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The Numbers Are In: China Dumps A Record $94 Billion In US Treasurys In One Month
Shortly after the PBoC’s move to devalue the yuan, we noted with some alarm that it looked as though China may have drawn down its reserves by more than $100 billion in the space of just two weeks. That, we went on the point out, would represent a stunning increase over the previous pace of the country’s reserve draw down, which we began documenting months ahead of the devaluation (see here, for instance). We went on to estimate, based on the projected size of the RMB carry trade unwind, how large the FX reserve liquidation might need to be to offset capital outflows and finally, late last week, we suggested that China’s official FX reserve data was set to become the new risk-on/off trigger for nervous, erratic markets. In short, the pace at which Beijing is burning through its USD assets in defense of the yuan has serious implications not only for investors’ collective perception of market stability, but for yields on core paper, for global liquidity, and for US monetary policy.
On Monday we got the official data from China and sure enough, we find out that the PBoC liquidated around $94 billion in reserves during the month of August to $3.557 trillion (the lowest since September 2013)...
... and as Goldman argues (see below), the "real" figure might have been closer to $115 billion. Whatever the case, it’s a staggering burn rate and needless to say, were the PBoC to continue to liquidate its assets at this pace, it would necessitate a raft of RRR cuts and hundreds of billions in short-term liquidity ops to ensure that money markets don’t seize up in the face of the liquidity drain.
Here’s some commentary from across sellside desks on the official numbers:
- From RBC’s Sue Trinh:
- China FX reserves suggest about $140b used to defend yuan in April once valuation is accounted for
- Believes PBOC has been intervening to maintain the yuan’s stability since the devaluation, but this kind of intervention can’t continue indefinitely
- It’s unsustainable in the long run; yuan is overvalued by around 15% by RBC’s latest estimate; still targeting USD/CNY at 6.56 by year-end and 6.95 by the end of 2016
- From Commerzbank’s Zhou Hao:
- Decline in foreign reserves clearly suggests China’s central bank intervened intensively in the FX market to stabilize CNY exchange rate
- “One-off devaluation” in mid-Aug. triggered market expectations of further CNY deprecation, which has not only endangered the financial stability, but also posts a downside risk to the economy due to capital outflows
- It’s costly because frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity; that said, further tightening of regulations is expected near term
- Expects spread between CNY and CNH is likely to persist as PBOC has become an active player in onshore market
- From Goldman:
- The People’s Bank of China (PBOC) reported that its foreign exchange reserves dropped by US$94bn in August, to US$3.557tn at the end of the month. However, it is not straightforward to derive the actual scale of FX reserves sales from the headline FX reserves data, given uncertain valuation effects and possible balance sheet management by the PBOC.
- It is possible to get an approximate sense about valuation effects stemming from currency movement: e.g., assuming the currency composition of the PBOC’s FX reserves broadly follows that of the average country’s (using the IMF COFER weights, which suggest roughly 70% in USD for EM countries), the currency valuation effect would probably be positive to the tune of roughly US$20bn (i.e., if we only look at the change in headline FX reserves as a gauge of sales of FX reserves, sales of FX reserves might have been underestimated by around US$20bn, given the currency valuation effect). However, besides currency movements, there could also be significant valuation effects from changes to the market prices of the PBOC’s investment portfolios, and the direction and size of those effects is hard to measure given the uncertainty of the asset composition. Moreover, there could also be possible short-term transactions and agreements between the PBOC and banks that may complicate the interpretation of the change in FX reserves as an underlying measure of RMB demand.
Of course the huge draw down was widely anticipated and indeed, we've explored and detailed virtually every angle of this story in the lead up to the data. The key takeaway here is that we now have official confirmation that August saw $94 billion in reverse QE (and more likely $115 billion) or, quantitative tightening as Deutsche Bank puts it.
We can, as we explained on Saturday, argue about what the ultimate effect on safe haven assets will be, but what's not up for debate is that conceptually speaking, China's massive UST dumping is the opposite of Western central bank QE and as such should be expected to pressure yields. More specifically, Citi has suggested that for every $500 billion in EM FX reserve liquidation, there's an attendant 108 bps or so of upward pressure on 10Y yields. Similarly, Deutsche Bank, citing the extant literature, flags 50-60bps of upward pressure on 5Y yields for every $100 billion in monthly EM FX reserve liquidations.
The takeaway, as we put it last week, is that if the Fed hikes this month, it will be tightening into a tightening.
But it's not that simple. It's also possible that, if China's FX reserve draw downs do indeed end up serving as a trigger for risk-off behavior (i.e. a selloff in risk assets), the subsequent flight to safety could end up driving yields on long bonds lower, not higher. We discussed this in detail over the weekend.
Still, China isn't the only country liquidating its USD assets. When you consider that global EM FX reserves amount to more than $7 trillion, it seems reasonable to ask whether the flight to safety that would invariably accompany a worldwide selloff in risk assets would be sufficient to replace the lost bid from massive reserve draw downs. Or, as we put it on Saturday, "the real question is what would everyone else do. If the other EMs join China in liquidating the combined $7.5 trillion in FX reserves (i.e., mostly US Trasurys but also those of Europe and Japan) shown below into an illiquid Treasury bond market where central banks already hold 30% or more of all 10 Year equivalents (the BOJ will own 60% by 2018), then it is debatable whether the mere outflow from stocks into bonds will offset the rate carnage."
And that consideration, in turn, puts the Fed in a very, very difficult spot. A rate hike cycle will put further pressure on already beleaguered EM currencies which raises the possibility that the FX reserve liquidation will be larger than the eventual safe haven flows and besides, there's bound to be a lag between the liquidation of USD assets and the flight to safety and given the potential for extraordinary bouts of volatility in UST, JGB, and German Bund markets, it's anyone's guess what happens in between.
Whatever the case, something will have to give here. That is, all of these dynamics (i.e. a Fed hike, China's massive UST dumping, an EM meltdown precipitating FX reserve drawdowns, illiquid markets for the same assets everyone is dumping, hemorrhaging petrostate budgets, etc.) simply cannot coexist for long without something snapping because, as we put it last week, in this very unstable arrangement, the smallest policy error will reverberate exponentially, and those reverberations can lead to only one thing: the Fed's admission of policy failure by adopting a tightening bias, and ultimately launching another phase of monetary easing, be it QE4 or perhaps even the long-overdue and much anticipated Friedmanesque "helicopter money" episode.
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So is this a big deal? Or not?
Well helicopter money will be a big deal if you live in US. Imagine free $20000 USD. Spend as fast as you can.
It would be a whole lot better if they started dumping treasury secretaries... you know helicopter style. Right, Lacob?
Just give me the fucking helicopter!
slowest collapse ever.
It is slow until it is fast
Belgium will buy it.
The tidal wave of Federal Reserve notes will be coming to an American shore near you shortly.
This may have been an issue 50 or 100 years ago, but today we are able to buy our own debt, so China can sell our treasuries all day and it won't have any significant impact on our economy. In fact, I'd rather our Federal Reserve owned our debt than a foreign power who's interests may not be aligned with ours.
Yeah, and porn actor Ron Jeremy used to be able to suck his own dick. Until he couldn't do it anymore.
I see four possibilities here:
1/ You are new here on ZH
2/ Your humor just isn't funny
3/ You drank WAY too much Kool-Aid.
4/ You are a troll.
Which of the four is it?
Try... #5. It's YOU who are new here and just got Ron's wad in your face.
MDB is the oldest (still standing) ZH celebrity here. And for the record, his humor is priceless. But again, since #5... it obviously just went "whooshhh"...
See, MDB? You haven't lost your touch. You can get a crowd riled up with the best of them.
Question: When is an economic war not an economic war?
Answer: When China does it.
So who races to the bottom now, mutha'truckas'?
All your base are belong to us.
What does 100 billion dollars in US treasuries equate to in Chinese terms?
One chemcial explosion.
There is a 1,450 tonne gap between total gold refinery activity reported by WGC in 2013 and their global gold demand (supply) for 2013:
Check
https://www.bullionstar.com/blogs/ronan-manly/moving-the-goalposts-the-lbmas-shifting-stance-on-gold-refinery-production-statistics/
and
http://www.gold.org/supply-and-demand/gold-demand-trends/back-issues/gold-demand-trends-full-year-2014
"There is a 1,450 tonne gap between total gold refinery activity reported by WGC in 2013 and their global gold demand (supply) for 2013:"
This dumping of paper debt while its still worth something only really becomes the final move if the Chinese use the proceeds to cash out of the ponzi, otherwise...
"Dumping U.S. Treasuries is an economic pain, and economic threat – to both the U.S.’s puppet government, and the One Bank itself. However, if China decides to dump Treasuries and use the proceeds to buy gold, that would be the proverbial “double-barreled shotgun”. It would represent (by far) the most direct/overt action initiated by the New World Power against the Old World Power, at least in the economic theater.."
Gold War III: What’s Next?"Try... #5. It's YOU who are new here and just got Ron's wad in your face.
MDB is the oldest (still standing) ZH celebrity here. And for the record, his humor is priceless. But again, since #5... it obviously just went "whooshhh"..."
you are the n00b. MDB_ is a fake rip-off loser trying to imitate MDB's humor and routinely failing. It's only the 1 or 2 that bite on the trolling. Or the guys that try to claim he's the real MDB that keep his boring pathetic copy trolling going...
Chinese are like jews. They'll steal anything that's not bolted down.
EXTERMINATE, EXTERMINATE, EXTERMINATE...
Not even close.
Saw Marla post the other day.
6 years plus.
Sorry brah, I'm one of the Real muthaphukkin' G's around here, I was on ZH when it was on blogspot. Would love to hear from Marla and Sacrilege and Cheeky Bastard and Andy Dufresne again.
Hope this helps
Marla@deutsche.ge
Sacrilege@atheists4U.nz
CheekyBastard@fox.com
AndyDufresne@goldmansachs.com
What's her handle here?
Seen a few come and go myself. Interesting place indeed!
Uh, maybe you're the newbie?
I don't remember the original MDB having an underscore after his name.
Nor was a low pixel picture of the dollar sign and flag.
Wait a minute. There are a few of us who have a year or two on MDB. I've been reading his schtick for four years and as sad as it seems, he's been right. That's the really fucked up part.
MDB is an old hand here, and his sarc routine is appreciated by those of us who understand it for what it is.
that's hilarious... we were miliseconds apart. Nice to see there's another genius like me in the world!
OK.... /sarc. Don't want to be hammered.
He is also a big stacker on the quiet as well.
He admitted as much after drinking a little too much when posting
one night.
Perhaps his humor is a little dry for you.
Yeah! Its his hobby...to come across like a booger eating booboo to foster some excitement and outrage...We all love MDB's satire...unlike fonestar who actually is a booger eating booboo..it takes a while to get the hang of it around here...good hip shot there though..
Right about MBD, wrong about fonestar, as cryptocurrencies are the future of money and a whole lot more, including and especially privacy and freedom.
Dick, you were without a doubt one of the all-time best linebackers, but cryptocurrencies are simply digits wrapped in an enigma of "so-called" security, which no one really understands. It should be the 0 and 1 of it that scares everyone the most. In truth and reality, there is no such thing as a "secure" anything.
It wasn't that funny nor was it that sarcastic
BC, perhaps you understand how this form of communication works; I don't, any more than I understand how my computer works or most of the things that make up my world. That doesn't stop me from using them, however, as long as I know how and why. I understand enough about cryptocurrencies (having been dismissive early on) to believe that they are the future, and even if the grid goes down, my cryptocurrencies will be there when it comes back up. If it doesn't, then we will have obviously headed down The Road, not just "digits" but the electricity that propels them being the way the modern world works.
Which is to say, life is no more secure than it is fair, and only a fool believes otherwise. So one does what one can to increase the odds in one's favor or suffer the consequences.
Me, I and mine live on a sparsely populated mountain in the country, close enough to a mid-size city to work there but far enough away, and sufficiently prepared, to be out of harm's way for an extended period of time.
"Which of the four is it?"
MDB is a regular aggravation at Zero Hedge.
He/she will not post for a while and then he/she comes back with a hyper-aggravating post, like the one just posted.
MDB is doing this purposely to aggravate or he/she is a total and absolute moron.
Incidentally, MDB, "buying" with counterfeited US dollars by the Federal Reserve is FRAUD.
It leaves the door open for a hyperinflationary event.
If the Federal Reserve buys all comers on a rising interests environment then trillions of US Treasuries will be sold and likely result in hyperinflation.
(knock knock....) helloooo? Anyone home???
"Its the Plumber!"...
the parrot replied, as the punchline to an old joke!
~"MDB is doing this purposely to aggravate or he/she is a total and absolute moron."~
Au contraire, mon ami! MDB's views, contrarian to most of Zhers, is held in high regard for its eternal optimism, robust exhuberance and Pollyannish perspective. The man blows more sunshine bubbles up the arses of pessimists than a fart unicorn. That they, sheltering from the rain of their gloomy personal clouds, quite understandably take umbrage at MDB, but it isn't his fault the rain faills where it may.
Okay, that enough sticking up for him. I need a drink.
BBWWWAAAAAhahahahahahahhhahahahah.....
MDB lures another unsuspecting earnest blogger into his web of troll-dom.
#5. He is right. You collapse-a-tarians are a hoot.
China IS part of the federal reserve system and bought and paid for.
http://www.federalreserve.gov/SECRS/2008/March/20080303/ICP-2008108/ICP-...
One happy family.
"Our" fed is owned by a bunch of mostly foreign El-ites.
I love the sight of reductio ad absurdum in the morning...looks like...sense!
If there is even a hint of FED buying back the treasuries quietly (waiting on Tylers to figure it out how who bought 115b of treasuries from China) there will be an effect. This means QE4 is ON, it means USD is going weaker. The number gimickry is possible, but the effects will be very real.
Of course the Fed is buying back, China wants to keep it a secret but gives hints, crazy.
The Fed will raise the rates and yes QE4 right after that.
The FEDs actions will force countries around the world to drop the dollar as a peg as they cheapen currencies. They will sell treasuries to assist in devaluing their own currency.
Race to the bottom but unfortunately FED cannot play the same game, not even in the race.
Who is this " ours " you speak of comrade ?
Reply to Million Dollar Bonus. Ours? Nothing is yours. Not the Bill of Rights or the Constitution of the US. Its over Rover. The global regime of economic interlinking corporations and organizations run your government. By de facto you have no government or military to protect you. You live in an occupied nation controlled by financial perverts. You get Trump and Bruce Jenner and the propaganda of two women passing the Ranger tests of carrying 200 pounds on their back for 27 miles, a black computer math wiz in every TV show or as the heads of special CIA and FBI organizations. If not black then you'll get to watch a woman play those same roles. You'll get a Muslim president and pay taxes to fund operations to take down the World Trade Centers. You are fucked. Face up to it and do something you schmuck.
Just kidding. We don't have nations on Q99x2.
You are just beautiful. Really.
You are a cherished toy that should be played with everyday..
and then we all suffer whiplash
The liquidity problem is out there waiting. I think they are going to run out of people with cash before they run out of Treasuries. This will have an effect on the FED since they are also trying to get rid of theirs and the bond market which is already becoming unstable is likely to barf its guts with nothing left to hold it up.......
They will fill the camps before they give you $20k
China dumps and the Fed prints to buy them
How else are the 30 yr stable
Exactly, all this "financial analysis" is just hyperbole at this point!
So China sell 100b USD, and this is supposed to reduce liquidity by sucking in dollars from the so called "market"? As the poster above said, the Fed could just as well be buying these up via the famous"Belgium" proxies; actually printing *more* dollars.
@JRobby : Yep, when will the sucka's understand the FED is here to support the banking structure not individuals. They'll give the banks $20 Trillion dollars but the average working clown gets nothing but a massive increase in their groceries, taxes and medical costs.
Yeah - 20K in services...free food, a roof over your head, your own cell, daily beatings....
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
The result from 10 hours of supercomputing processing of the data streams coming in: The Fed is between a rock and a hard place.
It must really gall them that China is raising rates for them and now they have to cover. They have to pretend it was their idea and come up with all the necessary excuses.
No problem. Fed will buy it all through its proxies. Problem is when everyone begins selling...
"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." - Alan Greenspan
So long as the FRN is accepted, yes.
I convert them shits to goid ASAP. Damn shame my boats keep sinking to the bottom of the ocean from the weight of the coins.
I'm no longer sure if moar' boats loaded with bullion are sinking or if moar' chemical factories in China are blowing up? Is anyone keeping a score card?
days are numbered, history repeats. the great demise. proccess is underway motivated by attempt of untied state merica overstep into world domination with force. defund the evil empire run MIC DoD is the goal bric nation and EE coun tries except the one with dual dictators on the dole(econ hit man stuff).
strong dolla for time being...head fake til punch
"eveybody has a plan til they're punched"
ha
"...because we can print money..."
He means currency, which is monetized debt, which we use to pay back our debt. So we use debt to pay for debt, meaning we can default like a mother fucker. The reason we don't default is the world will accept our currency because we have a military that will turn your country into dust and a retarded population who will gladly pay for it if you even think about rejecting the dollar.
What's that? Another explosion in China?
Spot on Meat Hammer. Until the other countries with nukes give it flick, that is. But that will never happen...wait.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
No, it's emphatically not a big deal. Although TD wakes up every morning hoping and praying that today will be the end of the United States, he's going to be waiting a very long time.
The sources in the "article" are not hard to understand: the liquidations are occuring because of the strength of the greenback, not weakness, for chrissakes. When the worldwide equity markets take their massive, diarrheal shit (gonna be real, real messy--like the toilet stall in El Mariachi), institutional money will be looking for USTs, any USTs, to buy. In the illiquid and supply-constricted T-bill markets TD like to go on and on about, WTF do you think will happen to bond prices? Do you think they'll go down??
Keep trying TD--one of these decades you'll hit your big score...
the only weakness I see here is China's, not the US... it's blatantly obvious to anyone who doesn't have an agenda which side is winning this exchange...
$100B in treasuries? whoopty doo, I think Obama pissed that amount into an Alaskan stream last week...
Mmm, hmm. Yes, US strength for now is far more than all of the BRICS. As things get worse in China, Europe and Brazil, more investment (buyers) will come to the USA.
For now King Dollar. But, if you have no (or not enough) gold, that is what will endure. And endure.
No, they are liquidating because of the weakness of the YUAN, and by selling treasuries, they are transferring that weakness to the dollar. If everyone dumps, it's all over for the US. At best, the Fed prints and buys them off market, and the hyperinflation comes on slowly as dollars first lose value abroad before being used to buy up everything not nailed down in the US for export, exploding prices for us.
There's more where that came from.
A few points.
First, if China has decided to sell a big chunk of their dollars and treasuires ($3.5 trillion stash), this could easily become the next Lehman event.
Second, if that was their plan, then it made sense that they would devalue their currency before beginning, because inevitably the Yuan will strengthen with all of these dollar/treasury sales.
Third, the key will be if they do follow through the rest of this year, and continue with their selling.
Fourth, this sell-off senario is not far-fetched. If you held $3.5 TRILLION in assets that were becoming increasingly at risk, wouldn't you begin to liquidate?
Fifth, if they do liquidate dollars and treasuries, wouldn't some gold purchases make a lot of sense? Doesn't gold equate to power?
Not really true.
A lehman event is akin to whoever buying up UST from China's selling go bust.
China selling UST is not deflation because it's being absorbed. The bubble burst, if ever, will come from the other side.
Every single day for years now ZH has posted at least 10 articles a day trying to say how everything is going to collapse, so this is as "big of a deal" as the few thousand other posts they have made here.....
the market needs negative sentiments. that's why he calls it a hedge.
not really a big deal. they had to dump it due to capital outflows. they will buy it when there is capital inflow. it's a normal course of economics 101.
not to mention, they are selling UST at the top. call it profit taking
I once ate at a chinese buffet. Their pizza was cold and the mexicans cooking the food wouldn't make another. I don't trust them or their voodoo soothsayin cookies.
Well I could launder the money for them and only take a .00001 % commission, I could avert the comming World War, Just think.
Need belgium ...
They were Belgium.
Not everyone knows that "Belgium" is not just a country…it's also a corporation :-) ZH found evidence of this a while back, but it's too early in the am to go looking for it.
Several I would think? Lot of QE transactions, swaps, etc. flowing through it.
balance sheet management by the PBOC.
balance sheet manipulation by the PBOC.
So what? 94 billion is what percent of the total treasuries outstanding?
All central banks are manipulating criminal enterprises, in all countries, especially China...
so, same as it ever was...
Its only 2% of the total, Plenty more pain to come!.
So, let's see how it works operationally
China sells $100 bn of UST.
Effect, the system has $100 bn more USTs and has $100 bn less USD. This is QE in reverse.
Now, China sells $100 bn USD and buys the equivalent in Yuan.
Effect, This is QE again.
Issue is what is China doing with USDs, not USTs.
Liquidatin USTs is NOT liquidating USD.
PBOC can do the job of the Fed if it wishes, with all those reserves
Bingo. As far as I can tell, very few of those U.S. dollars are coming back home. China is spending them on real assets in and for China. Basically, all the resources in South America and Africa just got a lot cheaper for China.
China is selling US Treasuries for US dollars cause they know the Feral Reserve is about to raise rates
So US Treasuries drop in price while US dollar goes up.
Duh
Yes. That and the fact that U.S. property, Canadian property etc. is now on sale etc. Beating the U.S. oligarchy at it's own game.
How's your mandarin?
That money is coming to Vancouver, Toronto, London, Berlin, Florida, NY etc etc etc
Yes, many good places to live around the world. My brother in New Zealand says it's coming there as well. The point being it is being spread around the planet. FYI, the word "China" means "the center of the universe".
Chinese oligarchs have direct access to national reserves.
US oligarchs do have the same access, but congress has to permit it. Complicated stuff. Warren Buffett and others managed to get to US excess reserves to bail themselves out via congress and white house control
small correction, LoP, zhongguo (Chinese for China) means middle or center country.
Yes, should have mentioned that it is the Chinese word for China. Welcome your new oligarchs, same as the old oligarchs... ..they just speak a differnt language...
My Mandarin depends on what I'm drinking and how much.
Had a Manchurian girlfriend many years ago... OMFG!!!
If they keep USDs, then that would be tightening, shortage of dollars, reverse QE.
PBOC would be basically unwinding QE from the Fed
Yes and providing QE, for themselves, thanks to the U.S. taxpayer via the Fed.
brilliant.
This stuff is a hand's span outside of my grasp so thanks for all the explanations. Since these treasuries are held outside the US how will they affect the Eurodollar vs the USD? They usually act as one but need not stay the same. I'm thinking that sucking down Eurodollar liquidity plays out differently than the within-country liquidity, but as I say it's a bit outside my knowledge base.
hard to say, in this global con game. As far as I can tell the global power centers are shifting from west to east, many of the family names are the same, some are not. It's a slow process, but the demographics are what they are. Many people, especailly older businesses and older people in my neck of the woods are preparing for a long winter so to speak.
Nothing new under sun, however, this time when the global supply chains go down, we have 7+ billion people to deal with...
interesting times, there will be pain, but I see a lot of opportunity as well.
First country to restore and accept "mark to market" with with a monetary system attached to reality and the means to defend it, will dominate.
same as it ever was...
Garbage
Red capitalism is gone bust. Nothing to do with Fed talk nor will that make the dollar go up
What part of all fiat will die, don't people understand? Now about those demographics...
Meanwhile the Crony Capitalism, Colonial Capitalism, Scam Capitalism that we have in the US of A is doing great as long as the money is printed and put in the right hands on a regular basis. You guys who insist upon putting ideology, personal bias and hatred before fact-based thought will come up with the wrong answer every time.
Dumping Treasuries forces their price down, and rates on them are pressured up...at a time when the Fed is considering it's own rate increase (Fed Funds Rate, which influences other rates).
All of this at a time with essentially dead core economies...
Regardless of what China does with the dollars, I expect this dumping (especially if it catches on with other CB's) to really pressure the U.S. Bond (debt) racket. The Fed must raise rates to back their claims of economic improvement; they HAVE NO CHOICE if credibility is at stake...and it IS.
If this forces big whackiness in the government's debt machine (eg massive dumping of old debt that pays a lot less than a rapidly-unwinding racket is now demanding)...it'll blow up.
The government would have to have the Fed soak it all up, and that would tank the dollar.
The Fed can print all the saw bucks it wants, but it cannot print someone else's notes to buy US debt.
Watch it all carefully; if this doesn't finally do it, the masses need to rise to blow it up manually.
This cannot be allowed to continue unchallenged.
m
Which brings us back to the interesting oil trades in Dubai. I was curious about what currencies where being used to buy and sell the oil.
Good thought. What I can not understand, is how you got 2 down arrows.
heh, now the Fed knows how the american public feel.
Not true at all.
"Effect, the system has $100 bn more USTs and has $100 bn less USD. This is QE in reverse."
The system still has the $100 bn USD because China is holding it while someone else is holding the UST they sold. No USD is destroyed from China selling UST.
This isn't like corporate share buybacks.
Helicopter money is actually a Bernanke concept. He has the dubious title 'Helicopter Ben', but I seriously doubt they will rescue the plebs. The joke is on the plebs of the world who think they are actually 'represented.' They would only be represented by extreme violence, but that will not happen. Most plebs are actually decent people who would never think to use violenve. There lies the problem: the plebs vs. the pychopaths. The plebs don't have a chance, hence the 1% of pychopaths easily rule the other 99%.
Evil people ruling the dumb people, sounds about right. Insanely frustrating when you don't fit into either category.
There's always the option of ditching your humanity and becoming evil yourself. No-one said you had to join "their" team.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
The plebs don't have a chance, hence the 1% of pychopaths easily rule the other 99%.
And that is where they are mistaken...and you are mistaken...
Historically it has been demonstrated that it takes about 5% to 15% of the people to overthrow a Government.
So just what is 99% of that 5% to 15%???
That number outnimbers the psychopaths by a factor of 4.95 to 1 all of the way to as many as 14.05 to 1.
And yet you attempt to convince us that we stand no chance???
Your are a DEFEATIST PROPAGANDIST, a QUISLING.
Not only can it happen but when the plebs become hungry enough...IT WILL HAPPEN.
And the is not one thing that you can do in order to stop it. There is a PLETHORA of successful revolts throughout History.
Yes the Oligarchy and Plutocracy will rise again, as it has today, and has in the past after the revolutions.
But it will be one bloody mess and you can count on far too many dying.
(Twenty Seven of you allowed this bullshit to get by you and validated this crap? I am stunned by the lack of critical reading skills and the lack of ability to discern the subtle propaganda posted above.)
How do we know China is buying Yuan? Because they told us they were? I thought the Chinese wanted to devalue their currency in order to enact their own beggar thy neighbor policy.
dumping is from a position of weakness, not strength.
@laomei
I always feel stronger after a good dump!
All those dollars they are getting are (allbeit temporary) strong right now, not weak. Wait for it, they are insiders now, they know rates will go up, at least for a little while, making those dollars even stronger, for a bit anyway...
They are buying yuan with those dollars so until they stop selling treasuries and buying yuan, this will tend to depress both dollars and bonds. I would think given that, the bonds are a good place to park money as stocks are liquidated.
Maybe. Either way, the Chinese can now give their people more QE, at the expense of the U.S. taxpayer. All according to plan.
laomei wins the thread folks, we're done here... +1
I think this $94 billion is only the tip of the iceberg. How long have the Chinese been selling? Are the Chinese the only ones selling? What about the Russians, Saudi's, and the rest of the world that suddenly want Dollars in hand.
Despite the outward appearance of chaos, I have a nagging feeling this is all contrived.
Sun Tzu- ish.
one of my posts from another thread:
..but it rests on the assumption that they are spending 100% of the dollars they got in return for the tresuries on buying RMB then using those to support (effectively nationalize) the shittiest businesses in china.
we would have to know what they are doing with those FRNs they are getting from treasury sales. i would guess that a portion is spent to support the currecncy, but i would guess that they are also spending a great deal on buying hard assets. for me it comes down to this. are they keynesian idiots or are they using sunzi's art of war as their playbook? ie appear weak when you are strong, bide your time until the right time to strike etc etc.
if they are keynesian idiots then youre right, this policy is suicidal. if they are smart (and maybe i give them too much credit), they took advantage of a popping stock market bubble, which they themselves might have intentionally created, to liquidate some of their massive treasury holdings while denying the US a good reason to villianize them. they can then use all those dollars to buy up even more hard assets, which simaltaneously makes the fed monetize the treasuries they are offloading thereby fucking directly with the fed. they have prodigious real estate and stock market bubbles as well as their huge shadow banking system.
they are taking steps to systematically dismantle the dollar while at the same time building an alternative financial system. if they were to, as jim willie has suggested, bide their time and then suddenly announce their (potentially massive) gold reserves while inserting the RMB into something resembling a world or even asian reserve currency, they could offset some of the pain in the real estate and stock markets by immediately and substanially increasing demand for their currency and thus everything demoniated in that currency. essentially an overnight upwards currency revaluation.
this would allow domestic chinese consumers the ability to consume the huge production capacity in china and make them wealthier when measured in foreign goods, which again would offest a lot of the problems with the real estate and other bubbles. it would also solve the problem of their economy being dependant on the dying and criminally corrupt and insane west.
Yes Winston
The first quality that is needed is audacity.
invariably there will be a physical conflict to top off this currency and economic war. always has always will happen.
Have you ever been to China and watched them in action? Chinese fire drill is REAL. The Chinese are handling their meltdown exactly as I would expect them to. Think of it as reverting to the cultural mean.
Only a handful of countries matter: http://www.treasury.gov/ticdata/Publish/mfh.txt
It needs to dump a whole lot more!...
Once and for all let's end this god damn "party"!
I look forward to the day that China exchanges it's "reserves" in bits of billions into bullion. 1 B U$D is roughly 27 metric tons of the yellow metal, 100B is ~ global yearly mine output. Just for a relative perspective.
Sooner or later we will be sending our "heavy metals" to the Chinese.
"1 B U$D is roughly 27 metric tons of the yellow metal, 100B is ~ global yearly mine output. Just for a relative perspective."
Fuck. That's actually depressing. I could see the Chinks trading their US$ for gold. But they wouldn't be the price makers - they're too canny for that. They'd buy over a 35+ year period - they're patient mofo's.
Imagine this crap lasting for another 35 years. What a nightmare.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
Damn, time to dump those precious puts before QE4 and QE5 start and hyperinflate this stupid market...
FRN's have the potential of being a waste of paper and ink - now, THAT'S scary!......
Yes, this is contrived in a way. If China wanted to start to unwind their huge position in USTs, this is the time to do it. The timing is difficult here, but everyone knows the US petroldollar system will not be solvent forever. At some point, the world moves on to another monetary system or they remain a USD bitch forever. The Germans should take note here, in other words, your country has been occupied for 70 years, doe Germany ever want to break free? Interesting times here ladies and Gents!
if china was smart,they would go ahead and cash out all that t-bill stuff ahead of the us collapse, cause we all know how much their cash out would be worth once we go south.
China , hopefully will do what th eFED has been opposing to do for the last few years. ......raise rates in the US.!
A good old fashioned CREDIT CRUNCH in the US brought along by Chinas dumping of UST will cause yeilds to rise and exacerbate the USD decline. The FED may then be limited in starting off QE4, as a sharp crash/falling USD may not allow such leeway for the FED. The FEDs hands maybe tied. save the dollar or save the equities market. Usually they will let the dollar fall, but they may have not considered that china would have crash the dollar for them. The FED may have thought all along they they themselves would ctash the USD in the process of saving the equities market.
This is like that episode of MR BEAN.. the one where he paints himself into a corner of the Room..... with no way out .
Haha.
Mr Bean for Tres. Sec.
https://anglotees.com/wp-content/uploads/2014/12/r4q1gawgmeoeglkuync6.jpg
So we are still on the long path of deflation before hyperinflation ??? Or have we just hit the speed bump ???
A lot of failures to deliver will be written down because of the available supply. Derivatives market meltdown.
Build more ghost cities? Come on, it worked before. Let's boost spending, aka, borrowing, and all will be fine. What, that playbook is dead? Oh sheet, man...
I know everyone here is palpatating over the U.S. being smothered in dollars, and China is buying everything with these new found dollars. But there is a fly in your ointment. There is mostly dollar credit around the world, not necessarily dollars. This will cause an incredible dollar shortage.
China is no different. They have huge dollar credit problems, as well. As trade collapses, there is less need for new dollars to circulate, which causes even more need for available dollars, and so it goes.
Concur. This is not the end. Still part of the deflationary cycle. But it's a nice acceleration in that direction.
You know we're near the end when the deflation is so out of hand that political instability is a gross daily affair - think LA riots breaking out on a weekly basis.
That's when you'll hear the thop, thop , thop of the approaching helicopters.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
I don't see the devaluation and Treasury dump as mechanically connected. Weakening a currency shoud involve buying other currencies and increasing your FOREX reserves, not selling them. The simple answer that has always been the answer will suffice. They are getting rid of USD reserves and they are also devaluing at the same time. Both things annoy the US in different ways and represent non-compliance with previous arrangements.
Infowars has many articles today about migration in Europe...the same is happening in the u.s. I don't necessarily mean from south of border, but from countries dumping their dollars and buying real estate and business in u.s. the u.s. no longer exists. On September 23, the pope will address congress and explain it better when he officially announces the nwo that bush senior mentioned....period...
40% real estate meltdown predicted.
Media over here were reporting that the FED sent Jacob Lew was in Beijing late last week to have a word with the Chinese.
http://www.cnbc.com/2015/09/03/jack-lew-were-going-to-hold-china-account...
Doesn't China's selling of USTs potentially help the scarcity of collateral issue, thereby making the UST market more stable? This actually might be a good thing from a market perspective, depending on who buys the collateral?
A mERE 100 billion a month?
That matches Draghi put of Euro QE.
Perhaps the real point of a 100 billion slae of U.S. treasuries is what is being done with the 100 billion China has turned into 100 billion of U.S. Cash. Where has it been put to use to support the Yuan. Perhaps much of it has been used to purchase GOLD? Does someone have the answer to this simmple query?
Perhaps the real point of a 100 billion sale of U.S. treasuries is what is being done with the 100 billion China has turned into 100 billion of U.S. Cash. Where has it been put to use to support the Yuan? Perhaps much of it has been used to purchase GOLD?
Does someone have the answer to this simmple query?
Q tightening is what my post pointed to...
If the UST is now naked as the creditor states divest themselves of it, Yellen will really have to make Jackson Hole a new mountain of fiat "rise and shine".
So China (finally) purges the sewer of shaman bankster rigged market "capitalism" of the Anglozionazi Empire of Chaos by flushing its filthy wads of I$I$ terror backed petroscrip dollahs clogging the septic tank in the Potemkin Village of USSA. Only question is why it all took so long considering the caked up john has been overflowing for decades.
First, plunge vigorously, then flush and run for the hills!
In other news, the bullion banks have canceled their holiday and are dumping 94 billion paper shorts on gold and silver today.
Up my FAFSA Yellen Mother F'kr. I think the globalism idea was stupid. The banksters built up the entire world and made half of it powerful enough to fight a world war against itself. I think we should end the reign of banksters. They fucked up.
What's the US going to do if they cannot force China to surrender?
The demon pope isn't going to help you.
There is no US government other than a global economic group of interlinking corporations and organizations. They will probably take to the bunkers in New Zealand and leave the US to be bombed.