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Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History

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Thu, 10/13/2011 - 18:10 | 1771421 Eireann go Brach
Eireann go Brach's picture

Timmayyyy get on the phone with Hewlett Packard and order a new round of printers!

Thu, 10/13/2011 - 18:18 | 1771456 I think I need ...
I think I need to buy a gun's picture

from greenspan himself circa 1966

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

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Thu, 10/13/2011 - 18:24 | 1771478 dlmaniac
dlmaniac's picture

Who needs foreigners when you have BEN-52 carpet-bombing the treasury market?

Thu, 10/13/2011 - 18:30 | 1771490 Kitler
Kitler's picture

Shit ----> Fan.


Thu, 10/13/2011 - 18:33 | 1771513 redpill
redpill's picture

Biggest bubble ever.  Is it finally ready to pop?

Thu, 10/13/2011 - 18:48 | 1771576 spiral_eyes
spiral_eyes's picture

hate to say i told you so bitchez


Thu, 10/13/2011 - 21:55 | 1772030 Ahmeexnal
Ahmeexnal's picture

so it has begun...the snow flake that will turn into an avalanche has already landed on the snowy slope.

yet, the sheeple party like it's 1999:


Fri, 10/14/2011 - 01:21 | 1772527 rcintc
rcintc's picture

I think Homer says it best...


Thu, 10/13/2011 - 19:33 | 1771704 jomama
Thu, 10/13/2011 - 23:18 | 1772210 Phil Free
Phil Free's picture

lurid bubbley, budy

Thu, 10/13/2011 - 19:45 | 1771759 Triggernometry
Triggernometry's picture

Grab a poncho first

Thu, 10/13/2011 - 23:13 | 1772195 TheFourthStooge-ing
TheFourthStooge-ing's picture

Grab a poncho first

A Mexican poncho or a Sears poncho?


Fri, 10/14/2011 - 06:39 | 1772725 BandGap
BandGap's picture

Sears poncho, no foolin'.

Thu, 10/13/2011 - 21:58 | 1772034 upWising
upWising's picture

Kitler:  decorum, please.


OSHA-approved crash helmet

Rosary (optional).

Fri, 10/14/2011 - 06:52 | 1772739 mick_richfield
mick_richfield's picture

Fewmets -----> Windmill

Thu, 10/13/2011 - 20:52 | 1771922 mailll
mailll's picture

I keep mentioning it over and over again on zero hedge that if foreigners aren't buying our treasuries, then who is?  It's the printed money by the Federal reserve.The problem is that if they can keep our interest rates on our US Treasuries at rock bottom by buying them, and that they have this much control over our Treasuries, then they can very easily crash our bond market as well whenever they decide to.  They are not on our side, but on the side of evil.  Please beware of the person in the drivers seat.  He can crash the vehicle anytime he wishes. I can't emphasize this enough. 

Thu, 10/13/2011 - 21:09 | 1771936 Republicae
Republicae's picture

Quantitative Easing my friend, the FED is buying Treasuries, which are essentially worthless paper securitizing the other worthless paper we call Federal Reserve Notes. Fiat paper money substitutes backed by fiat paper Treasuries, which are in turn backed by the fiat paper money substitutes, which are backed, by get this, the Full Faith and Credit of the United States of America. Hmmmmm...nothing like honest money is there?

It's almost as good of a scam as the Social Security Trust Fund, which doesn't have a single dollar in it, only very special government securities. What makes them so very special? They are unmarketable securities...can't be sold. More fiat paper, worthless substitutes for assets. 

In a very real sense, the monetization of debt was a stoke of genius, it allowed the governments of the world to operate well beyond what they would have been able to do on Sound Money. All fiat currency, being double liabilities are a wonder to behold, especially when the system is dying. Too bad so few understand that gold, and silver, are double assets...it makes all the difference in the world when it comes to monetary potency and economic health.


Do you smell it? The fish is rotting from the head!



Thu, 10/13/2011 - 23:02 | 1772173 Snidley Whipsnae
Snidley Whipsnae's picture


"In a very real sense, the monetization of debt was a stoke of genius, it allowed the governments of the world to operate well beyond what they would have been able to do on Sound Money."

No expanding empire can function on a sound money foundation. Up front money is needed to start a war and a great deal more money is needed to fund long multi front wars.

Greenspan's comments about welfare statists aims and fiat vs gold were good as far as they went. What Greenspan did not address was the need for fiat currency/gov bonds to finance wars. History shows that countries with sound money switch to fiat quickly in wartime.

Empires and fiat currencies go hand in hand.

Thu, 10/13/2011 - 23:24 | 1772230 Oh regional Indian
Oh regional Indian's picture

Excellent point SW.

Fiat is the enabler of empire. Or rather, debt is, but Fiat makes it all go around.


Fri, 10/14/2011 - 02:47 | 1772597 Popo
Popo's picture

And a corollary argument is:  All empires require fiat.   The expansion of fiat is always a self-limiting and ultimately-doomed exercise  -- ergo all empires are self-limiting and ultimately doomed. 




Fri, 10/14/2011 - 06:56 | 1772742 mick_richfield
mick_richfield's picture

Another corollary is that fiat is the death of the Republic.

The Powers do not need to even simulate democracy if they can create their own 'money', and force us to accept it.

Thu, 10/13/2011 - 23:37 | 1772265 Republicae
Republicae's picture

My point exactly. Without fiat, the government is limited and thankfully so. The fact that during war many countries have, in the past, resorted to the suspension of specie, is indeed evidence that while sound money does restrain, the necessity for even more restraint is needed. The lack of public understanding, or perhaps the gullibility of the public is also a factor that allows government to go beyond the law, suspending specie in order to fund its wars, wars that are usually purely interventionist in nature and rarely defensive.

Fri, 10/14/2011 - 06:30 | 1772713 nmewn
nmewn's picture

I am heartened others understand the basic thing.

Without unbacked fiat, there would be no money for wars or welfare. We need to decide.

Thu, 10/13/2011 - 18:24 | 1771479 Don Birnam
Don Birnam's picture

"Foreigners:" Does that also include that El-Arian chap at PIMPCO ?

Thu, 10/13/2011 - 18:40 | 1771544 Fish Gone Bad
Fish Gone Bad's picture

He is only 42% foreign to me, but his name sounds 100% foreign to most people.

Thu, 10/13/2011 - 19:52 | 1771781 Biosci
Biosci's picture

42%?  Three-sevenths?  Apparently one of his great-grandparents was a hermaphrodite?  Christ, what amazing info you can get on ZH.  I f'ing love this site!

Thu, 10/13/2011 - 20:11 | 1771829 whisperin
whisperin's picture

T thought that was an airline!!!

Thu, 10/13/2011 - 18:34 | 1771516 nyse
nyse's picture

Good. Thank you.

Thu, 10/13/2011 - 19:46 | 1771768 acabrer
acabrer's picture

HEY! (leaning in trying to hear over party noise) FANCY MEETING YOU HEAR! COOL PARTY UHH! ILL BUY YOU A SHOT!

Thu, 10/13/2011 - 18:59 | 1771602 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Too bad Greenspan sold his soul.

Thu, 10/13/2011 - 21:01 | 1771943 Republicae
Republicae's picture

Greenspan, was bought and paid for...he'll rot in Greenbacker Hell.

Thu, 10/13/2011 - 23:15 | 1772201 TheFourthStooge-ing
TheFourthStooge-ing's picture

Too bad Greenspan sold his soul.

Whatever he got for it was more than it was worth.


Fri, 10/14/2011 - 02:51 | 1772605 Popo
Popo's picture

Ayn Rand got to him.  He started to believe in the always convenient lie that market participants are self-governing and always operate in the interests of self-preservation.

...that is until Greenspan gave his famously pathetic "I found a flaw" speech to Waxman.   At which point, Greenspan's career should by all rights have ended -- and he should forever have been remembered as a fraud of historic proportions.

But along with accounting standards, capitalism, constitutional democracy and other extinct concepts -- we have also retired the concept of failure.


Fri, 10/14/2011 - 00:11 | 1772351 Calmyourself
Calmyourself's picture

Who the heck reads that quote, looks at Greenspans actions and red flags this comment??  Clearly the Stasi has penetrated this freedom cell..

Fri, 10/14/2011 - 03:03 | 1772611 Gief Gold Plox
Gief Gold Plox's picture

Now and then I do. By mistake. Sitting on the porcelain throne, reading ZH... with the f-ing touchscreen phone you need to be very accurate to vote up, missing the down arrow. I'm not saying I downed this exact comment, but it happens every so often.

Fri, 10/14/2011 - 01:24 | 1772529 Waffen
Waffen's picture

Just a theory.. But what if, just what if, this has all been Greehspan's plan to implode the system so we can return to a gold standard and kill the banks?

Fri, 10/14/2011 - 05:22 | 1772679 Manipulism
Manipulism's picture

Bix Weirs theory.

Thu, 10/13/2011 - 19:38 | 1771731 decon
decon's picture

This could also be attributed in large part to EU banks.  Just yesterday they announced they would not seek capital in the markets but through liquidation.  Since they announced their strategy yesterday it means they had already largely made the moves.

Thu, 10/13/2011 - 22:41 | 1772109 TrulyBelieving
TrulyBelieving's picture

Written in 1966 Allen Greenspan....Just wondering exactly who, by name or organization, are these "welfare statists"? If I got any understanding at all, that be the enemy.

Fri, 10/14/2011 - 00:15 | 1772367 Prometheus418
Prometheus418's picture

Circa 1966, Greenspan was a follower of Ayn Rand.  Rather than writing a lot here, I'll just direct you to her body of work for the answer to that question- she used that exact term extensively.


Fri, 10/14/2011 - 00:34 | 1772412 AustriAnnie
AustriAnnie's picture

Unfortunately, because Greenspan spoke out in defense of free markets, then actually in action supported corporatism and the Federal Reserve ponzi, many people are now confused between the two.  Thank you Greenspan, for not only selling out your soul, but also doing it as a corporatist under the guise of a free marketer.

Fri, 10/14/2011 - 12:48 | 1774234 tamboo
tamboo's picture

ATLAS SHRIEKED: Ayn Rand’s First Love and Mentor Was A Sadistic Serial Killer Who Dismembered Little Girls

well her birth name was rosenburg or some such, jews love goy killin joo serial killers.

Sun, 10/16/2011 - 09:25 | 1778614 PAUL LEO FASO
PAUL LEO FASO's picture

Notice how we are now poised to carpet bomb Iran because it is selling its oil without accepting the Federal Reserve Note?   Notice the internal combustion engine has been under your hood for over 100 years when every other piece of technology has changed on planet Earth?  Notice the private Federal Reserve Bank has been sub-contracted by the Congress for 100 years to run our money?  Notice the "RESERVE CURRENCY "to die for is the Petro/Dollar worthless fiat authorized the Congress who have abrogated their right and duty to "coin and regulate" money?  Notice how oil is measured in dollars not gold? Notice any monumental criminality here?  Notice the plan below to stop this here and now;




Thu, 10/13/2011 - 18:29 | 1771496 Nascent_Variable
Nascent_Variable's picture

Don't worry.  I'm sure Geithner will release a statement any minute that there's absolutely no risk of China and others dumping Treasurys.  Problem solved.

Thu, 10/13/2011 - 23:24 | 1772228 TheFourthStooge-ing
TheFourthStooge-ing's picture

Don't worry.  I'm sure Geithner will release a statement any minute that there's absolutely no risk of China and others dumping Treasurys.

Good God, NOOOOOO!!!

That would pretty much guarantee that it was Fuckin' On like Donkey King Kong.

Problem solved.

...yes...it's all so clear now........watch more television, and avoid panic buying....now I understand...


Thu, 10/13/2011 - 19:17 | 1771662 eureka
eureka's picture

I have been telling my fellow zerohedgers for a while that US needs China more than vice versa - and that China at some point may choose to dump its $3TRIL $US paper.

Well, here it is, the warning - and the proof. US is going down - in a short mattter of time.

Thu, 10/13/2011 - 21:29 | 1771993 kito
kito's picture

Wasn't it a few days ago that bernanke gave bonds away to a sold out crowd?

Thu, 10/13/2011 - 21:59 | 1772037 Ahmeexnal
Ahmeexnal's picture

just as a snakeoil salesman has his friends "buying" from him frantically, thus the idiotic fools who believe they are missing out on a wonderful product gladly exchange their silver schillings for a flask of putrid rat oil.

Thu, 10/13/2011 - 19:22 | 1771668 Perpetual Burn
Perpetual Burn's picture

More like cotton :)

Thu, 10/13/2011 - 18:12 | 1771429 tim73
tim73's picture

But but but...USA is SAFE HAVEN! Even JESUS would DEPOSIT! USA! USA! USA!


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