Posted on 03/16/2016 4:26:38 PM PDT by SkyPilot
In a bid to raise cash, foreign central banks and government institutions sold $57.2 billion of U.S. Treasury debt and other notes in January, according to figures released on Tuesday. That is up from $48 billion in December and the highest monthly tally on record going back to 1978.
It's part of a broader trend that gathered steam last year when central banks sold a record $225 billion of U.S. debt.
"Foreigners have no longer been our BFF when it comes to buying U.S. Treasuries," Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a client note.
So what are foreign central bankers doing with these piles of cash? They're mostly using the funds to stimulate their own economies as the global growth slowdown and crash in oil prices continue to take their toll.
For instance, China has been liquidating its holdings of foreign debt to pump money into its slowing economy, plummeting currency and extremely volatile stock market. China, the largest owner of U.S. debt, trimmed its Treasury holdings by $8.2 billion in January, the Treasury Department said. The actual decline was likely larger considering China reported selling $100 billion of foreign-exchange reserves in January.
(Excerpt) Read more at money.cnn.com ...
</rolling eyes>
The next big Stock Market collapse, long forecasted, may finally be closer to reality.
I think more people would have gotten out by now, but the pull of money is a very strong emotion and temptation.
I can’t blame them. Obama will have added at least $11 trillion to the debt before he leaves. We’re broke. My guess is we’ll see a devaluation of our currency within five years.
The beginning of the end.
The Fed always buys it. At low rates. What a deal!
Your point highlights the profligate spending and budget insanity. However, I think it is something to pay attention to, but not worry. Since they sold the instruments, that means there is a willing buyer. There are always institutions, states, etc., whose portfolios have US debt.
While US debt isn’t returning the highest rate, it is a very known quantity, and quality. US insurance companies hold US bonds until maturity (10, 20, 30 years). Few other institutions hold bonds to maturity for various reasons.
Feds will print
Being a reserve currency means never having
to say, “I can’t afford it.”
I remember the U.S. unilaterally abrogated the Bretton Woods agreement in August 1971 and allowed the dollar to float in relation to the trading whims involving all paper currencies. When the Treasury in 1964 began producing dimes through dollars without silver, silver coins disappeared from circulation. Until about 1968 people could still trade their Federal Reserve notes for Silver Certificates and trade those for packets of silver from a Federal Reserve Bank. At this time the working careers of a single generation comprise the totality of comprehension for how the international community was to function economically without important currencies emerging from things people can touch and see.
An individual country might think they have a solution, but they know they must also survive during the resulting chaos as all countries seek similar solutions. They see the daunting specter of disaffected holders sending 10’s of billions of dollar denominated bonds to the marketplace when there are no buyers unless prices are severely discounted. They are also frightened by the image of a devastated U.S. economy, because feeding the insatiable desires of U.S. consumers has been a mainstay of their prosperity. I imagine something like the final scene in “The Good The Bad and The Ugly”. The members of the G-20 are standing in a circle with open graves behind them. They are all contemplating how they are going to successfully outdraw the other nineteen members and survive the resulting mayhem, which Lee Van Cleef’s character did not. The only thing needed now is a typical expression of human frailty to commence the cascade to catastrophe.
We should be toast along with the rest of the largest economies.
The Good, The Bad and the Ugly: http://www.youtube.com/watch?v=sXldafIl5DQ
Tax Rate to Balance Budget: http://www.taxfoundation.org/research/show/25985.html
Fy2010 Spending by Category/Department: http://en.wikipedia.org/wiki/File:Fy2010_spending_by_category.jpg
FY2010 Spending by Function: http://en.wikipedia.org/wiki/United_States_federal_budget
Policy Basics: Where Do Our Federal Tax Dollars Go? http://www.cbpp.org/cms/index.cfm?fa=view&id=1258
U.S. Funding for Future Promises Lags by Trillions http://www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm
What if the Treasury Defaults: http://online.wsj.com/article/SB10001424052748703864204576317612323790964.html?mod=WSJ_Opinion_LEADTop
CBO outlook on long-term debt worsens: http://thehill.com/blogs/on-the-money/budget/167781-cbo-outlook-on-long-term-debt-worsens
U.S. Debt Clock: http://usdebtclock.org/
Understanding the Budget Control Act: http://keithhennessey.com/2011/08/01/bca-understanding/
S&P Downgrades the U.S. Debt Rating: http://www.housingwire.com/2011/08/06/full-text-sp-downgrades-the-u-s-debt-rating
Cut, Cap and Balance: http://conservativedailynews.com/2011/07/cut-cap-and-balance-full-text/
Federal Budget History: http://www.whitehouse.gov/omb/budget/Historicals
S&P Downgrades U.S. Debt Rating — Press Release
http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s-debt-rating-press-release/
Baseline Budgeting
http://en.wikipedia.org/wiki/Baseline_(budgeting)
ADDED 8/9/13
Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation? US in a Minsky Bubble?
http://globaleconomicanalysis.blogspot.de/2013/08/fed-balance-sheet-vs-stock-market-will.html
Some thoughts on ‘international reserves’
http://www.plata.com.mx/Mplata/articulos/articlesFilt.asp?fiidarticulo=216
Disconnected Central Banks Can’t Last Forever
http://finance.townhall.com/columnists/mikeshedlock/2013/08/09/reflections-on-paper-reserves-of-central-banks-n1660091?utm_source=thdaily&utm_medium=email&utm_campaign=nl#
Money Morning Interview with Jim Richards
http://www.bing.com/videos/search?q=money+morning+interview+with+jim+rickards&FORM=VIRE1#view=detail&mid=696ACDBB0651B4D766F2696ACDBB0651B4D766F2
Business 50 Facts About The U.S. Economy That Will Shock You
http://www.theblaze.com/stories/50-facts-about-the-u-s-economy-that-will-shock-you/
Central Banks Have Become A Corrupting Force — Paul Craig Roberts and Dave Kranzler
http://www.paulcraigroberts.org/2015/08/23/central-banks-become-corrupting-force-paul-craig-roberts-dave-kranzler/
The Velocity of Money: Economy About To Collapse
http://www.americanthinker.com/articles/2016/01/the_velocity_of_money.html
I didn’t see in the article who is buying the Debt. It’s a good sign that our Debt can be traded.
Optimally the FED should be trying to buy up deep discount debt, as in some cases can end up at a negative interest rate — meaning somebody paid us to borrow money from them, but politicians aren’t wired that way.
So Vote Trump.
At this rate, the only way we can pay off the national debt is to seize all assets of liberals, followed by returning to the gold standard and eliminating the Federal Reserve.
I am convinced that is the present strategy of the elites in Washington: So what if we’re bankrupt, so is everyone else and we’re the biggest bankrupt so we’ll be the last ones standing.
I’m positive you are more well-versed on the matter, but I thought I’d share a recent observation of mine (if it’s been said before, I don’t consciously recall it...)
The “great recession” stock market crash of 2007-2008 coincidently happened just as the earliest baby-boomers were reaching 62....in effect wiping out huge portions of their life-long savings. Followed by the collapse of the value of their homes...
Now again, 8 years later, a similar fate seems to be happening again as these same boomers are reaching 70 (many that were nearly devastated in the ‘08 snafu decided to go ahead and work until they were 70 to recapture some of their losses...)
Theory 1: Coincidence.
Theory 2: Timing is everything.
Theory 3: No coincidence at all, manipulation is everything.
FWIW.
I would speculate that central banks did not have enough funds to bail out everyone and decided private savings drew the short straw. In regard to any financial problems Boomers have to face, I think they had it coming whatever the cause.
They will also be among the first to face the bewildering consequences of Obamacare "death panels; but that is another really long essay.
Here is a copy of the letter I wrote about my generation a few years back.
From: Retain Mike
Sent: Wednesday, November 28, 2007 9:37 AM
To: WSJ Letters
Subject: Baby Boomers: The Worst Generation.
Instead of Boom! Tom Brokaw should have titled his book The Worst Generation. The focus of society since WW II has been on how to make Baby Boomer passage through life ever more comforting and affluent. Great perplexity now exists about what enabling behaviors to legislate concerning health care and Social Security to ensure them a retirement free of financial worries and moral concerns.
Baby Boomers have always possessed a great social conscience carefully directed into areas bringing them peer acceptance by costless displays of compassion. Their hijacking of the civil rights movement provides a clear example. The hallmark legislation affirming human equality was the Civil Rights Act of 1964, which became law just as the first Baby Boomers graduated from high school. The generations, which came to maturity in the 30’s, 40’s, and 50’s, are the ones, which paid the price and triumphed against formidable opposition.
Baby Boomers have an unprecedented focus on self. With that generation coming of age, the divorce rate first exceeded the marriage rate, and there was first enacted a nationwide Federal Support Enforcement program to track down deadbeat dads. In the 30’s, 40’s and 50’s syphilis and gonorrhea were the widely known venereal diseases. Now over thirty diseases are transmitted, and only professionals can keep track.
The Baby Boomer generation has achieved self-actualization through moral exhibitionism and militant self-absorption, and has strained the survival of this country as much as our Civil War.
Nonsense. You can’t lump people together based on when they were born. Liberals create competing groups. Conservatives believe in freedom and individual responsibility.
bkmk
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