$256 Billion in US Treasury Auctions
We really don’t need to look any further than our own US treasury weekly auction schedule to find real inflation. The sheer enormity of our debt burden is constantly on display and this week continues this king debt dubious honor. The US Treasury auctions of 2Y and 5Y notes today and in total over the next 2 days, some $256 Billion dollars.
The 2Y note will come with a coupon of 5%, the first time in nearly 2 decades. We are sure the pension funds love this as they have spent a decade buying sub 1% US debt and now its time to bring those mismatched liabilities back in line. We do not think rates are too high, we do not think Powell and Co. are wrong for raising rates. What we do think was wrong was the timing and the veracity. If they would have just ended QE and ZIRP a lot earlier, years in fact, then we would have such a massive mismatch in organic economics and inflated economics.
We aren’t sure what their, the FRBs end game is here, but we do believe they want a few coupons to be > than 4 or 5% in order to ensure solvency for the majority of our future fixed income payers. This is just another subsidy from the govt (tax payers) to the future beholden payments receivers. We still believe this is a long shot, we still believe that they have gone way past the singularity whose only result is hyperinflation followed by massive deflation.
We see it now in fact, the signs are everywhere, the FRB continues to play the higher for longer game despite the fact that all the economic numbers have fallen off a cliff. It seems that the FRB is willing and ready to drive off the cliff and hope for a soft landing…whether they succeed or not, doesn’t matter to them, they always get paid, but for the general economy its reckless driving that usually ends in a fiery crash. Think about this the next time our overlords speak as they descend upon their lavish surroundings of Davos or Jackson Hole.
These are the people in charge of your future whether you like it or not, you think you have a choice in your future, you don’t. The value of your worth squarely rests on their shoulders, well and their printing presses, but even that is a facade. They can print all they want, the value and utility of what they are printing becomes more and more worthless…You want to have your cake and eat it too, more money and more wealth, well it comes at a cost of higher and higher prices which really should be looked at from the other lens. That other lens is DEVALUATION of your labor, your wages and your ability to obtain anything of value.
We have noticed that velocity of money has been on the rebound, this is something to watch, what this tells us is that money is being spent at a much faster rate due to rising prices and this is not the kind of thing that installs confidence in money, rather its the very nature of humans to act emotionally that truly drives the final stages of hyperinflation:
The reality of all this is, its not just the US, but China and Japan and even Europe for that matter, everyone is in the same boat and the US is probably in a much better position if you can believe it or not, but that doesn’t change the reality that if and when this whole debt system breaks, nobody will be immune and with it comes destruction, emotions and war, that is our biggest fear…you can’t eat money.
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