US financial website Zerohedge reported on January 21 that , famous for successfully predicting the 2008 financial crisis, Wall Street , a well-known economist Peter Schiff, said recently that the upcoming financial crisis in the United States will be much more serious than in 2008, and the core logic behind this is the result of the Federal Reserve's uncontrollably opening the dollar printing machine.
Indeed, under the Fed's "extremely loose" mode, nearly $3 trillion of thin currency was printed in 2020 alone. Therefore, the depreciation of the US dollar will be even greater than expected from now on. As shown in the figure below: US M1 (narrow currency: cash + check deposits in circulation (and transfer credit card deposits)) grew by more than 50% in 2020. Never experienced it in American history.
And the next chart directly from the Fed shows how M1's absolute value grows...
As more and more new dollars enter the market, every dollar people currently hold becomes less valuable. It is worth noting that since the Federal Reserve was established in 1913, the US dollar has almost continued to show a downward trend in purchasing power, as shown in the figure below. This is all for making the dollar asset price seem to keep rising, but it laid the foreshadowing of the financial crisis, just as the US financial crisis was suddenly in 2008, and the US economy may be brewing a bigger financial tsunami.
In this regard, Jim, the Wall Street billionaire known as the most visionary. Rogers is consistent with Peter Schiff's view. He warned more than once that a financial crisis in the United States may occur more than the 2008 financial tsunami will be something he has never seen in his life. However, the Fed seemed to remain indifferent at this time. Even the U.S. Treasury Secretary Yellen , who had served as the chairman of the Federal Reserve, and former Fed Chairman Greenspan , both said earlier that negative interest rates in the United States are not something that can’t be done, or sooner or later.
In this way, in the event that the expected inflation target of the US economy may be achieved, Peter Schiff believes that US inflation should not be regarded as an expansion of the money supply and the resulting increase in consumer and asset prices, which is the broadest taxation of American consumers at the most basic level. Over time, this broad taxation will benefit most Americans, except for the few rich people closest to Wall Street's money printing machines, who will benefit from this broad tax. At the same time, the US economy will also intensify its debts.
Yelen
As of January 22, the total U.S. federal debt has reached a record level of about $28 trillion. Over the past four years, about $8 trillion has increased, equivalent to the total of the previous eight years.
. Through the figure below, we can see more that since the 1980s, the US economic debt model has been overturned and difficult to collect. And the new change in things is that Yellen recently said that it may consider issuing 50-year U.S. Treasury bonds, which will far exceed the current maximum 30-year U.S. bond years.
In addition, Mike Swell, co-head of global fixed income portfolio at Goldman Sachs Asset Management, pointed out that at the current borrowing costs, the U.S. Treasury Department should issue 1,000-year Treasury bonds. Although not currently adopted, it is inevitable that the U.S. economy continues to borrow more debt from major global buyers. Some analysts predict that by 2028, the total federal debt of the United States may reach $48 trillion, exceeding 250% of the United States GDP.
Peter Schiff believes that the US economy has borrowed so much money and tried to delay repayment for so long, and as it gets deeper and deeper into debt, the United States seems unable to provide funds for it, and repaying the debt is doubtful. This also laid the hidden dangers of the debt crisis for the US economy. Bloomberg reported recently that the pandemic may exacerbate the US debt crisis, which is based on an expectation that the US economy has become more burdened due to the Great Depression. US media CNBC and Russian media RT analyzed that once major global buyers sell US bonds sharply, the impact on the US economy may be at the "nuclear" level.
It is worth noting that since 2018, the selling of US bonds has continued, and buyers from major central banks around the world have accumulated a total of up to about US $1 trillion. This is also a signal of US debt issued by central banks in many countries. At the same time, gold, as a constant currency in the global economy, is increasingly receiving attention from global central banks. One of the phenomena is that as of now, the stock of gold in the Federal Reserve's underground vault has now fallen to its historical low, with a total of about 5,750 tons. That is, about 1,250 tons of gold have been shipped out of the United States. Germany and 15 other countries have announced that they may plan to ship back some of the gold from overseas vaults such as the Federal Reserve.
Russian Finance Minister warned the Federal Reserve several weeks ago, "If our gold reserves are found, even if such ideas exist, they will be regarded as financial terrorism and financial declaration of war." This means that Russia has publicly warned that the Federal Reserve will face serious consequences for misappropriation or embezzlement of gold. At the same time, Russia also reduced its holdings of U.S. bonds at a nearly zero-cut rate and won the title of one of the world's major gold buyers.
A new change is that according to the latest international capital flow report TIC released by the US Treasury Department on January 19 (the data has two-month delay practice), Russia currently holds short-term US Treasury bonds at US$3.4 billion, while the total holdings of long-term debts are US$1.568 billion. This is about 97% lower than Russia's $120 billion U.S. bond quota a few years ago. Russian media analysts believe that Russia is counting down on holding US debts at 0. So, what readers and friends are concerned about is whether China will reduce its holdings of US debt on a large scale, whether there is gold in the Federal Reserve, and does it need to be transported back?
Federal Treasury
A new change in the matter is that the TIC report also showed that in November, China's net purchase of US $9 billion in US Treasury bonds increased its position in US $1.06 trillion. Currently, China and Japan are still the two largest overseas holders of US debt in the world. However, it should be noted that before this, a signal of US debt has been sent, and in the 25 months ended October 2020, China has continued to sell a total of approximately US$174 billion in US debt. Zerohedge quoted experts asserting that as the attractiveness of US bonds declines, there may be a possibility of clearing US bonds.
In addition, according to an analysis of an article titled "How much gold has the United States embezzled" published by the International Financial News a few weeks ago, 600 tons of gold may exist in the Federal Reserve. Analysts believe that in order to maintain US debt and US dollar credit, the US economy has no right at all, and it dares not relinquish any US debt. The ownership of these gold is very clear. Therefore, the United States will not risk its own national credit, and will not allow unsafe gold reserves to happen. The Fed has no power and dares not prevent depositors from transporting their own gold.
, and Rogers believes that the United States is the world's largest debtor country, and the initiative of the US debt economy is in the hands of major global buyers. It is worth mentioning that Zerohedge also reported earlier that thousands of tons of gold may have flowed into China since no acquisition data was reported to the International Monetary Fund or the World Gold Council. And this point, although the Federal Reserve has managed a lot of gold around the world, it has no right and dare not stop it. (End)
