monetization of debt means inflation begins immediately. Yet, the books cookers are able to fake the inflation numbers (or ignore them ... like they do on food and fuel). The effect also snuffs out real markets so demand falls off sharply. That shows up initially as deflation when inventory must be liquidated at fire sale prices just to pay the rent and short term obligations.
This is proving to be the largest harvest the international bankers have ever attempted.
We so need someone who has a clue about the proper process for managing any Medium of Exchange.
the point is the pboc sells the bonds to get dollars, and in turn sells the dollars to mop up yuan, to halt a sliding exchange rate. of course. if they mop up one on one hand, they will want to sell with the other so that internal interest rates don't rise. i've been asking zh to comment on the 'impossible trinity' or so called 'trilemma'.
just as yields went down, not up, when qe3 stopped, there is no clear answer as to what would happen if there was a sudden selling of em (including china) reserve us bonds.
(that is i don't think anybody can say).
And then the Interest Rate Swap market would shit the bed.
Been saying this for 3+ years: QE by the "Fraud Preserve" (NOT "Federal", NO Reserve") until "the fat lady sings". Possibly Yellen? No better pawn than possibly Bernanke or Greenspan. The "Fed" does anything else and it is the same as shooting itself in the foot when it is already out of coumadin and can't afford to buy more at Big Phamra's ridiculous price. When UST bonds - the largest liquidity pool in the world - is rendered abrasive toilet paper or kindling tender status, hope your already "re-settled" RURALly and hunkered down with lots of armed close-knitt neighbors!
Say hello to QE4, 5 and 6.
Answer: Either a bunch of capital cities experience 5,000 degree weather, or the US military really does its job and puts the executive, judicial, and legislative branches in handcuffs and there is a call for a genuine reset.
You know things are bad when martial law sounds better than what we have.
I would welcome true martial law (meaning actually declared by the military after the civilian government "is fled" or handcuffed).
Whenever I hear of a civilian government still in power declaring martial law, I want to vomit, because it ain't martial law. A draconian government crackdown maybe, but martial law declared by a civilian government still in power? That's a mind fuck.
As others have said, so what do they do with the cash they get from selling Treasuries?
What's the quatloo exchange rate?
Probably the ChiComs would rather have US real estate.
PMs will have their day...
PMs are under valued...
Treasury sell-off means problems for the USD...
Blah, blah, blah...
The story of the next three years will be debt defaults. The USD will sky-rocket. Many assets will be converted to USD including stacks of phyzy. It will likely be biblical.
What Would Happen If Everyone Joins China In Dumping Treasuries?
Peace on this planet.
Peace is absent from
Human DNA.
Envy, guilt and regret destroys our peaceful minds.
How the hell would "everyone" dumps treasuries? That could never happen since they have to sell them to a buyer. And we know that would be the FED or IMF, so there's a perma buyer. You guys are on the hook for their loses. So to answer the question: savers would be more broke.
What Would Happen If Everyone Joins China In Dumping Treasurys?
The Fed will have to decide quickly in its infinite wisdom that it is best for the economy to raise interest rates after all, to something like, oh maybe 10-12%, and inflation should really be at 30%, not 2% like they thought before.
Let be written, let it be done.
Looks like the SF Fed Hackers set their dumpster on fire. Hillarious.
$100bill. sounds like a lot, but in reality it's only a small portion of what US paper that China holds, they would need to dump a lot more, and Japan would have to join in to make any real impact, which is highly unlikely, they are kind of political enemies.
Trading partners are more important than global currency reserve status.
A threatened partner is not a partner.
Just a future adversary.
The U.S. produces nothing but dollars. Our manufacturing moved to China or Mexico? Who are we partnering with?
What would happen?
1. First and foremost we would learn who is on the banker's side of the conflict and who is on the human's side.
2. We WILL NOT find out how much it costs the government to borrow money on the open market ... because the banks can still create infinite money.
If you are a human working for the banks (and possibly the government and media), then you are on the wrong side of the conflict.
Demand for USD$ collapses.
Prices would go up in the US.
People would die.
US would surrender to the UN.
US would be on its knees.
China would be in control.
I wouldn't be worried about closed equity markets at this point.
Germany didn't do too badly out of hyperinflation and total collapse of its' currency did it?
Surely if a 1930 economy can recover to dizzing heights, so can we.
Or are we just too dammed lazy?
Not lazy, just held down with hundreds of thousands of laws, regulations and procedures, taxes, fines, penalties, unemployment, factory closings, church and fellowship declines, shitty appliances, Ferguson, Missouri, racial profiling, medical system broken, illegal peoples from diseased countries. Nope, we are inundated with bullshit we never approved or agreed to. Time for a nap...
While I am no international econ expert, China is offloading their huge Treasury posisition without gutting the bond market. It seems to me that China is using the current stock crisis and flight to safety in US dollars to their benefit. We know China wants out of the dollar from their past moves toward gold and bilateral trade. The question is what are the chinese buying with all these bonds, yuan, gold, or something else?
Waiting for more discounts to buy real assets.
Power and influence.
The question is what are the chinese buying with all these bonds, yuan, gold, or something else?
Good point. Buying/selling RMB to support their currency and markets and more gold I would imagine, and paying for the new silk road infrastructure and real assets like ports and farmland around the world.
What happens as EM economies get weaker and the USD strength forces them to liquidate FX reserves - treasuries - to pay USD denominated debt? The buyer of last resort is the US government, not Belgium. QE never ended. As nations are forced to defend their economies they'll sell everything they've got, especially USD.
The BRICS alone (TIC data http://www.treasury.gov/ticdata/Publish/mfh.txt doesn't include SA figures so really just the BRIC nations ) have 1.76 TRILLION, add the oil and OPEC nations and it tops out at over 2 trillion, or roughly one-third of all foreign holdings of US debt. All concentrated in some of the happiest friendliest countries who love and respect the US. What could possibly go wrong?
For all you know the new owners of these 'dumped' treasuries might still be the Chinese.
If they start dumping treasuries the FED can get a bunch of Mexico pesos at a discount so there is a currency that can be used for normal purchases.
Thank god. Maybe the NWO won't be able to afford a standing army in the United States of America.
It would all fall apart like an American Rolex.
It wouldn't do a damn thIng, since the Fed would buy it all up. Normally that would be inflationary, but that kind of dumping would only happen in a massive deflationary environment. So, nothing - except we'd monetize our debt for free.
Bring it on.
If everyone is selling, then who's buying?
But Tyler, honey, if this selling of U.S. Trashuries by central banks does accelerate, won't that panick global investors aka the crash of 2008?
And won't they then pile into U.S. Trashuries as at least a temporary 'safe haven' for their wealth, like they did in 2008?
But of course, back then, interest rates didn't rise because the EM central banks we'ren't selling Trashuries like they are now - so piling into Trashuries was a pretty safe bet, back then.
Higher interest rates should attract investors into Trashuries because of their eternal hope for greater return on their investments, but investors will be greatly conflicted when they see interest rates rising fast and the fear of inflation and a dollar collapse sinks in.
What the hell has happened to this site...does Zerohedge really think the stock market is going down in flames any time soon, there will be gyrations sure. But listen...you guys have been saying there will be a financial apocalyspe for the past 7 years now and all thats happened is the FED, rightly or wrongly has made the stock market go up. You only post bad news and you post stuff that basically doesnt help anyone get richer. So if youre not helping me line my pockets whats your purpose as a financial site. Not like you are making any thesis statements on the direction of the market or a particular stock based on the articles. Doom and gloom 24/7 gets tiresome, especially if you arent suggesting how to profit from it. Who the f--- cares about burger king joining up with mcdonald if there isnt some segway into how to possibly play it. Let me give you guys an example, since obama has come in shares of smith and wesson have gone up 5 fold, now you could have suggested due to obamas noise on gun confiscation people would be buying up gun en masse so the natural reaction would be to see huge gun sales, but you guys didnt.
So what is zerohedge's purpose. Its seems to be only about scaring the bejesus out of people... certainly isnt about informing people anymore in a way which allows them to grow wealth. In short zerohedge has become the enemy which it has feared. Keeping people afraid and divided through a careful manipulation of fear statistics (any vision into its said statistics monetary upside).
Purpose of ZH; it's an NSA "honeypot", that maintains databases of radical anti Hope & Changer's like me with the intent of placing me in a FEMA camp some day, of course for my own "reeducation & enlightenment", as well as figuring out if I'm a "malicious short seller" that listens to any of this shit.
www.traderzoo.mobi
Exactly on point.
I keep coming here to see what the fringe thinks and how they react.
I am especially entertained by all the "apocalypse is immanent, USD will be worthless, you MUST buy gold" wackos and all the absurd beliefs they have.
proper/mack, ignore the evidence that is placed right in front of your face on this site at your own peril. collapsing commodities, collapsing em currencies, collapsing em countries, europe collapsing with most countries with over 25 percent UE. china, japan, australia economies tanking. look at south america, venezuela, brazil, argentina, all tanking. mexico and canadian economies in the toilet (their currencies as well). volitility in US markets. boy, you two have the biggest fucking pair of blinders on ever in the history of the world...
The point johmack2 is making is about the way people use information.
He is proposing to use information in such a way that he might become a gun manufacturer, or own part of a gun manufacturing outfit, whereas others seem to only want to use the same information to become gun owners.
exactly...but it doesnt only apply to guns(was just using an example) it applies to analysing financial balance sheets to identify weak companies or finding dodgy accounting, in other words REAL FINANCIAL information. I wont lie when zerohedge produces good analysis its really good, but then it produces crap which is just downright aweful bad.
It's fight club, man. You can come here to use it or just come here to fight.
Im not ignoring the information/evidence infront of me, if you looked at the example i wrote i showed you that i do look at things objectively. You say commodities and currencies are collapsing so what are you going to do about it, are you just going to sit and wait like a little sheep to be sheared or would you rather someone propose methods of you making off these things. The difference between myself and most zero hedgers is that i believe oppurtunity exists in chaos. Making silly remarks about dead bankers, mcburger,deez nutz doesnt help me one bit.
Central bankers created a huge asset bubble, which will eventually deflate, resulting in huge turmoil in financial markets and economies.
The USD will continue as the global reserve currency and treasuries will still be the global safe-haven interest-paying asset regarded as "no risk".
The regimes will implement another cycle of manipulations and interventions to get the merry-go-round spinning again.
The life-cylce of countries is opposite the life-cycle of stars - the bigger stars explode into novas, the smaller stars shrink into neutron dwarfs. Large countries/economies, eg USA, decay, decline and rot into mediocrity, small countries/economies, eg Greece, Argentina, Venzuela, etc, explode.
Why the difference ?
Because people and capital can relatively easily leave the small declining/collapsing countries/economies for the large countries/economies, which always have the lure and niches of safety and opportunity. There is no country and currency that is safer than the USA if the global system is perceived as collapsing - people and capital will flee to the USA.
Eventually the USA will decay and decline into a disgusting third-world shit hole, but not for many many many years - everyone alive today will be worm shit before that stage is reached.
The USA will atrophy, not explode.
Prober,
Ever consider that you might be the fringe you are talking about?
You dickhead -if you wanted a source to help you increase the value of your stock portfolio -go watch Jim Cramer. ZH is simply telling you the truth. Someone has to do it. You will profit listening to Cramer until the fascist criminals who run the stock market decide to pop the bubble -like they do every 7 years or so -and future bubbles may not even be possible - the 7 year cycle is coming up - I believe september 13th is the date people are citing. If you enjoy living in a fascist socitey where sheeple and the banksters elect the likes of Clinton's , Bush and Obama - enjoy it for a little while longer. it won't last. You are obviously too ignorant to even attempt to explain to you why that is true.
Johmack2,
Surely you have been doing more than just reading ZH for the past seven years: stacking, prepping, acquiring skills, or getting in shape. Would hate fir the site to be a total waste of your time.
unfortunately unlike alot of zerohedgers i dont believe the world is going to go into the middle ages and we are going to need ammo to survive in a mad maxesque kind of world just because of a financial collapse. Historically financial collapses do not lead to a long term civilization changing way of life. Example... even after argentinas economic collapse life went on. Hell even during ww2 life albiet depressingly went on and eventually returned to normal(ask mercedes and seimens) . ZH has informative tidbits and for the most part i ignore the nonsensical doom and gloom stuff. ZH isnt preparing people to take control of their financial destinies. You dont see kyle bass stopping his hedge fund just because he is afraid of the furture.
"We are determined to mobilize the means required to implement this Agenda through a revitalised Global Partnership for Sustainable Development, based on a spirit of strengthened global solidarity, focussed in particular on the needs of the poorest and most vulnerable and with the participation of all countries, all stakeholders and all people."
https://sustainabledevelopment.un.org/post2015/transformingourworld
Elimination of the single family home says it all. This war is discussed as a "go green" project.
http://www.deagel.com/country/United-States-of-America_c0001.aspx
Military related web (inventory? think tank? no one knows (correction!) Population projected to drop to Georgia Guidestone levels due to suicide and deaths related to stress-related medical events (CVA/MI), crime - Elimination of the middle class is underway. Fighting terrorism locally and wars abroad, 1% tax cuts, and big industry welfare. War will hide it all.
edit\\\
Foreword by Edwin A. Deagle, Jr.
The massive energy transition the world has been undergoing since 1973 continues to be full of surprises. Past predictions of energy independence based on a diversity of supplies; of the unlikelihood that conservation based on higher energy prices would be much help; of the prospect that OPEC countries would drive prices higher and higher have all proven wrong. Many people now interpret the current surplus in he oil market as evidence that the power of OPEC is broken and the energy crisis is essentially over. This prediction is undoubtedly wrong too.
What is true is that energy will remain high on the policy agenda of most countries for a decade and probably longer. New sources of supply require vast sums of capital and long periods of time to bring to the market. The promise of renewable sources of energy at reasonable prices remains in the future. conservation in reaction to high energy prices has been the most successful public response to the energy transition to date, greatly overshadowing the efforts of governments.
Nevertheless, governments and international agencies have begun to act. We note that the United Nations is holding a Conference on New and Renewable Sources of Energy at Nairobi, in August 1981. It is the first international efort in some time to attempt to fashion strategies for international action; and we hope that it will be successful.
In thebelief that informed public opinion is both the prerequisite and the guarantee of effective public policy, The Rockefeller Foundationn is pleased to support the work of Ruth Sivard in preparing this volume. Revised and expanded from an earlier version published in 1979, the volume is intended to provide an overview of the world energy situation and prospects for the future. Its merit, in our judgement, lies in the useful way it marshals complex facts and issues for the lay reader. The foundation takes no formal positions on matters of public policy and therefore does not, by its sponsorship, necessarily endorse the substantive views expressed in this report. We are pleased, howerver, to support this useful work with the hope that it will contribute greatly to public understanding of these complex and vexing issues.
Edwin A. Deagle, Jr., Ph.D.
Director, International Relations
The Rockefeller Foundation
https://www.metabunk.org/website-deagle-com-projects-massive-depopulatio...
Edwin A. Deagle, Jr., Ph.D.
Director, International Relations
The Rockefeller Foundation
Dude, Mr Yellen and Congress have our backs and everything is awesome! Any precious metals you have are worthless archaic relics and any guns, ammo, or storable food you have you dont really need because everything is awesome and about to be confiscated because they are the only things that aren't awesome so I recommend you have a garage sale this weekend to get rid of all that useless crap. Please post your street address here so I can let all my right winger weirdo friends know about all the useless shit you have to offer......
I was about to offer my U.S. Treasuries after reading this article but instead I decided to incinerate them with my newly acquired flamethrower.
where can i get one of those? i've got some land to clear... :-D
No worries, in the next 10-15 years as debt continues to exponentiate and the unfunded liabilities of the US go to the quadrillion level, the Gubermint will require US workerbees to place part of their paychecks into US treasuries; and then you can redeem at retirement [72+]. The same of course for IRA's, and 401K's. A massive shift from foreigner's to Amerikans, just in time for default and a move from the soft police state we have now to a complete "Hope & Change" sponsored dictatorship to save the kids don't-cha-know.
www.traderzoo.mobi
Exactly why i think they will "let" or "engineer" another stock market collapse. With three of them in the last fifteen years that will be evidence enough that "you can't trust wall street" and ALL retirement plans must be in US treasuries. All for our own protection of course...
Rollover
a hypothetically impossible question. Everyone knows what will happen is US treasury will just buy back its own bonds AT A FREAKING DISCOUNT, thus helping the US FED out.
"What Would Happen If Everyone Joins China In Dumping Treasurys?"
Dream come true for me, especially if the yield-to-maturity goes above 5%, then I will buy millions the higher the yield.
What so many of you who regard treasuries as risky do not understand is that the regime in WADC has confiscation authority over ALL of the incomes and assets of ALL the entities (individuals, businesses, institutions, organizations, etc) within the jurisdiction of the regime, which means that they can and will increase taxes (euphemism for confiscations) enough to continue making debt payments on treasuries and avoid default.
Americans no longer have the brains and balls to revolt and overthrow the corrupt WADC regime that robs them of their rights, liberties, incomes, etc., therefore the regime can and will do whatever it wants and Americans will just submit, comply and complain.
After you understand these fundamental principles, you can understand that treasuries are the lowest-risk interest-paying financial asset.
"Market" lmfao.....everything is ducking awesome!
so as the dollar becomes less desired interest rstes rise. as interest rates rise in a world with less desired dollars the value of the dollar goes down. as the value of the dollar goes down the stock market goes up in nominal, less valuable dollar terms. btfd!
Mr Burns Excellent
http://www.youtube.com/watch?v=_crvGziPn3g (0:02)
The Federal Reserve would just be that mystery buyer sucking up all the treasuries with imaginary money.
The only thing not imaginary are those plentiful Maserati's, and Ferraris running down NY and Chicago after the market close.
The Fed's just taking money from the savers and giving it to Wall Street.
The 600 trillion, not a misprint, in interest rate swaps market blows up to the tune of a super volcano, causing all the "they all offset" pumping derivative PhDs and mba ass holes to shit their shorts while splattering themselves on pavement due to not being able to understand the simple concept of counter party risk. If rates go above 2.75 or 3 without the fed in the coming weeks that's your sign.
China sold. Who did the buying?
Kevin Henry is buying using a Belguim front.
you are not slow, quite the opposite. sadly can't say the same thing about the rest, including the writer of this gibberish.
If China needed a good excuse to dump their treasuries fast, this would have been a good one.
As someone once said "Never let a crisis go to waste".
Saudi reserves also being drawn down:
http://www.tradingeconomics.com/saudi-arabia/foreign-exchange-reserves
Thye have sold at least $60bn so far this year:
http://www.bloomberg.com/news/articles/2015-06-28/saudi-foreign-reserves...
Asia isn't crashing today ... I'm not ready for a recovery, more crash pleeze.
It will be same as in Zimbabwe
With this link handly, you will never again be far from the article "How the Petrodollar Quietly Died, And Nobody Noticed"
http://bit.ly/PetrodollarDeath
I have no idea what will happen if China starts dumping their treasuries. One I thing I do know though is this board is full of people who think that have answers and they have none, the ZH crowd likes to think they are smarter than the rest of us but they are grasping at straws. After reading 5+ pages of crap, its clear nobody knows, bunch of idiots.
Especially the PM'ers... when will ZH post an update on the price of silver these days? What it's at 5 year, maybe 10 year lows? All you metal freaks are the biggest losers of all! You got your ass handed to you several times over, so quit talking like you know what you are talking about. Because you don't.
We can guess. I guess the same model would be applied as we see in Greece. Government obligations will be met by the sale of national treasures and the seizure of the population's wealth, including precious metals, homes, acquired wealth until there isn't a penny left. When that runs out, charity and Obamacare will present themselves as the answer to what to do with 300 million people in a land where commerce has come to a screeching halt and exports of foreign owned manufactures utilize the new highways and new penniless slaves who made the cut in hubs and warehouses. Then, the new owners elect their preference via campaign donatioins and dual citizens take on a whole new hue. We are looking at our eventual demise as a middle class across the globe.
Can we stop using the phrase "And make no mistake"! That phrase needs to be jettisoned just like Hillary's Orange pantsuit like the clap!
Dollar bull. I rest my case. For now.
Outside of China, what you have to worry about is not so much the effect on US if the other EM countries dump. You worry (if you wish to) more about these crony infested economies. They dump by convincing markets on the lesser volatility and liquidity of the currencies (or vanities) ? C'mon you really think that global traders are morons. The bets against some of these currencies are flashing across many Algo with/without whatever actions these insginificant CBs may want to play. You do not see volume plays not because of stability but because no juices in second tier games.
got this in the mail today:
Worst Bear Market in History by Richard Russell
"I’ve been writing Dow Theory Letters since 1958, and I’ve never let my subscribers take losses in a primary bear market. I believe we are now in a primary bear market that will go down in history as the worst bear market we have ever experienced. My subscribers are out of stocks and holding physical silver and gold. I believe this bear market will touch or break below previous historic lows. The collapse of stocks will generate great confusion among Americans."
Wrong question IMO. It will happen one day, but for now TBs are still among the most important collateral in the 1 Q$ derivative casino. As long as this is the case, nothing drastic will happen to TB market, and whatever TBs are sold (even China dumping 100B in 2W was swallowed up easily), as long as the CBs and TRTFs work together, they will paper everything paper over. EVERYTHING, except the fizzical metals. That's their achilles heel, but so far they kept their only week spot well defended.
re What if Everyone Joins China Dump?
They'd all be Chinese Dump-lings.
China held over $1,200billion worth of US treasuries in June. Japan not far behind China in it's holdings.
http://www.treasury.gov/ticdata/Publish/mfh.txt
There are ofver $6,000billion worth of US treasury securities out there in foreign hands.
The Fed would just print more mon ey and buy the paper back, through the Caribbean or Belgium. Printing money is so easy. They don't even need paper and ink, just the "1" and "0" keys on a keyboard.
Chinese authorities sold US treasuries becuase they had a profit in them.... what would you do when u are losing your ass in a position and you have a fat profit in another??? Ask yourself: What would be the point of their devaluation of their own currency?
Jesus said I come to judge u all, stick your satan up ur ax. way. last chance all of u... repent
Looking beyond the noise, it is clear there are strong deflationary pressures at work in the world, the deleveraging process is not complete and further accommodation will be forthcoming. However, the stock of debt is so large, the repayment profile is approaching infinity and with it the market's faith in so-called risk free sovereign debt.
Maybe QE4?. I do not understand it, as far as I know it already started a long time ago in "Belgium".
Of course: QE4, QE5 and so on. The only real strategic usefulness of quantitative easing is to be ready to absorb debt selling waves in times of stress. Pity the tool has become the way to enrich the banksters and kill free markets.
QE forever? As long as dollar is king and the FED keeps on printing they can keep buying these treasuries back via Belgium. It might be even in the US interest if they are dumped because that will drive down prices. The US can then slowly buy them up cheaply. The sellers will see their savings evaporate and would loose leverage over the US.
Any other ideas how this would work out?
1oz Silver Australian Kookaburra Coin just €17.21 @ EurGold
https://www.eurgold.eu/silver/kookaburra-1oz-silver-1-dollar-legal-tende...
The fed has been saying they want inflation. A treasury dump would throw a bunch more USD into circulation giving the fed the inflation they want without having to QE. Be carefull what you wish for.
Why is the fed talking about raising rates? the major rate hikes of the past were to combat inflation. The mainstream econimists say inflation is low. If anything they should be talking about easing. QE is a dirty word now I guess. you bunch of potty mouths.
We cant underestimate how desensitised the ordinary person has become. I met with some people last evening, and while they knew something crazy was going on with China, they were completely convinced that nothing could go wrong and that their savings was protected by the .gov and that all that stock market garbage cant really affect them.. there are times I wish I had taken the blue pill
www.teamramgold.com/about-us
After yesterday it should be clear that Federal Reserve policy saved us. Obama, Bernanke, Yellen - will all be remembered as heroes that saved the U.S. economy. You can feel the electicity of hope all over America and people are ... I dunno ... thinking about having a job ...
(now ... for the love of all that is holy ... WHERE IS MY COCAINE????)
The type of paper promise is fucking irrelevant. What part of ALL paper bullshit will be worthless don't people understand?
The Saudis are already cashing in.
off-topic: 15 trillion world trade visualization
deserves a link here
http://globe.cid.harvard.edu/?mode=productsphere&id=1001
Blaaahh. 100 billion is only 0.6% of the 16 trillion (and cuonting). Teh treasuries move from one crooked holder toanother crooked holder. Who cares.
Ok, now that this is old news, answer me this, who was the buyer if China is the seller? China has a gameplan. And it is not in our best interest. It would be better look under the covers for thier longterm plan. China, Russia, India, Brazil, most of the middle east and most of europe want off the petro dollar. They have already aligned their mutual goals and intent with their respective central banks. And the USA was not allowed to attend their meetings even under observer status.
The rules are changing and as long as the CFs who are currently running Fort Fumble, our government, are allowed to not be held accountable, the various self-interest-what's-in-it-for-me groups will trear this country to shreds.
The rest of the world vultures remain poised to pick our roadkill carcass clean.
Can you grasp the difference between the "What Difference Does It Make" politicians of today and one from "Ask Not What Your Country Can Do For You - Ask What You Can Do For Your Country" politicians of the past?
"And it is not in our best interest."
Wait........o no you are right, it is not in the best of YOUR interest.
Why not use them to buy real assets? If the paper exchange is for USD and the USD is being used to prop up the Shanghai Stock Exchange, then why not just give the Tresuries straight to Goldman et al to desist and be done with it. Waging financial warfare and profiting at the same time....it is still pretty damn tough to beat the Yankee trader.