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The Great Unwind, China Begins Dumping Treasuries
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The Great Unwind, China Begins Dumping Treasuries
charts from: http://www.globalpost.com/dispatch/news/regions/americas/united-states/150204/chart-us-foreign-debt
Behind the scenes is an event unfolding that has the market shaking in its boots. Yet you don't hear this discussed by the mainstream media, let alone investment bankers.
The reason? It is an event that has been talked about throughout China’s rise to prominence. It has been pondered and feared by Western bankers and politicians. The event I am talking about is the dumping of US treasuries by China.
It is common knowledge, that China has been propping up Western economies over the last decade and longer, it is common knowledge that China has the ability to wipe out the US dollar in one quick motion, by dumping their treasuries on the market.
What is not common knowledge are the recent events that have unfolded behind the scenes in which China has begun this very process.
On August 11th, China unexpectedly devalued the Yuan. This came as a shock to the markets, which saw the currency rapidly plummet by 4% and would have continued to do so if not for the extreme intervention of the Chinese Plunge Protection Team.
Since that time, they have been actively and directly engaging in the Forex markets, where they have propped-up the Yuan and artificially maintained their fix with the US dollar.
How did they do this you ask? By selling US treasuries. That's right, it is being reported, that in the past two weeks alone, China has sold over $106 billion worth of treasuries! But this isn't all, since the start of this year, China has sold an additional $107 billion worth of treasuries!
You read that correctly, not only is China accelerating their dumping of US treasuries, they have hyper-accelerated this process in the last two weeks, dumping almost as much as an entire year’s worth of US treasuries.
Yet, why haven't treasuries collapsed under this huge influx of supply on the market? This is the true question that you have to ask and is not being answered. Who is buying up this huge influx of supply?
Remember, this is a period of time when the world is facing renewed uncertainty and is already awash with fiat dollars. The first and only likely candidate that comes to mind is the FED.
It is highly likely that the FED has been monetizing their own treasuries, in an act that is akin to paying off a credit card with a credit card.
As the situation in China continues to move into the realm of a full-blown crisis, you have to wonder how much more of their massive stockpile of treasuries are they willing to dump on the market? Likewise, how much more can the FED handle before the market wakes up and sees this Ponzi scheme for what it is?
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I'm confused. Wouldn't the US$ proceeds from UST dumping return to China and actually APPRECIATE the Renminbi? That's counter to all the efforts from the PBOC to keep it depreciated.
Re "Since that time, they have been actively and directly engaging in the Forex markets, where they have propped-up the Yuan and artificially maintained their fix with the US dollar." Not quite. They are "propping down" the Yuan. China is a net seller of Yuan, has been for decades. Keeping the Yuan DOWN is what keeps foreign money coming in to build factories there, and chinese junky products cheap to export everywhere.
Sorry, Sprott, you got that one backwards.
So, this site is sensored. My comment was deleted. Had no offensive language. Just talked about the crooked fed system and that income in a tax law is not your compensation according to the supreme court. And poof, deleted like this one will probably be.
Software glitch. There is crappy software *everhwhere*. Nobody cares what you write here.
That is worth suspecting, but I've notices a few instances of this site saving and rendering incorrectly depending on what browser I use.
In any case when its acting like that I copy my comment, and if it doesn't post correctly I just paste into a second attempt. So far so good.
Never have so many, schemed and labored for so long, for so little....
and soon, for so little less...
Isn't it tragic how the whole world fights over resources, buys it with fiat money printed by one or more governments, and then one day POOF! The money vaporizes!
UST's earned by China through years of foreign trade are dumped on the market and converted into Dollars, which are then plowed into Yuan, which slowly vaporizes as people lose faith in it. Meanwhile, the Chinese workers labored for years to accumulate some savings, which they put into the stock market, which just partially vaporized, too. And here in the US, the psychopaths plot and scheme to hoard the vast amount of money in this country, to perhaps see it vanish soon, too.
It reminds me of "Treasure of Sierra Madre" where, at the end of the story, all the golddust held by Humphrey Bogart gets picked up and blown away by the wind.
On a broader scale, we build great enterprises to harvest our natural resources, pollute and eventually destroy our entire planet for monetary profits, as expressed in fiat money that is nothing but digits in a computer, and which could very well vanish.
Never have so many, schemed and labored for so long, for so little....
Meanwhile, closer to home, these bankers leverage money out of thin air, buy real estate assets at a fraction of market value, and they get to claim ownership of my house, even though I've paid most of it down. Not sustainable.
Yup. Human predators rule. And everyone lets them.
IF YOU had a large stockpile of wealth, and you knew that the "assets" in your stockpile might undergo a huge decline in value, wouldn't you SELL off those assets as soon as possible?
Keeping this in mind - do you really think that the move by the Chinese is such a surprise?
The WEST is wrapped up in its own "head games". The West cannot accept the stark fact that its stock markets and its banking systems are no longer the world leaders. Meanwhile, the Chinese are taking a good hard look at the US economy - and they are coming to the conclusion that America is in decline. To take this logic a step further, they are worried that the US decline will accelerate, causing a massive loss in the value of UST's.
So when you think about it .... their strategy is perfectly logical.
Sell? You mean trade? For what? Mote of the same? LoL!
JACK LEW, WHERE ARE YEW----ALL THIS IOU IS BECOMING DEW DEW
If China or any other entity wanted to get really serious the would buy a trillion$ in physical gold with leverage.
Which is exactly what they've been doing in the last couple of years. And India and Russia. Venezuela repatriated its gold from NY vaults, the Netherlands did so as well. Germany is busy doing it, but has troubles getting its gold back. For being a much larger amount than that of Venezuela or the Netherlands, could it be that NY doesn't want to admit their vaults are getting empty?
Sounds like the US is prety much fucked. But when they finally fall off the cliff, lets hope they won't try to cover it up with red herrings like starting a war with Russia (over Ukraine) and/or China (over the South China Sea). But it seems like they've sowed the seeds already, in case they'll need them.
You forgot to add the nation of Texas
;)
"Behind the scenes is an event unfolding that has the market shaking in its boots. Yet you don't hear this discussed by the mainstream media, let alone investment bankers.
The reason?"
The reason is it doesn't matter, because it's all just paper games to the point where even a trillion is irrelevant.
Yes, eddiebe, globalized electronic frauds, backed by atomic bombs, can create trillions & trillions out of nothing, because it would be possible to kill trillions & trillions of people with the existing abundance of weapons of mass destruction. The entire political economy is based upon governments enforcing frauds by privately controlled banks. That has had thousands of years of history to get going, and kept going by deeply entrenched psychological and political habits.
Somewhere, one presumes, there must be some physical realities that still exist underneath a political economy almost totally based upon governments enforcing frauds by privately controlled banks, which can routinely create trillions & trillions more units of "money" out of nothing, because they can also credibly threaten to kill trillions & trillions of people, if everyone does not continue to play along inside of that system based upon being able to enforce frauds.
Civilization was ALWAYS based on being able to back up lies with violence, for thousands of years, which became more sophisticated systems of legalized lies, backed by legalized violence, which enabled the development of electronics and atomic energy to be applied to create the existing systems, where trillions & trillions of units of "money" get created out of nothing, while everyone must continue to accept those enforced frauds, because those are actually backed up by being able to kill trillions & trillions of people, including pretty well cause the extinction of the human species, in the sense of killing all of the potential future in which trillions & trillions of people may have lived, if the species had not previously been rendered extinct.
The article above is typical of the kinds of material republished upon Zero Hedge routinely presenting grossly understated versions of what is wrong:
The Federal Reserve Board is the single greatest of the national Kings of Fraud, integrated into a globalized system, with the Bank of International Settlements being the King of Kings of Fraud, supervising that overall globalized system where almost all of the world's governments continue to enforce frauds by privately controlled banks. Their "credit cards" are backed by the ability of those governments to use weapons of mass destruction to mass murder the human species, and indeed, possibly cause its extinction, and certainly could cause the destruction of technological civilization to the degree to which it would never be able to recover.
Similarly, it is a gross understatement to describe the situation where governments enforce frauds by privately controlled banks as being merely some sort of Ponzi scheme. It is a pyramid scheme, but one run according to the principles and methods of organized crime, wherein governments are the biggest forms of organized crime, controlled by the best organized gangs of criminals, which offer everyone else "a deal they can not refuse."
Properly speaking a Ponzi scheme presumes that people have to be tricked by that scheme. However, the established systems are based upon governments enforcing frauds by privately controlled banks. While those may well be able to trick some, those systems actually exist because it does NOT matter if the "market wakes up." IT MAKES NO DIFFERENCE IF ONE UNDERSTANDS THAT THE FEDERAL RESERVE BOARD IS MAKING THE PUBLIC "MONEY" SUPPLY OUT OF NOTHING. THOSE FRAUDS CONTINUE TO BE ENFORCED, AND CONTINUE TO OPERATE AS VICIOUS SPIRALS, THROUGH THE FUNDING OF POLITICS, IN WAYS WHICH ARE POLITICALLY IMPOSSIBLE TO CHANGE. (Waking up to the nature of Ponzi schemes may prevent one from continuing to be tricked by those schemes. However, waking up to being stuck inside of systems based upon banksters' frauds being enforced by governments makes no difference to still being stuck inside of those kinds of social pyramid schemes.)
Those frauds continue to be enforced by the government of the USA, and various other governments, many of which have utterly overwhelming military superiority, in the sense of an abundance of weapons of mass destruction, that could kill the planet to the degree that eventually there could be no survivors, but rather the human species would have gone extinct. All around the world, there are many governments of many other countries, which could do that same thing that the USA could do, such as China. Therefore, China has also been able to make more "money" out of nothing than can be completely comprehended, because China was also able to back up those frauds with the force of an abundance of weapons of mass destruction.
EVERYTHING THAT NEOLITHIC CIVILIZATION IS DOING IS BASED UPON THE ABILITY OF SOME PEOPLE TO CONTROL OTHER PEOPLE THROUGH BEING DECEITFUL, AND BACKING THAT UP WITH DESTRUCTION. Exponential progress in physical science has enabled those systems of ENFORCED FRAUDS to become globalized electronics, backed by atomic bombs, etc. ... Therefore, generally speaking, it is practically impossible to fully imagine how criminally insane that civilization has become. Furthermore, it appears politically impossible to do anything to prevent that runaway psychotic situation from automatically continuing to get worse, faster, especially since the magnitudes regarding those unprecedented events are such that preparing for those also appears practically impossible too. That is the context inside of which it is correct, in completely crazy ways, for eddiebe to state:
Of course, there are no longer merely "paper games" backed by the gunpowder, but rather those enforced frauds have become electronic and atomic, which was how and why, inside that context, "even a trillion is irrelevant." Civilization ALWAYS operated on the basis of the principles and methods of organized crime, repeating in fractal patterns. The ONLY thing that changed was the exponential progress in physical science, which enabled there to develop electronic frauds, backed by the force of atomic bombs, in which numbers like TRILLIONS are operating.
Money is measurement backed by murder, since the debt controls depend upon the death controls, all of which fits inside of the ways that private property is based on backing up claims with coercions. It was inside of that context, wherein human beings lived as robbers in their environments, and some specialized in robbing others, that there gradually developed civilizations through the history of warfare, to become based on being able to back up deceits with destruction, that gradually morphed to become based on enforcing frauds, whereby numbers like TRILLIONS became trivial, compared to the powers and capabilities manifested by technologies like electronics and atomic energy.
Of course, at the same time, the vast majority of people have continued to cruise on the autopilot of their own habits. Mostly, people still think about and communicate regarding the political economy in ways which are based upon ridiculously old-fashioned religions and ideologies. However, since almost everyone else is doing that, continuing to do that appears to still be socially successful. Meanwhile, creating trillions & trillions of units of "money" out of nothing as debts was metaphorically like the fraud of overall pretending to create hundreds, headed towards thousands, of additional planet Earths out of nothing. That scale of fraud was possible because it was backed by forces that could destroy most of the life on 100s if not 1,000s of planet Earths. Of course, a world in which such $trillions are "irrelevant" is a world manifesting runaway criminal insanities, which are psychotically detached from any relatively objective realities.
That situation is WAY WORSE than merely "paying off a credit card with a credit card," inside of a "Ponzi scheme." However, I am sure that it is more comforting to people to continue to perceive the problems with the political economy in those superficial ways. Indeed, the vast majority of people continue to take almost completely for granted the ways that they are living inside systems of RUNAWAY ENFORCED FRAUDS, wherein "even a trillion is irrelevant." The overwhelming vast majority of human beings, and so too, the contents on Zero Hedge, want to continue to think that globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs, are not so bad, and could be resolved with some superficial sets of "solutions," which did not have to fully face the meaning of those FACTS.
Indeed, it has become so much the case that "even a trillion is irrelevant," that there seems no practical point in my bothering to attempt to present the deeper reasons for how and why that kind of social situation could actually exist, and what that means. Since the political economy is based upon ENFORCED FRAUDS, which have been growing at an exponential rate for thousands of years, until the point where each additional doubling down becomes more and more flabbergasting (and yet, continuing to do that is what the established systems are based upon continuing to presume is both possible, as well as a good idea), we actually have arrived at such surreal points where "even a trillion is irrelevant."
Since the structure of civilization is based upon organized crime, which almost totally gets away with being socially successful by presenting itself in the most absurdly backward ways possible, that civilization has developed to become runaway criminal insanities. The grand canyon chasms between progress in physical science, without that being surpassed by progress in political science, keep on getting wider and WIDER. Indeed, that gap has become so astronomically amplified in size that most people do not even see the other side, or even suspect that there might be some other side to be seen ...
Theoretically speaking, what would be necessary would be series of intellectual scientific revolutions in political science, which surpass the profound paradigm shifts that have already been achieved in physical science. It theoretically makes sense that we should NOT live in a world where trillions of units of the public "money" supply can be casually created out of nothing by privately controlled banks, while governments continue to enforce those frauds, to the point where "even a trillion is irrelevant!"
In order for those numbers to make sense would require that human beings and civilizations understood themselves as manifestations of general energy systems, or entropic pumps of energy flows. However, the established systems based upon governments enforcing frauds by privately controlled banks require that kind of civilization deliberately ignores the principle of the conservation of energy as much as possible, while also deliberately misunderstanding the concept of entropy in the most absurdly backwards ways possible, because that is what is necessary for those systems of enforced frauds to continue.
Within the fundamentally fraudulent financial accounting systems that dominate the established kind of political economy, that bookkeeping is based upon a special kind of magical mathematics, because of the long history whereby frauds by privately controlled banks were enforced by governments, in ways which required everyone to accept that those were the ways things were, and therefore, they had to adapt to operate within those systems. Indeed, the more that they could do so, then the more of that "money" they could accumulate within those systems.
Despite those systems becoming globalized electronic frauds, backed by atomic bombs, almost everyone still must live inside of those systems, and so, mostly tend to be socially successful by taking those systems for granted. While it should indicate that making it become that "even a trillion is irrelevant" is a trend which demonstrates the degree to which civilization has become psychotic, there are still people who can make billions, by skillfully gambling within those systems, whereby those electronic frauds are backed by atomic bombs, which appears to be socially meaningful, because everyone else continues to be forced by governments to respect those kinds of financial frauds.
The EXISTING problems are due to the development of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs. That EXISTING social situation is the one inside which it has actually tended to become that "even a trillion is irrelevant." The problems that monkeys and apes are controlling each other, including the ways that they think and communicate, by operating through the maximum possible deceits and frauds, is FAR WORSE than what most of the content published on Zero Hedge tends to indicate, while that is FAR, FAR, WORSE than what the content of the more mainstream mass media tends to indicate. However, it does point towards the magnitude of those problems to observe the degree to which, inside of the existing political economy based upon runaway ENFORCED FRAUDS, "even a trillion is irrelevant."
due more to failing trust in "the full faith and credit"
than to economic crisis in China
Don't worry. The total value of UST outstanding is $31.2 T, so China's selling is 0.6%. A rounding error. While China is the largest holder, their total holdings are only $1.3 T, or about 3%. Hardly a catastrophe, is it? The Fed created several times that amount for QE since 2008, so even if China did 'dump' their treasuries, the Fed could finance their purchase easily. The situation is well in hand, no where near a crisis.
Stop using $. $ is for dollars, Federal Reserve Notes (sic) are NOT dollars!
China sells their US T's through Belgium. Look there in 90 days when the TIC Data is published.
Basically the EU is laudering dirty money for the Chinese which the FED re-printing with any other added digit of debt that is back stopped by the Japanese. My days are we fucked. The bankers are firnly in control of the world you must see. Culture, religeon and race is all but a farce displayed in front of your face to take your mind off what is actually going on. People are scared of the unkown, and money is no longer sound.
Can't the FED just buy back the debt and retire it? I mean yeah, it leads to massive shenanagins. I supose that is why I cannot support this... BUT is this not akin to us then re-owning debt we use to owe an external party? So if we really wanted to and the FED held the debt, they could just controlled retire or default on it?
I mean, in a shitty deal, isn't that better than china owning all of our debt (or external parties)? I might just be missing it though. Plus, here isn't china pinning the Yuan higher and wouldn't that also be good for us? IE if it dropped like a rock, our exports could not compete even worse than the overall trend of that has been in the recent past right?
The US has bills to pay. If we could simply retire all the debt and just leave the Fed holding the bonds, with the US Treasury providing an IOU, the US National Banking System would need the assurances that such IOU was valid. In this naive illustration, would you want to put your savings in such a banking system?
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Stealth QE?
•?•
V-V
It's already happening.. aka Belgium.
Never mind it is gone
Meanwhile the Saudi's are pumping more oil and earning less and at same time waging costly war with Yemen that is becoming a Royal pain in the fiscal ass. Russia also selling Treasuries , but small amounts so far, and Japan being squeezed. Sounds like a global liquidity mismatch caused by malinvestment of QE combined with commodity deflation. China stock market is actually reflecting reality while US market is in denial due to reliance on Fed to resolve problem they created in first place. When markets realize Fed has no clothes (what an ugly thought). Game Over.
The Saudis are running out of oil and need Yemen's oil and they do not know how much they actually have, but someone does.
HMM, lets think about this. China devalues the Yuan to boost their economy and then dumps their USA dollar bonds to ..... cause the US dollar to dive? What would be the point? Your hypothesis is silly.
Now China might be selling to raise cashor other reasons but not to crash the dollar, certainly not if you believe they want to devalue their own currency.
Hmm, let's think about this.... Nope. The Yuan is pegged to the dollar, so a declining dollar doesn't hurt Chinese competitiveness in the U.S. AND a declining dollar makes China more competitive in non-U.S. markets. I know it comes as a surprise to many, but there are such things as non-U.S. markets.
Never mind; it is now gone.
Hey dummy; the reason for the market "dump" is to scare the people into the "safe haven". the UST and now you have your new buyer. The problem is that people are getting tired of being burned; so they will flee both the markets (bond & equity) when they get burned again. Especially if the FED were to raise rates, then the reset is upon us and the PM's will sail up up and away because ultimately they correspond with debt and real inflation. We will see hyperinflation, credit freezes, which in turn will cause supply shortages on basic necessities. This is already happening in smaller nations around the world.
But by running into money market funds they are now simply paying fund managers to run into UST for them. Rinse, Repeat.
Sitting long PHYS and PSLV, I'm getting concerned about Sprott's repeated "the sky is falling" warnings. I get talking your book, but it sounds kind of desperate. Come on guys, make your case but realize that after $4T of Ctrl-P, we're not getting hyperinflation. If anything, the deflationists have won the argument. Instead of shouting "the dollar is failing, head for the hills!" maybe the stronger case is, "there's a whole lot of instability out there, and oh, by the way, if you're sitting on too much cash in your 401K, be aware that Treasury authorities can now lock-down the money market during a crisis. Might be a good idea to put at least part of that in the only monetary asset they can't print."
I don't understand. How can this be secret? Does the Fed publish its holdings? Won't everyone find out pretty soon that the Fed's portfolio increased by $100B in the last few weeks?
They LIE!
... er ... ahh ... welllll ... errr ... PBoC really doesn't tell anyone what is on its ... errr ... book of assets.
I'm having another drink right now, prolly u should too.
- Ned
All is well, buy the dollar
And yet I heard on MSNBC (Tuned in accidentally) a talking head report that "The crisis for China has passed. What bullshit we endure...
Not to worry, the ratings crowd caught your blip and credited you with 38 hours of watching the channel this week.
It only taked 839 such inadvertent blips onto MSNBC to give them sufficient phantom ratings to keep them goin'
Don't do that shit again, we need to starve that beast as well.
- Ned
... what bullshit we ignore...
there, fixed it for ya.