Posted on 08/25/2026 8:52:49 AM PDT by ransomnote
Financelot
@FinanceLancelot
Scott Bessent is choosing to fight the WW3 currency battle now because the 2020 lockdowns forced the entire world to enter the same 5 year debt cycle.
Global debt is financed in Dollars.
Every home, business and nation loan that was taken out in 2021-2022 now must be rolled over at significantly higher rates.This will compound the Dollar shortage at the precise moment Scott Bessent is threatening to cut off financial institutions and nations from the supply of Dollars.
Starving a nation of Dollars forces them to liquidate their forex reserves, including U.S. treasuries significantly below the face value as they face sovereign debt crises.
This will allow the U.S. to buy its own debt for pennies on the Dollar and take it out of circulation.
ransomnote: Grok was asked if the reasoninging in the post is valid. Grok's response posted below.Financelot
@FinanceLancelot
·
14h"You described this as economic D-Day, why not impose the sanctions today?"
Scott Bessent: "Why would I want to blow up the global financial system?"
"If people don't want to meet our expectations, then they should expect to leave the Dollar system."
Dollar shortage anyone?
Grok
@grok
6hBessent's Aug 24 quotes on Iran sanctions and the dollar system are accurate. COVID debt created a refinancing wave now at higher rates, with much EM debt in dollars that can tighten shortages under stress. Forced reserve sales can discount Treasuries, and buybacks retire them. But the deliberate "WW3 currency battle" timed for pennies-on-dollar US purchases is speculative without supporting evidence.
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I will need a translation. Is the debt referred to here the same as the $40T debt? I dont see how we buy back our own debt. I can see how we reduce debt to other nations by basically telling other countries “you will never get the XXX dollars we owe you so will you take X dollars now?”
“forced the entire world to enter the same 5 year debt cycle....”
Study financial history, act on what you learned, and you will make it through just fine.....PS: history records over 3,000 plus paper currencies have come and gone.
“Pennies on the dollar”
Really?
* Realize Trade and Commerce has existed for 5,000 years and there is a huge difference between “ money” and Wealth.
They have ALL come and gone.
The dollar is just the most recent. 80 years is a good run based on historical precedent.
We need a “good” war to allow debts to be cancelled or defaulted. (I am being sarcastic...kind of.)
Every President is keen on making sure the default doesn’t happen on their watch. No matter that this has been coming since Nixon...whomever is holding the hot potato when it explodes is going to be blamed.
“I will need a translation. Is the debt referred to here the same as the $40T debt? I dont see how we buy back our own debt.”
******************************************************************
If we buy back $100 of existing debt for $60 obtained by new debt we’ve reduced our total outstanding debt by $40.
and yes history shows us it is a cycle repeated time and time againI know a guy his name is Martin Armstrong who traded currencies based on these "cycles" in the 1990s and lost $700 million doing it. That program that he used to trade these cycles is called "Socrates" and Armstrong still sells that as a $150 monthly subscription today.
I dont see how we buy back our own debt.
“The Treasury could use its near $1 trillion General Account to help fund its recently announced plans to increase purchases of government bonds, according to two senior Treasury officials.
Using the TGA would provide the Treasury with considerable firepower to influence long-term bond yields. The Treasury surprised markets last week with an announcement that it would be doubling the size of buybacks of off-the-run securities on the long end from $2 billion to at least $4 billion. ...”
They are buying our unsold / unwanted Debt Instruments ( US Treasury bonds, bills , notes)...the Snake is eating it’s tail...we have entered the dreaded Debt Death Spiral.
I get that, if the debt is owed to someone else willing to sell it at less than the amount. (I thought I expressed that). But is this the same debt as the 40T we watch on the debt clock? I thought we owe that to ourselves. Its convoluted to me.
We need a “good” war to allow debts to be cancelled or defaulted. (I am being sarcastic...kind of.)
Help an old guy out. If we starve a nation and its trade partners of dollars, does that run the risk of strengthening the Yuan and the PRC?
Thanks.
Following...
What was that book called?
The author is not clear
I believe he refers to "Eurodollars." There's a whole system of non-US, global banking and finance which is based on US dollars. Through loans, foreigners create US dollar "debt" offshore, outside the USA - although ultimately, transfers of those US dollars must pass through the Federal Reserve
For example, Saudis sell oil in US dollars. Their banks may hold US treasuries, or, they may loan those US dollars to others in the Mideast or South Asia. For example, let's say Saudi Banks finance developers to build a large shopping mall in Pakistan. The Pakistan developer then deposits those dollars in a Pakistani bank to draw-down during construction. The Pakistani bank now has a US dollar asset they need to manage. This offshore system has just created new US assets and liabilities. Economists consider this new "money." The cycle grows and continues.
Ultimately though, this system is controlled by the US Federal Reserve (who handles all dollar transfers and sets short-term interest rates, and US Treasury, who has political control over US economic policy.
If Pakistan does something Bessant doesn't like - well, then in a severe case Pakistani banks can't trade US dollars. What happens then? They are insolvent.
The author is saying a lot of loans interest rates were priced very cheaply. Now people involved in this offshore dollar system must re-fund themselves at higher interest rates. Or if foreign banks (and foreign central banks) were holding US treasury bonds as collateral, bought at 2%, when interest rates are now 5%, those bonds are worth less than before.
The author is pointing out that friendly nations can get temporary loans from US treasury. Unfriendly nations can not.
War. has longtime been the preferred method to clean up the mess made by bankers and politicians.
I thought we owe that to ourselves.
Our interest payments are now over $$$$$$$$$$$ 1 trillion. That is why many want to end theFederal Reserve.....remember before 1913 and the Fed creation, JP Morgan and other private banks loaned out money to the US government to keep our government from going into default.
In Trumps last term, he was rumored to defaulting on our debt to the Federal Reserve....in other words, declare a sort of “ bankruptcy” and renegotiate or default on what we owed to the Federal Reserve. It can work, however the USD will then become just another third world nation.
Thanks, still makes my head spin. But your explanation helps.
* if we defaulted or “ renegotiated” on our debt payments to the Federal Reserve, that would reduce our debt by 60 percent ( some say less, others say more).,....something to think about.
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