Posted on 05/20/2016 6:42:09 PM PDT by Lorianne
Central banks are dumping America’s debt at a record pace.
China, Russia and Brazil sold off U.S. Treasury bonds as they tried to soften the blow of the global economic slowdown. They each sold off at least $1 billion in U.S. Treasury bonds in March.
In all, central banks sold a net $17 billion. Sales had hit a record $57 billion in January.
So far this year, the global bank debt dump has reached $123 billion.
It’s the fastest pace for a U.S. debt selloff by global central banks since at least 1978, according to Treasury Department data published Monday afternoon.
Treasuries are considered one of the safest assets in the world, but some experts say a sense of panic about the global economy drove the selloff.
“It’s more of global fear than anything,” says Ihab Salib, head of international fixed income at Federated Investors. “There’s still this fear of ‘everything is going to fall apart.'”
Judging by the selloff, policymakers across the globe were hitting the panic button often and early in the year as oil prices fell, concerns about China’s economy rose and stock markets were very volatile.
(Excerpt) Read more at davidstockmanscontracorner.com ...
It nationalizes the debt, which would allow the feds to just cancel it, if they had to.
Buy it back cheap and reduce our debt total.
In all, central banks sold a net $17 billion. Sales had hit a record $57 billion in January.
So far this year, the global bank debt dump has reached $123 billion.”
Are Obama and his conspirators planning to destroy the economy on the way out?
“Are Obama and his conspirators planning to destroy the economy on the way out?”
Yep. And being Democrats, they’ll also be taking anything in the White House that isn’t nailed down!
“planning to destroy “
Yes, but he doesn’t have to try very hard.
If you saw a good company you had stock in get taken over by a board full of petulant retards, would you continue to invest in it?
I wouldn’t.
So central banks are selling. It is not clear, from my reading, who is buying. Hedge funds buying at a discount?
It’s a daisy chain, other central banks or more likely the Fed via proxy.
“Buy it back cheap and reduce our debt total.”
We’d have to borrow money to do it...
Just raise the price of food. That ought to get their attention.
red
...or print it.
I am sure they are buying at a discount. I suspect that the central banks expect US interest rates to rise and they are getting out now while they can. In addition the are effectively forcing rates up faster. Obama’s debt binge is about to come home to roost.
In the end, the market, not the Fed sets interest rates, I guess.
“In addition the are effectively forcing rates up faster.”
The bond vigilantes are flexing their muscles.
If they are selling, then someone must be buying. If they were selling into the market at a discount, then interest rates would be going up. But in fact, interest rates are very low, and have been pretty steady over the past three months.
Now let’s look at the theory that the Fed is simply creating money and buying the bonds in at a discount. If the US dollar were used only in the US, then this would cause inflation to rise. However, since the US dollar is a global reserve currency, then there might be little effect. We would print dollars and hand them to Saudi Arabia. They would buy food from Europe in dollars, and Europe would turn around and buy oil from Saudi Arabia in dollars.
Of course, in theory, the chickens should come home to roost, since the US dollar is only valuable as a world reserve currency because it can be used to buy goods and services in the US. But if foreigners holding dollars started to buy goods and services from the US, then our economy would be stimulated by the additional business. There might be some inflation, but that would be accompanied by a business boom.
I find 1978 to be interesting. It seems 2016 might be our 1980.
When you buy it back “cheap” the effective rate goes up. That means the rate at the next auction goes up.
And then we are screwed.
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