In this episode of Finance University Pual and I discuss the recent Honey Badger Gathering, as well as the extreme gaslighting by the US Treasury Department which is planning to buy back(!) Treasuries in order to “reduce volatility in their cash balances.”
LOL
The US government is going to have to borrow $2 trillion in 2024, but they’ve got the audacity to explain they are going to buy back their own Treasury paper to help “reduce volatility in their cash balances.”
This would be like a coke-head selling off parts of their last gram of coke to help “reduce volatility of their supply.”
Clearly, the explanation is complete garbage and total gaslighting, so what is the program all about? My money says it’s another taxpayer-funded bailout of banks and Wall Street. Tune in to hear the details…
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Great “suggestion,” there, guys.Use fiatskies to buy real money, on the dips! The old pre-64 quarter still buys a gallon of gas,or a gallon and a half of milk, as always.
Hit the nail on the head with sending money to Ukraine but not paying the people’s pension. Question is, when will people not just wake up but act and what is the most constructive way to act/react?
Absolutely that crash happened before covid - that’s exactly why they needed covid to happen and that’s why another covid crisis is going to take place in October. Congress has already written the bill to bail Wall Street and the banks out again as Q3 will be horrible and Q4 will be catastrophic. This is in stone. After that, the real estate market is on the verge of going fractional so even more housing will be ripped from home owners and turned into investments. This is a total scam and we are at the end of being able to sustain it. Every inner city you want to name is the result of this insanity and what they will turn into after the next one is kinda more than I want to think about.
Could The Administration Use This To Delay The Recession Past The Election?
I think that the Treasury buy-back scheme is a clever ploy for the administration to be able to spend more money than Congress has allocated. Here is a stylized example: Suppose a bond with a par value of $1 billion today has a market value of only 50% of that. So they buy back this bond for $500 million, and then issue a new bond for $1 billion. They will then have $500 million more to spend. The total US debt has not changed, assuming that it is shown as par value rather than market value, but future administrations will be burdened with higher interest rates. Is this correct? At scale, could this be a way for the administration to delay the recession past the election?
If they buy back the bond at market value, and not par, then they will be exchanging a bond with a lower coupon for a future bond with a higher coupon.
For example, govt buys back a $1000 face bond bearing 2.5% yield for $500. Normally they’d have to pay $25/year in interest. But, soon enough they have to issue a $500 bond to cover the cash used up. Because that one has a yield of %5 the future interest payment is identical at $25.
So that’s a wash.
Example 2: The government is actually dumb and overpays. It buys back a 2.5% bond for its par value of $1000. In the future, it has to reissue that $1,000 bond at 5%, so now its interest costs have spiked by 100% for the same borrowed money. But the big bank that sold the government the bond for an above-market rate is thrilled. The taxpayer gets hosed, again.
Those are the two scenarios. However, to be complete, scenario 2 doesn’t have to ‘go off’ at par, it could be anything higher than the current market rate for that bond and the banks would still win and the taxpayers would lose.
Would love some more content in these interviews. For a few suggestions how about interviewing Brett Weinstein, Scott Ritter, Dr John Campbell(UK), Senator Gerard Rennick(AUS), Professor Robert Clancy(AUS), Willem Middelkoop(NL), Dr Sam Bailey(NZ), Neil Oliver (UK), Dr Aseem Malhotra(UK), Ed Dowd, Catherine Austin-Fitts, Curtis Stone for a range of more diverse subjects and viewpoints.
I’m curious what your opinions are on emergency fund construction. In other words, the status quo is “emergency fund equals currency”. In other words, a 6-month emergency fund means you have 6 months of US dollars available somehow. But I question that presumption, especially in this inflationary epoch we’re in. Or in any fiat regime, for that matter. In my opinion (not financial advice), 1-3month of currency and 4-8months of a basket of assets that could be liquidated could be considered a ‘6-month’ emergency fund. At least that’s how I think about it. Have not seen someone break that down, though.
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If the debt is shown at its face value instead of its market value, the total amount of debt hasn’t changed, but future governments will have to deal with higher interest rates.@drift boss