Glenn, I'd like to comment on one aspect of this post, Message 20651958
I'll call it "the Great Bag Holder" question. Although there are lots of eventual losers in this current maladjusted arrangement, in a Big Inflation it seems that the Asians (especially the Japanese(*) are the biggest Bag Holders. Now, I don't really understand the Japanese mentality or mindset, so perhaps I'm at a disadvantage in SWAGing the final outcome. But if normal, rational self interest prevails, then I would expect the Japanese to take steps to preserve the Old Maid cards (US debt) that they are stuck with. Perhaps they will be the real Toto, running loose in the Land of Oz?
Message 20657373
That would suggest that it will be them, not necessarily the US, who would be the ones to set US monetary policy, including normalizing interest rates. Actually I think they already do set defacto US monetary.
It would be easy to do too, just pass on Treasury and Agency auctions, and that can be tracked. Of course the Fed, still has the ability to monetize debt, so it could end up being a Titan struggle. One twist of this might be the Asians selling back Old Maid Cards, while the US monetizes it, that would be ugly. Once again, easy to follow in real time on a weekly basis. In fact it might start looking like last week:
Foreign custody holdings US debt -3,907
US Gov securities bought outright +911
Note the bought outright doesn't cover the difference, that's why you had several permanent injections to da boyz.
(*) I think the Chinese are on a different track, (note second set of numbers is a typo. should be 03-04)
Message 20657067
already much more involve with Flucht in die Sachwerte reallocation away from USD. That's one reason we have $52 oil. |
