WHO’S BUYING THOSE BONDS?

This article was spotted and passed along by Ms. K.M., and it's in that "gimongous whopper doozie" category, and definitely one for all the financial sleuths out there. As one might imagine, I have my own high octane suspicions and speculations to offer, but first, the article. Nose to the ground, get ready, sniff:

Nobody's Buying US Treasuries Except "Other Investors" & Mutual Funds?

The article begins by asking the $64,000,000,000,000,000 - allowing for missing money, inflation, and lots of derivatives - question (and yes, I know that $64,000,000,000,000,000 is way more than the mere pocket change of $17,000,000,000,000,000 in derivatives that's been reported. But I'm allowing for (1) their penchant for non-stop lying (2) consistent fraud, (3) a repertoire of accounting tricks rivaling the processes of "renormalization" in physics, and (4), just as in physics, a stubborn adherence to "the model" and its cooked books, even though the cooked books are telling them there's something wrong with the model. Of course, that could be due to all the physicists that went into Wall Street and hatched the golden egg of "econophysics" and taught all those traders a thing or two about accounting tricks and cooking books... But I digress. Where was I?)

Oh yea.

The article begins by asking the $64,000,000,000,000,000 question and modeling the circumstances behind that question:

Today's question: Who buys and holds America's federal debt?

To begin, the chart below shows the growth of US debt (split between public marketable debt and non-marketable Intra-Governmental holdings) and Federal Funds rate since 1970.  Public marketable debt is skyrocketing while debt held by Intra-Governmental trust funds continues slowing.

Hereupon follows a couple of helpful graphs, and then more commentary:

But thanks to the quarterly publication of the Treasury Bulletin, the Treasury roughly details the changing ownership of US Treasury bonds in four buckets; the Federal Reserve, Intra-Governmental surplus trust funds, foreign held, and domestically held.

Below, which of those four buyers bought and held all that debt from 2009 through 2014 (blue columns) versus 2015 through 2018 (green columns).  The changing buyer types before, during, and post QE are quite radical.

Radical you say? what's so radical about this? Well after more breakdowns of who is buying what, we get this handy summary:

This means the domestic public has been left to purchase an unprecedented $3.2 trillion, or 84% of all issuance since QE ended.

Yup. You read that correctly, gentle reader: the numbers are saying that John and Susy Q. Public rushed right out to buy bonds when quantitative easing ended. Yes... I remember it well, the long lines, the endless waits to take home my bonds and coupons.

But wait, there's more! This massive figure also represents "other investors", and who might those be?

"Other Investors" vaguely includes:

  • Individuals
  • GSE's (government-sponsored enterprises; Freddie Mac, Fannie Mae, Ginnie Mae, etc.)
  • Brokers / Dealers
  • Bank Personal Trusts and Estates
  • Corporate and Non-Corporate Businesses
  • and yes, somehow the category titled "other investors" wasn't vague enough...even among the heading of "other investors" comes the bullet point of "other investors" which seems wide open to interpretation

All this can be seen in the Treasury Bulletin December 2018, page 51...Table OFS-2 Estimated Ownership of US Treasury SecuritiesSource; Office of Debt Management, Office of the Under Secretary of Domestic Finance.

HERE

Yes, that's right, under the heading of "Other Investors" there is a sub-category of "Other Investors"; call them "Other Investors, Squared." But wait, it gets even more fun, and here, I just have to cite the Zero Hedge article at length, because not even Hjalmar Schacht could come up with a convincing explanation for this one (or, maybe he could, but we'll get back to that):

Finally, perhaps the biggest question of all is who is buying all the middle and longer dated issuance? As QE was officially completing its taper in September of 2014, the spread between the 2-10yr and 2-30yr was 200 to 275 basis points, respectively. Simply put, the 2yr offered just 22% of the return of the 10yr and a 1yr offering less than 5% of the 10yr. If one wanted yield, one had to buy the longer dated issuance and could use significant leverage to take advantage of the fat spread.

However, by mid 2018, the spread of the 2-10 and 2-30 had plunged to just 30 and 45 basis points...and now on even the 1 year vs. 10 year is just 8 and 44 basis points. Heck, the 1 year is now offering 97% of the 10 year yield at just 10% the duration....and even a 1 month bill gets you within 21 basis points of the 10 year (offering 92% of the yield for less than 1% of the duration?!?).

Given this, only a buyer without profit motive would use leverage to borrow short to buy long dated debt with a negative return assured. (All emphases added)

Let that one sink in for a moment: "only a buyer without profit motive would use leverage to borrow short to buy long...with a negative return assured." So who could that be? Well, one possibility is that Johnny and Susy Q. Public felt such a surge of patriotism and noblesse oblige for the befuddled, struggling banksters, that they wanted to lend a helping hand, and mortgaged their, their children's, and their children's children's future and rushed out to stand in line for their bonds and coupons. If you believe that, I have a few suspension bridges for sale, cheap, which I'll be happy to finance with gold-backed bearer bonds (I'll meet you at the border of Switzerland and Italy, and I'll be carrying those bonds in a false bottom in my briefcase. Don't worry about the fact that those bonds are in denominations that supposedly never existed, or that they contain little spelling errors and so on. That's how we know they're authentic). All this is to that that it leaves a very different party and possibility which we'll get back to in our high octane speculation of the day. But Zero Hedge sees the same difficulty and implication that I do, and that by now, you probably do too, and here it is:

So, the Fed isn't buying and has in fact rolled off a massive quantity of mid duration US debt, foreigners aren't buying, banks aren't buying, insurers aren't buying, American's aren't buying savings bonds, state nor local governments are buying, and there is little to no spread to compensate any leveraged "investors" to buy mid to longer duration US debt.  Yet the Treasury tells us that "other investors" (suddenly became hyper-interested just as QE ended) and have come up with over $3 trillion in cash since 2015 to buy low yielding US debt like never before?!?

Is there any party (aside from central banks or central bank conduits) that could come up with such gargantuan quantities of dollars to yield so little and do it essentially without leverage???  Tell me again, who buys US Treasury's...and particularly who buys mid and longer duration US debt (responsible for setting the 30yr mortgage rate)???  Otherwise, this may sadly be the smoking gun of an active, accelerating, and perhaps unraveling Ponzi scheme?

Yes, it certainly could be the harbinger of a rapidly unraveling Ponzi scheme. Or it could be something else entirely; it could be yet another indicator that my long-ago hypothesized "hidden system of finance" is so awash in money, that it is buying up that debt for one reason, and, as Zero Hedge has intimated, that reason is not profit, which leaves only one other: leverage, influence, control, and power. I'm reminded of Dr. Tatyana Koriagina's article in Pravda shortly before 9/11, that the US would be attacked on its own soil by a powerful internationalist group of people with assets in excess of $300 trillion. In other words, the "other investors, squared" would be the sort of people with enough money to throw around, to buy lots of sophisticated technology, the kind that can pulverize buildings, burn down houses leaving surrounding forest intact, that sort of thing. Or to put it differently, that post-war hidden system of finance, and the players in it, are gobbling up more and more of the open public system. And, as Zero Hedge intimates, that could mean that the inherently fraudulent nature of that system could also be unraveling quickly. After all, why else would you now want to take the entire federal budget black?

Or to put all this high octane speculation "country simple," what we're looking at, I believe, is a bit of confirmation that there was and is such a hidden system of finance.

And it's now beginning to eat up everything.

See you on the flip side...

 

 

 

 

 

24 thoughts on “WHO’S BUYING THOSE BONDS?”

  1. trump knew that planes did not bring down those towers. interview here with him ON 911
    https://www.youtube.com/watch?v=Rt-ldMj9y9w&feature=youtu.be

    Of course I never expected the now completed Australian Royal Commission into the banking sector to reveal.
    1. who owns the ‘big four’
    https://www.creditcardcompare.com.au/blog/big-four-ownership/
    2. who really prints the money. who owns/controls the Reserve bank of Australia?
    3. who gets the interest that this sovereign state pays and what have they done to earn it? where does the interest money come from?
    4. how come Hjalmar Schacht (Freemason) was the one of the few not to be slowly hung at Neurmberg?

  2. as if they need an excuse or mechanism to crash any system and buy up the remains at pennies on the dollar, ruble whatever. and then rehypothicate it of course.

  3. Privatization is the new tribalization they make the godfathers and godmothers of crime look like pillars of society.

  4. What if the deep state is accumulating treasuries in preparation to “crash the market” before the next election. I think the biggest fear they have is an audit of the New York fed, and Trump has threatened to do this.

    1. I think all the comments are missing the point. As I noted in the comments section to the original ZH post, the most likely buyer is the ESF. That would be even more disturbing because it is just another form of debt monetization using hidden and/or stollen Government funds to artificially prop up the system. The ESF is variously estimated to control assets of between $10-50 Trillion so it can do a lot of buying before the collapse. Note also that, whilst the Fed recently appears to have sacrificed the USD in favor of the equity markets (The Fed “Put” now demonstrably being the third mandate of the Fed) yet recently, the USD has put on a rally for no apparent reason.
      So the same question must be asked: who is buying USD now that the Fed has ended its rate increase cycle and has indicated it will also end reduction of its balance sheet, thus having directly monetized $4 Trillion of debt?
      And the answer is probably the same although, unfortunately, in the case of forex we don’t have the same data to show the various buyer groups.
      Oh, and incidentally, under US law it is perfectly legal for the ESF to manipulate any “market(s)” it chooses to, for whatever reason(s). And, since the latest EO, it is also legal for USG to falsify its accounts providing the bottom line totals are correct, of course in the interests of National Security. So in future, more Trillions can “go missing” from USG accounts and henceforth there will be no way of identifying same.
      If the above is correct, this is an enormous fraud and scam being perpetrated on we the people. And it can’t end well.

  5. My understanding is that since the original QE, the Fed has simply been adding numerous zeros to the accounts of hedge funds and other central banks, etc, with the agreement that they use the bulk of the created funds to buy treasuries. At this point, the interest rate for treasuries has been fully gamed for a full decade, and is now entirely fictional.

  6. Robert Barricklow

    I was thinking of this last night as I was reading a sci-fi novel.
    A legend in xeno-sociology was not allowed to go public. Not even allowed to give students lectures any more, not for decades. The Fleet was worried his research would give the masses the ‘wrong idea’.

    As another character put it/And there’s nothing in all human space that scares me like human leadership scared of facts[their wars were destroying records].
    “They” were guarding their most ancient history secret: an economic warfare weapon.
    [Was that a Mussolini reference at the border].

    The privatization of the public sphere; leaving no elected officials nor accountability of/for & by the people.
    A globalized economic dictatorship of cyber bits?
    Protected by a private militarized police & private globalized paramilitary.
    A magik spell of deception may be cast[Microcosm & the Medium], so the masses are under an illusion of self governance.

    I haven’t finished the sci-fi novel as yet; but it does hint that this economic weapon has been continuously used to conquer vast regions of space, including man.

  7. By far the largest holder of US Treasury Bills is the Social Security Administration. (Jane and John Q. Public)

    This has been true since the changes in the 1980s, which allowed Reagan more capacity to borrow and speculate.
    Then most other presidents continued the trend.

      1. Robert B:

        Right, I just don’t see what this US national debt has to do with the Fed or the Fed’s Quantitative Easing.

        Clearly (in most cases) the Fed is using some other power/money source than US Treasuries to buy up derivatives (junk bonds) from the usual suspects.

        I’m sure that the “official” Fed records list some purchases that became T-Bills, but that’s for show. And such transactions don’t reflect anywhere near the scope of the Fed’s buybacks, and loans–backed who knows how–to the usual syndicates.

  8. We are witnessing the creation of the World Empire. I can’t remember where I heard this…

    ”Empire is a system created by men to protect the fallen’

    Paraphrasing…

    The fallen are disembodied entities who require fear as a fuel source. Low consciousness, terror, melancholy are fuel sources. The fallen are those who have fallen into de-spiritualisation and can be personified by Satan. They are not people as we are; they are not human. They assume human form. It’s a supernatural, paranormal thing that is happening. So empire is a strategy to provide energy or fuel for those entities that cannot ascend and if you’re not ascending you’re descending. Those who are descending and yet have a great power cannot leave this realm. They’re not quite dimensionally in the same space but they are here. Nothing can survive without energy or fuel … not even them. Our low consciousness fuels them and that is what empire does. So it gives dominion to those greedy humans who enjoy power, have great avarice, great depravity, great indecency. They can create their own kingdoms and domains as a reward for providing this fuel. The depraved and the de-spiritualised are the foot-soldiers for empire. There are many corrupt humans who have fallen into error into dysfunction into criminality and then into depravity.

    This kind of sums up the spiritual war that I’ve heard Dr. Farrell speak about and of course for me explains his final sentence…

    ”And it’s now beginning to eat up everything.”

    The question is…will it eventually consume itself?

    .

    1. Robert Barricklow

      All history is the history of empire – a bid for control of that greatest expanse of territory, the past.

    2. The generation of Loosh seems appropriate to mention here. This term was popularized by Robert Monroe, but the behavior probably goes all the way back to the Vampire archetype.

      As Monroe used it, Loosh was pain*-side energy/chi that was deliberately produced for consumption by various entities. Food, as it were. If you were sufficiently ‘clear’, you could draw life-energy directly from all-God. If you were unable to draw that energy (because of pride or injury), then a ‘substitute’ was needed. Somehow, it was discovered that pain-side energy/chi would suffice. ‘Farming’ of this energy was set-up on an industrial scale. Looking for a deep reason for the suffering in the world? Search your feelings, young Skywalker…

      There are two obvious responses to the above: (1) Starve them out. Feel-through your pain-side energy/chi internally rather than expressing it. The forgiveness of self/other that comes at the end ‘spoils their milk’, as that is positive energy.

      However, that allows the entities to produce Loosh elsewhere. So (2), as your training, skill, and ‘draw’ allows, get to the core of whatever is producing that behavior in the entity – and draw-it-out or transform it. When they can connect with their God-source, there is no need to generate Loosh. (Needless to say, have ‘back-up’: Higher Self, all-God, or reinforcement-Beings. Know your own limits…)
      .
      .
      * Pain (from rejection/non-recognition of some sort) produces the emotions of sadness, anger, fear, rage, etc. Pleasure (from acceptance/recognition of some sort) produces the emotions of love, joy, etc.

      1. in that case: God bless the looshers. may they become so blessed they turn into major dudes with half a heart.

      2. A bit of a synchronicity here. I’m currently reading ‘On Divination and Synchronicity’ by Marie-Louise Von Franz, a co-worker with C G Jung. She goes some way to explaining Jung’s concept of the ‘archetype of the Self’ (note the capitalisation of the word Self). The Self is the most powerful archetype, one which regulates and orders all the relationships of the others. The Self stands in the centre of all the other archetypes. Jung said the Self was mathematically ordered and has a rhythm, which Von Franz calls ‘the number rhythm of the Self’. I’m not yet understanding the number part though.
        So what you’re saying here makes sense and what I’m seeing is that it’s down to the individual to transmute the negative energy into positive energy and the Self then becomes the conductor of all the archetypal energies. Keeping time and rhythm.

        1. Another minor synchronicity; I actually have that book! (On the to-read pile – so many good books…)

          Well, we have the whole ‘problem’ of Inner and Outer. Entire treatises have been written on whether Outer even exists, and whether we can ever even distinguish between the two. (Even in brain processes, there are a lot of ‘transformations’ between whatever hits your eye & goes into the retina and a ‘picture’ that appears in your brain.)

          I was speaking of exterior entities who have developed a diabolical ‘feeding system’. Being nonphysical, they have to be handled in nonphysical ways. It is also, of course, possible that we are speaking of interior ‘artifacts’ that are confused as exterior beings. Either way, keep up the ‘transmuting’…

        2. nice. another book added to the pile. amazing how tough jung can be to grock given how opposed he was to freud. there’s a guy who was impossible to grock carefully and on purpose. and jung works so beautifully, it just seems it oughta look as simple as redfield.

          btw, did it ever occur that the whole purpose of ai is to put us back to sleep with pseudo-coincidences?

          1. ZDB, I read a book long ago (don’t remember the title) on a visit between Freud and Jung at one of their houses. They got into an argument of increasing intensity. Finally, there was a loud ‘crack’ sound, and the argument ceased. Some object inside a glass case had shattered. Evidently, both of them were generating Chi, and it had to discharge somewhere…

    3. This sounds a lot like the “Hybrids” as described by experiencers. Maybe the aliens are trying to find the sweet spot for creating “containers”, which is what some of them call us.

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