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Armstrong and the repo storm
Armstrong spent a total of 11 years in prison when crooked NYC banks tried to get his program. Ultimately, the fault was crooked GOV. Later, he advised the Chinese to buy treasury paper directly from the FED GOV and bypass the primary dealers. He got a bit of revenge on the big NYC banks.
Armstrong predicts a rotation OUT of GOV debt and, INTO private debt. This may very well be true.
As is typical, he was correct to the day on his predictions of the economic low point in India.
https://www.armstrongeconomics.com/w...their-actions/
Just how much temptation does he have to predict a crash of public debt to get back at the entity who stole 11 years of his life?
The economic writers claim that there is NO legitimate replacement for the U.S.
dollar because, there is no market with the size and depth of the U.S. treasury market.
Currently, the repo market from the FED is going crazy trying to support all the sketchy banks. Will this lead to a breakdown of the public debt markets? I have no idea. If Armstrong is correct, something will lead to a breakdown.
The State is forcing the CB to "fix" everything with monetary policy. The FED is crying for the State to fix everything with fiscal policy. The FED sees the writing on the wall and, is preparing to completely change it's "mission"
"So what is a central banker to do? Hildebrand’s proposed solution was presented in a paper he wrote with three of his colleagues at BlackRock, the world’s largest asset manager, where he is now vice chairman. Released in August to coincide with the annual Jackson Hole meeting of central bankers, the paper was co-authored by Stanley Fischer, former governor of the Bank of Israel and former vice chairman of the U.S. Federal Reserve; Jean Boivin, former deputy governor of the Bank of Canada; and BlackRock economist Elga Bartsch. Their proposal calls for “more explicit coordination between central banks and governments when economies are in a recession so that monetary and fiscal policy can better work in synergy.” The goal, according to Hildebrand, is to go “direct with money to consumers and companies in order to enliven consumption,” putting spending money directly into consumers’ pockets."
"directly into consumers’ pockets" Sounds a lot like universal basic income.
"The central bank would maintain a “Standing Emergency Fiscal Facility” that would be activated when interest rate manipulation was no longer working and deflation had set in. The central bank would determine the size of the Facility based on its estimates of what was needed to get the price level back on target. "
"n short, Hildebrand and co-authors are not talking about central banks giving up their ivory tower independence to work with legislators in coordinating fiscal and monetary policy. Rather, central bankers would be acquiring even more power, by giving themselves a new pot of free money that they could deploy as they saw fit in the service of “government objectives."
Currently, the PPT, ESF, FED and treasury are pumping "money" into markets willy-nilly. The new idea proffered here would be to streamline and institutionalize liquidity injections to the individual rather than channelling injections through the private banks.
The article goes on examining different possible plans.
https://ellenbrown.com/2019/09/18/de...or-more-power/
The East will NEVER endorse a reserve currency created out of thin air by the West.
More on "repo"
"QUESTION: Marty; You warned that there would begin a cash shortage and real rates would rise in the private sector starting in September after Labor Day. Ok, it’s about 15 days past that marker and Repo rates have gone completely nuts hitting 10% forcing the Fed to intervene. They were calling it Armstrong’s revenge here in the dealing room. It certainly appears the Fed has lost control of short-term rates as you warned. Is this the start of the chaos you have warned about?"
"ANSWER: It’s not my revenge, it’s fiscal mismanagement. Look, this is the chaos we have coming and sorry, it is the beginning, not the end. It’s not even a fluke or a blip. So get used to it. Indeed, the Fed has lost control of short-term rates. Trump can jawbone all he wants for zero to negative rates. Sorry! The free markets are showing something else lies in wait.
The Repo Rate reached a high of 10% by about 9 am just before the stock market opened. The fed funds rate was testing the Fed’s upper limit. The Fed was forced to intervene I believe for the first time since the 2008 crisis."
"On Tuesday, the Fed offered $75 billion through its facility and received $53 billion of demand from borrowers who swap AAA Treasury holdings for cash at minimal rates"
It's hard to believe that there is a shortage of cash at the bank level.
"Overnight financing (REPO Rate) is a basic function which holds the economy together. Those who trade on leverage rely on the REPO market (Broker-dealers, hedge funds, and institutional). It is rarely written about for it is not generally seen by the public. The events of the past few days is a clear warning sign of what I have been yelling about which is on the horizon. The central banks are TRAPPED and in Europe, they have destroyed their bond market with more than $15 trillion and perhaps up to $17 trillion in negative-yielding bonds "
"NEGATIVE Repo Rates can happen when there is a shortage of cash or particular collateral security, like negative-yielding bonds, are put up to borrow against. Therefore, trying to borrow against a negative-yielding bond can present a crisis. The standard Repo contracts, such as the Global Master Repurchase Agreement (GMRA), have been drafted under the implicit assumption that general collateral (GC) Repo Rates would only ever be positive."
"We are looking at SERIOUS credit risk once again but instead of the time bombs being mortgage-backed securities, this time it will be negative-yielding bonds issued by governments. The bond markets have been converted into a child’s game of musical chairs. When the music stops, someone will be left holding negative-yielding bonds that will only be salable at even deeper discounts of perhaps as great as 50% in a few years."
"The financial system simply doesn’t work with negative rates and this is also contributing to shortages of cash for Repo markets. A slight rise in interest rates will create a massive debt crisis and if you undermine the bond market, that is what creates great depressions. Negative yields have been confined to places outside the USA and the intervention of the Fed implies they are not prepared to allow negative rates to undermine the US economy as they have done in Europe."
You can see the problem. Everyone dumps treasury debt. The sovereign bond market collapses. FED GOV is completely insolvent. 51% of Americans receive a check from GOV,,,, 44 million receive direct public assistance. The safety net would be completely useless. The FED now rolls out the Standing Emergency Fiscal Facility This would be activated when the bond market implodes. The banks will, obviously, fight against being bypassed for liquidity injections. This UBI can NEVER be implemented until after a crash.
"Unlike the 2008 crisis where the time bombs were private debt, Tuesday’s abrupt rise in short-term rates wasn’t obvious that the financial system was in trouble because sovereign debt is assumed to be AAA and risk-free. Not sure whoever started that huge lie.
Nevertheless, we have a convergence of forces which are creating the perfect financial storm on the horizon. Immediately, corporate tax payments are due so corps have less cash to sell overnight. Then there are big Treasury auctions as deficits continue to rise for governments always borrow, yet never pay off the debt as if this can continue without end."
The interest rate risk that negative-yielding bonds carry is beyond unbelievable. It is totally artificial supported only by punters. The financial system simply doesn’t work with negative rates and this is also contributing to shortages of cash for Repo markets. A slight rise in interest rates will create a massive debt crisis and if you undermine the bond market, that is what creates great depressions. Negative yields have been confined to places outside the USA and the intervention of the Fed implies they are not prepared to allow negative rates to undermine the US economy as they have done in Europe.
I have been warning that we are headed into a major financial crisis that will be a liquidity event which involves government – not simply the private sector as was the case in 2008. So buckle-up. I have been warning this is something NOBODY has ever witnessed before and if Socrates was actually alive, he would be screaming bloody-murder by now. The Institutional Bond Report will be going out to all our Institutional Clients. Those who have been thinking about joining our Institutional client base can purchase a copy $3,500."
https://www.armstrongeconomics.com/m...tting-started/
Ok, so there is a cash shortage and nobody wants to loan to the government. In 1913, the government gave up it's right to coin new money,,,, gold & silver. I'm sure that, if / when things get bad enough, US GOV will authorize itself to print money directly / electronically.
Russia has reduced it's public debt,,, getting ready for the collapse in public debt.
Here is a good article on mean reversion.
https://realinvestmentadvice.com/cau...version-ahead/
Armstrong spent a total of 11 years in prison when crooked NYC banks tried to get his program. Ultimately, the fault was crooked GOV. Later, he advised the Chinese to buy treasury paper directly from the FED GOV and bypass the primary dealers. He got a bit of revenge on the big NYC banks.
Armstrong predicts a rotation OUT of GOV debt and, INTO private debt. This may very well be true.
As is typical, he was correct to the day on his predictions of the economic low point in India.
https://www.armstrongeconomics.com/w...their-actions/
Just how much temptation does he have to predict a crash of public debt to get back at the entity who stole 11 years of his life?
The economic writers claim that there is NO legitimate replacement for the U.S.
dollar because, there is no market with the size and depth of the U.S. treasury market.
Currently, the repo market from the FED is going crazy trying to support all the sketchy banks. Will this lead to a breakdown of the public debt markets? I have no idea. If Armstrong is correct, something will lead to a breakdown.
The State is forcing the CB to "fix" everything with monetary policy. The FED is crying for the State to fix everything with fiscal policy. The FED sees the writing on the wall and, is preparing to completely change it's "mission"
"So what is a central banker to do? Hildebrand’s proposed solution was presented in a paper he wrote with three of his colleagues at BlackRock, the world’s largest asset manager, where he is now vice chairman. Released in August to coincide with the annual Jackson Hole meeting of central bankers, the paper was co-authored by Stanley Fischer, former governor of the Bank of Israel and former vice chairman of the U.S. Federal Reserve; Jean Boivin, former deputy governor of the Bank of Canada; and BlackRock economist Elga Bartsch. Their proposal calls for “more explicit coordination between central banks and governments when economies are in a recession so that monetary and fiscal policy can better work in synergy.” The goal, according to Hildebrand, is to go “direct with money to consumers and companies in order to enliven consumption,” putting spending money directly into consumers’ pockets."
"directly into consumers’ pockets" Sounds a lot like universal basic income.
"The central bank would maintain a “Standing Emergency Fiscal Facility” that would be activated when interest rate manipulation was no longer working and deflation had set in. The central bank would determine the size of the Facility based on its estimates of what was needed to get the price level back on target. "
"n short, Hildebrand and co-authors are not talking about central banks giving up their ivory tower independence to work with legislators in coordinating fiscal and monetary policy. Rather, central bankers would be acquiring even more power, by giving themselves a new pot of free money that they could deploy as they saw fit in the service of “government objectives."
Currently, the PPT, ESF, FED and treasury are pumping "money" into markets willy-nilly. The new idea proffered here would be to streamline and institutionalize liquidity injections to the individual rather than channelling injections through the private banks.
The article goes on examining different possible plans.
https://ellenbrown.com/2019/09/18/de...or-more-power/
The East will NEVER endorse a reserve currency created out of thin air by the West.
More on "repo"
"QUESTION: Marty; You warned that there would begin a cash shortage and real rates would rise in the private sector starting in September after Labor Day. Ok, it’s about 15 days past that marker and Repo rates have gone completely nuts hitting 10% forcing the Fed to intervene. They were calling it Armstrong’s revenge here in the dealing room. It certainly appears the Fed has lost control of short-term rates as you warned. Is this the start of the chaos you have warned about?"
"ANSWER: It’s not my revenge, it’s fiscal mismanagement. Look, this is the chaos we have coming and sorry, it is the beginning, not the end. It’s not even a fluke or a blip. So get used to it. Indeed, the Fed has lost control of short-term rates. Trump can jawbone all he wants for zero to negative rates. Sorry! The free markets are showing something else lies in wait.
The Repo Rate reached a high of 10% by about 9 am just before the stock market opened. The fed funds rate was testing the Fed’s upper limit. The Fed was forced to intervene I believe for the first time since the 2008 crisis."
"On Tuesday, the Fed offered $75 billion through its facility and received $53 billion of demand from borrowers who swap AAA Treasury holdings for cash at minimal rates"
It's hard to believe that there is a shortage of cash at the bank level.
"Overnight financing (REPO Rate) is a basic function which holds the economy together. Those who trade on leverage rely on the REPO market (Broker-dealers, hedge funds, and institutional). It is rarely written about for it is not generally seen by the public. The events of the past few days is a clear warning sign of what I have been yelling about which is on the horizon. The central banks are TRAPPED and in Europe, they have destroyed their bond market with more than $15 trillion and perhaps up to $17 trillion in negative-yielding bonds "
"NEGATIVE Repo Rates can happen when there is a shortage of cash or particular collateral security, like negative-yielding bonds, are put up to borrow against. Therefore, trying to borrow against a negative-yielding bond can present a crisis. The standard Repo contracts, such as the Global Master Repurchase Agreement (GMRA), have been drafted under the implicit assumption that general collateral (GC) Repo Rates would only ever be positive."
"We are looking at SERIOUS credit risk once again but instead of the time bombs being mortgage-backed securities, this time it will be negative-yielding bonds issued by governments. The bond markets have been converted into a child’s game of musical chairs. When the music stops, someone will be left holding negative-yielding bonds that will only be salable at even deeper discounts of perhaps as great as 50% in a few years."
"The financial system simply doesn’t work with negative rates and this is also contributing to shortages of cash for Repo markets. A slight rise in interest rates will create a massive debt crisis and if you undermine the bond market, that is what creates great depressions. Negative yields have been confined to places outside the USA and the intervention of the Fed implies they are not prepared to allow negative rates to undermine the US economy as they have done in Europe."
You can see the problem. Everyone dumps treasury debt. The sovereign bond market collapses. FED GOV is completely insolvent. 51% of Americans receive a check from GOV,,,, 44 million receive direct public assistance. The safety net would be completely useless. The FED now rolls out the Standing Emergency Fiscal Facility This would be activated when the bond market implodes. The banks will, obviously, fight against being bypassed for liquidity injections. This UBI can NEVER be implemented until after a crash.
"Unlike the 2008 crisis where the time bombs were private debt, Tuesday’s abrupt rise in short-term rates wasn’t obvious that the financial system was in trouble because sovereign debt is assumed to be AAA and risk-free. Not sure whoever started that huge lie.
Nevertheless, we have a convergence of forces which are creating the perfect financial storm on the horizon. Immediately, corporate tax payments are due so corps have less cash to sell overnight. Then there are big Treasury auctions as deficits continue to rise for governments always borrow, yet never pay off the debt as if this can continue without end."
The interest rate risk that negative-yielding bonds carry is beyond unbelievable. It is totally artificial supported only by punters. The financial system simply doesn’t work with negative rates and this is also contributing to shortages of cash for Repo markets. A slight rise in interest rates will create a massive debt crisis and if you undermine the bond market, that is what creates great depressions. Negative yields have been confined to places outside the USA and the intervention of the Fed implies they are not prepared to allow negative rates to undermine the US economy as they have done in Europe.
I have been warning that we are headed into a major financial crisis that will be a liquidity event which involves government – not simply the private sector as was the case in 2008. So buckle-up. I have been warning this is something NOBODY has ever witnessed before and if Socrates was actually alive, he would be screaming bloody-murder by now. The Institutional Bond Report will be going out to all our Institutional Clients. Those who have been thinking about joining our Institutional client base can purchase a copy $3,500."
https://www.armstrongeconomics.com/m...tting-started/
Ok, so there is a cash shortage and nobody wants to loan to the government. In 1913, the government gave up it's right to coin new money,,,, gold & silver. I'm sure that, if / when things get bad enough, US GOV will authorize itself to print money directly / electronically.
Russia has reduced it's public debt,,, getting ready for the collapse in public debt.
Here is a good article on mean reversion.
https://realinvestmentadvice.com/cau...version-ahead/
What a surprise.
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