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US Treasury: China continues to sell US debt, the US may default in October, a large amount of gold arrives in China, while US GDP reaches 125%. This also shows that the US economy is very dependent on debt, and it is almost impossible to move without debt. In this regard, billionaire Jim Rogers has repeatedly warned that the United States is the most indebted country in the world, and the US economy is saddled with debt in all aspects, and it will eventually pay a price. As expected, things are indeed cutting-edge.
U.S. Treasury Secretary Rao Ming said on September 8 local time that if the maturity debt ceiling is not raised, the United States will default on its national debt in October. He predicted that the U.S. Treasuries could run out in October. This will lead to a financial crisis. In fact, this is the second time the U.S. Treasury Department has issued a warning. Back in June, Yellen warned that the U.S. would soon run out of money, threatening American jobs and savings.
Yellen believes that even if the debt ceiling is eventually raised, the credit of U.S. consumers and businesses will suffer, and the credit rating of the United States will be negatively affected. She also worries that defaulting on debt would call into question the credibility of the U.S. economy and the dollar. It is worth noting that the US debt ceiling expired on July 31. Over the past month or so, the U.S. Treasury Department has taken unconventional measures to secure a large U.S. deficit.
Among them, the balance of the US Treasury in the Fed system is constantly passively used. For example, the latest data shows that the general accounts of the US Treasury collapsed. According to the Fed's balance sheet last week, the US Treasury's ordinary account (TGA) balance at the New York Fed has decreased by $240 billion since the end of July to $297 billion. That said, the Fed has spent at least $240 billion over the past month or so, and only the same amount remains. On this trend, the remaining $297 billion of "surplus food" will soon run out, and it's understandable that the U.S. Treasury is concerned that it may soon run out of money. Because American deposits will consume the last "bullet". In response, WrightsonICAP chief economist Lou Crandall said the U.S. Treasury will run out of money by Oct. 22.
According to the exclusive analysis of China's BWC website, the above latest progress means that the huge deficit of the United States will be exposed to risks. You know, over the past half century, the U.S. economy has relied on the continuous issuance of U.S. Treasury bonds, which has made U.S. bonds the main monetary reserve assets of many central banks, and the huge deficit of the United States has been effectively guaranteed. In addition, the United States has fallen into the trap of high debt dependence.
Notably, debt ceiling stagnation began back in 2011, when Standard & Poor's downgraded the U.S. credit rating, causing the market to crash. In June and July this year, US market inflation data remained high above 5%, resulting in negative yields for 25 consecutive weeks after deducting monthly inflation data, which has reduced US bonds. Attractive. Bill Gross of the United States' "old debt king" recently warned that he is aggressively shorting U.S. bonds as the inflation data in the U.S. market reaches 5%. This worsens the economic pattern of U.S. debt and financial conditions.
Three days ago, the US news media "Newsweek" quoted expert analysis as saying that the US economy is in an extremely dangerous situation, and the United States is heading for market collapse. It's time for American families to prepare for the worst. The Wall Street Journal and other US media reported that the supply of consumer goods for many Americans has run out, and some people have begun to buy daily consumer goods such as daily necessities in large quantities. This is the second time U.S. consumers have hoarded goods since last March. This undoubtedly reflects the concerns of the American people about the financial and debt crisis, and also suggests that the US debt economic model may fall into a vicious circle that is difficult to heal.
On September 8, the American media CNN quoted expert Matt Egan as saying that a default on US debt would trigger a financial crisis. Once the U.S. debt defaults, Wall Street stocks will fall, U.S. retirement accounts will suffer, dollar values will erode, and America's financial reputation will suffer. On the other hand, even if the US debt ceiling is eventually raised, while the Fed has been one of its big buyers, many central banks around the world are also major buyers of US Treasuries. Therefore, once many central banks no longer favor U.S. debt as much as before, U.S. debt will fall into a more difficult situation than the ceiling.
TIC data released by the US Treasury Department shows that since 2017, global central banks have sold US Treasuries for many months in a row, selling US Treasuries as much as $2 trillion. Not only Russia, Turkey and other countries, but also major institutions, including US economic allies, are moving away from US debt, and demand for US bonds is declining. Because according to the previous statements of former Fed Chairman Alan Greenspan, sooner or later there will be negative interest rates in the United States. When that happens, many countries may pay the U.S. to hold U.S. debt. Obviously, the dollar, which continues to lose purchasing power, will accelerate the sell-off in US bonds.
Notably, a new development is that China has sold a total of $42.3 billion of U.S. bonds during four consecutive months of sales since June, according to the latest TIC International Capital Flows report released by the U.S. Treasury Department on August 16 (U.S. debt data delayed by two months). The total fell to $1.062 trillion. Since 2018, China has reduced its holdings of U.S. Treasuries by more than $100 billion. The sale far exceeds Germany's holdings of $81.6 billion in U.S. Treasuries.
The US financial website Zerohedge previously quoted expert analysis as saying that if the risk of U.S. bonds increases, some large buyers may liquidate U.S. bonds. The impact on the U.S. debt economy is unimaginable. Therefore, it is expected that the US debt ceiling will eventually be raised, because the farce of US debt ceiling maturity has been staged 78 times since 1960, and each time the US Congress has raised the ceiling as a concession solution. That is, the probability of default on the US debt is not high.
Not only that, the US Treasury Department has repeatedly hinted since last year that it may consider issuing 100-year US Treasury bonds, which also indicates that the US economy has or will continue to rely on debt. This means that the United States will not dare to withdraw any accounts, including US Treasury bonds, at any time. At the same time, it is very important to maintain good credit because it is the only way we can continue to borrow.
As Stuart Varney, host of Fox Business in the United States, points out, the United States has never defaulted on its debt. If so, who lent us (USA) money again? Therefore, the Fed has no right or dare to oppose the return of gold previously deposited with the Fed by central banks around the world. So far, central banks have transferred nearly 1,300 tonnes of gold from the Fed's vaults.
Notably, according to a subsequent report by Zerohedge, large amounts of gold were sent to the Chinese market because global central banks did not report some data on the acquisition of gold reserves to the International Monetary Fund or the World Gold Council. And there is nothing the Fed can do to stop the changes that have taken place in the global gold market.
In addition, data showed that mainland gold imports totaled 247 tonnes from April to June, up 232 tonnes year-on-year. U.S. financial website Zerohedge recently reported that Swiss gold traders began exporting gold to the Chinese market since February, and the latest batch of about 150 tons of gold arrived in China from Europe and the United States between June and July. This superimposed data shows that from 2021, there is indeed a large amount of gold being supplied to the Chinese market. (more than)
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