The Fed’s “War Chest” Closes the Door to WWIII | QPOL Issue #63
“Nationalism-First” as a winning strategy.
Pardon my absence this month, and pardon my French. November has been an absolute shit show of a month as far as news. So here’s a long one to make up for the past few weeks. Typos and all.
Long story short, there’s a nationalist/populist/sovereignty-based uprising throughout the world against globalist totalitarianism. Throughout the history of this newsletter (or whatever the fuck this thing is), I’ve pretty much made this argument the whole time. If I’ve already mentioned or alluded to this fact then forgive me, but it’s worth repeating…
This nation-wide movement is taking place on all levels: economic, geopolitical, religious, cultural, ethnic, you name it. I’m not going to cover all of them (though they deserve the spotlight), but I will cover the ones that caught my eye the most. So to kick things off, let’s talk about this doom-porn spasm we saw in the bond market earlier in the month.
Bonds Bounce Back
Start by reading through the following. Take your time. I’ll wait…
My initial speculative thoughts were so forth: So that must mean they need money to maybe prevent a recession? And global South countries don’t wanna buy long debt because they’ve been selling it recently buying gold and/or preparing for war. So this might be different financial news sources piling on this “blame the US economy. They’re morons that don’t know what they’re doing.” WTF else could this sudden $24b before? Other than the government trying to bail out some company or industry that only was possible because of ZIRP that shouldn’t have existed in the first place.
There’s a mix of some possibilities here, but the major point is that it could have also been a PR stunt (like the lowering of the US credit rating) from the usual suspects to cover up how screwed Europe is. As a colleague of mine Dom points out, (and it’s fairly obvious to anyone who’s paying attention) the US is the only country in the world who’s central bank isn’t buying its sovereign debt. If every other central bank stopped buying their own debt the results world wide would be catastrophic. The fact that the US still has a bid, let alone a 75% bid in these conditions is fantastic. What do you think the bid on the German 30 year would look like on the open market if the ECB wasn’t buying every single Bund they issue? The FUD here is severely over done, and it’s a sign of Davos’ desperation in Powell’s Higher For Longer environment.
Meanwhile as Powell keeps bankrupting them, all they can do is bitch and make the US’s credit rating negative…
Yeah, give it a while. Never mind Europe though…
So after looking at the 30yr chart I’ve come to this conclusion…
The previous week (as portrayed below), 30yr yields were normalizing to near 4.8% and investors cashed out and bought blue chips that went on sale after Powell’s speech.
There wasn’t a bid on the 30yr last week (the 9th.) because the week before, central banks and investors bought US debt when prices were low and yields were high. Additionally, I think it could be argued that Yellen also bought a shit ton of long debt (as she does for YCC), which falsely raised the price of long bonds.
High bond price and low yields makes the yield not worth an investor’s time (because you expect a higher rate from your coupon the longer you wait for it to mature, and recently a normalized yield curve has been trending, which Yellen and Lagarde are trying to undo).
So basically there was a no bid due to the market (like the bond vigilantes did a couple months ago) called bullshit on Yellen’s bond prices. Plus the global south probably gave congress a “fuck you, we’re not financing your World War III, even if you’re only looking for $24b.”
Beating the War Chest
Let’s not forget who’s in the driver’s seat here, folks. It’s the Federal Reserve. Powell’s Federal Reserve.
This video explains how and why Powell’s higher for longer starves the Treasury General Account. I’ve covered this concept in the past, but here’s a quick reminder of how the Fed is the one in charge.
If the fed runs a deficit, it accumulates that deficit as an “asset” on its balance sheet and doesn’t have to pay the treasury its usual surplus. It won’t pay again even if they run a surplus next year until the accumulated deficit runs out.
Not to mention, Congress is gonna have to cut spending, and Powell isn’t gonna have to be the one begging them to to do it. As Stimpy has been saying, it’ll be the fat cats demanding Congress to stop spending.
Since Powell’s higher for longer policy, the best place to park money and earn yield for all corporate tycoons and investment banks have been treasuries. Continual spending will only ruin the US’s credibility, as well as hurt BlackRock’s and similar ilk’s bottom line. Simply put, spending like drunken sailors is bad for business. These globalists will have to forgo their dystopia if they wanna see another day.
Powell is the one on the global stage wearing the economic pants. There’s no argument here. He knows it, and so the the globalists fighting back. We saw a glimpse of that when a bunch of greenie weenie social justice warriors protested his policy in defense of climate change. If you missed his response, just Google it. It’s great. The shitlibs were escorted out and he said on the mic “just close the fucking door.”
Fucking. Baller.
This in addition to the 30yr bond stunt was simply an operation to discredit Powell’s policy that’s successfully working against the enemy, and the United States. Everyone on both sides of the isle are so desperate for a pivot, it’s pathetic. It’s not happening sooner than Powell wants. It’ll happen on HIS watch.
For clarity, "Pivot" must be defined. From my new FinTwit Sherpa, Stimpy, “if we mean pause, we have already pivoted. If we mean small cuts to keep real rates stable as inflation falls, we will see one next year. If we mean a TRUE pivot back to ZIRP and a desire to stimulate using rates policy, that may be years away.”
QE is dead. Powell slayed that beast back in June 2021 when he started stealth QT by raising the RRP.
This is where MSM finance is at mentally right now...
As Stimpy explains regarding this pathetic, coping headspace, “The Fed loves it. Keeps markets stupid and happy and ensures Congress doesn't start being annoying. Wait until markets discover what the BASEL 3 and UST clearing rules will do the price of speculative leverage.”
So, to the likes of MSM market normies and Zero Hedge pivoteers, I’ll see your “market pricing”:
…and raise you the 2023/24 Fed Dot Plot
Winner winner, chicken dinner.
No Dollar Reserve Diplomacy
Everyone is up in a frenzy about Argentina’s new apparent ANCAP president, Milei (more on him and Argentina later). I’ll believe those claims when I see it, but like Trump, Orban throughout the world, it’s a signpost of the world’s gradual move towards a nationalist uprising. The post below is a shining representation of the nationalist sentiment spreading throughout the world, in this case most notably Europe.
BRICS is legit. Don’t get that twisted. China in a sense has been replacing the Marxist mobster IMF by providing loans to its victims (smaller countries world wide). These countries will try the back track the economic hitman tactic probably by defaulting in IMF loans and turn to China for economic relief instead. China will lend them dollars, and said countries will pay them back in Yuan.
https://rumble.com/v3wkndy-us-and-russia-in-syria-vince-lanci-and-tom-luongo-tpc-1377.html
As explained above by the GOAT Tom Luongo and precious metals aficionado Vince Blanci, China is lending its trade partners dollar loans and letting them pay them back in Yuan. China did this when they bailed out Russia in 2014, and currently doing this with their trade partners in South East Asian. This strengthens the Yuan, and is good for the dollar. America does not want dollar supremacy because Triffin’s dilemma has killed the US economy. This is Powell’s plan.
Some might say that the sooner this happens the better. What if all these nations default at the same time? Turkey, Egypt, Argentina all tell the IMF simultaneously to go pound sand. Does this significantly weaken the dollar, or would China step in again and carry the trade through them all?
Honestly this is above my pay grade, but here’s me spit-balling. A coordinated default in the IMF seems like wishful thinking. My gut says no, because there’s still gonna be demand for treasuries and investment in US markets as there always is and most likely will be. You also can’t assume all those countries would be that brash because that might cause an actual war. By war, I mean the globalists/usual financial suspects that run the IMF will meme us into war against the global South just like they do in every war they wage. That’s not the BRICS playbook, especially not in China’s Art of War approach. A new bifurcated, multi-polar, global economic cooperation is the BRICS strategic detour around World War III.
China won’t be there to carry the trade (if you mean they weaken the yen and act like Japan by facilitating a weak carry trade). Luongo recently mentioned in the latest newsletter everyone with defend their currency like Japan. Japan are just the first ones to do it and everyone will follow slowly. Again, everyone in the world is making a gradual step towards nationalism, or at least delivering a powerful blow to the “Rules Based Order” of the globalist West.
A retort to the above might be if China would be happy to carry these nations via loaning Yuan, the currency would become too strong.
I don’t think the Yuan will get too strong if China exports it to BRICS/global South trade partners. They’ll balance the Yuan’s strength and the strength of their economy and manufacturing by using the resources of their trade partners. They’re doing their own version of Triffin’s dilemma that the US did by exporting their inflation, only successfully this time (if it works). AKA: the Belt And Road Initiative. That’s what the whole project was about; knowing their economic strengths and essentially colonizing and/or partnering with countries to offset their economic weaknesses.
I might have this totally wrong, but even if you weaken your currency to facilitate a carry trade (be the world’s cheap debt) the more people dedollarize and use your currency, the stronger your currency will get, and your currency might be defended as a result of more people start buying your goods and investing in your markets.
This of course assumes China fixes their domestic industrial and manufacturing in food, or wherever they lack in comparison with the main commodity exporters. One thing that’s certain though, is that they’ll become a major exporter of gold as the LME and COMEX gets drained (which it is). People are slowly doing bank runs on gold on the COMEX and LME and taking it to China.
Speaking of gold, there’s also the possibility for China that if the Yuan become too strong, gold may be a solution. Gold might help get around the issue of themselves having to print tons of money for their own economy and may even ask to be paid back in gold like Russia did soon after the war in Ukraine started in Feb 2021. This essentially becomes a back door for a gold and/or commodity-backed yuan and/or BRICS reserve currency.
All this seems to signal a trend of the global south, BRICS et al. to become economically independent.
It’s the Resources, Stupid
Now, back to Argentina. I owe a tremendous debt to my colleague Book of Cyril for the following info. Shout out to you, bro 😎. Ok…
Argentina is the exception in a China IMF-like bailout. They have one of the least involved economies in the world in global trade. Only the US (and a few totally irrelevant countries like Burundi / Sudan) are lower. They have zero reason to buy yuan because they dont import all that much from China already, or anyone for that matter. Their economy is even less dependent on imports than Russia who was forced into that position via all the sanctions.
Since Argentina doesn’t export commodities, they would use that to build up their dollar reserves. This could be a hypothesis for why Milei was installed. The US banking system could be backing (team Fed, or the US sovereignty faction).
Milei has gotten some recent backlash for not being as nationalist as he portrays due to his visit to Israel. However, it could be argued this was simply a tactic by his backers from Team Fed to conveniently to have him play nice with Israel as a cover. It could be problematic and a few geopolitical issues could be created if its perceived America is backing Milei…
Here's how you know the US banking system is backing Milei ultimately: Argentina has the 2nd largest shale gas deposit in the world. It’s the size of Belgium. Unlike China's shale deposits, which are unrecoverable given they're in the arid region of China, Argentina's are 72% nearby freshwater, which you need a shitload of to frack that shit out of the rock to extract the oil & gas.
Argentina needs exactly what US companies can give them, which are expertise in expanding their production in order for the economically suicidal Europeans can continue importing LNG to support their fragile economies built on complete bullshit social justice EU/WEF narratives.
Revolution is in the air my friends. Gradually then suddenly, and all those cliches. It won’t look they way you expect. Globalist totalitarians will go out with a whimper as these deals and partnerships on the multipolar stage plays out. One thing’s for sure, the cooler heads have had enough…
~ Mr. Pseu
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