The FED

[countryBoy641]

The question being if the US has debt, who holds the paper?
What happens if they default on that debt? Who is left holding the bag?

In the 1920s, Allies including France and Great Britain began to fear that Germany would not pay back the war debts proscribed in the Treaty of Versailles. That incident eventually devolved into the historical catastrophe popularly called World War Two.

We have one ET member who says the U.S. debt is totally fictional.
Of that debt, 30% is held by Asian countries.
17% of the debt is held by Japan.
13% is held by China.
https://www.investopedia.com/articles/markets-economy/090616/5-countries-own-most-us-debt.asp

So, is this debt fictional (as the poster says), or will these countries want their money back?
How about you? Would you want your money back? How bad?

 

[NoahA]

We have one ET member who says the U.S. debt is totally fictional.

About the only logical allowance I can make for @piezoe saying this is that since the US can print any amount of dollars it needs, the debt isn't exactly an obligation like it is for you and me.

If Visa let me pay back my debt outstanding with just my signature on a napkin, is this really a debt for me? In principle yes, but not really in practice since I could supply any amount of napkins necessary for very little effort.

In the case of treasuries, the countries holding these treasuries will always get their dollars back, but of course what those dollars are worth is a whole other matter. They may very well dump those treasuries if USD starts to decline, but with the DXY moving up like it is, its gonna take a bit of time. Clearly the Rubble is showing strength since Russia holds the energy that everyone needs, and the world may very well move towards once again wanting a currency to be backed by something more substantial. But we probably have a little bit of a way to go before the USD starts acting like the GBP. And at that point, where printing money devalues the USD even more, then the debt will certainly be a much bigger issue.

 

[countryBoy641]

It's not like no country ever had a printing press before.
They all know about that fiat currency "razzle-dazzle"

The locals who lived through this know what happened.
(Although they certainly did not want those things to happen).
But the people living in the contemporary world have NO idea what happened 100 years ago.
And they want to do this again.

 

[SunTrader]

About the only logical allowance I can make for @piezoe saying this is that since the US can print any amount of dollars it needs, the debt isn't exactly an obligation like it is for you and me.

If Visa let me pay back my debt outstanding with just my signature on a napkin, is this really a debt for me? In principle yes, but not really in practice since I could supply any amount of napkins necessary for very little effort.

In the case of treasuries, the countries holding these treasuries will always get their dollars back, but of course what those dollars are worth is a whole other matter. They may very well dump those treasuries if USD starts to decline, but with the DXY moving up like it is, its gonna take a bit of time. Clearly the Rubble is showing strength since Russia holds the energy that everyone needs, and the world may very well move towards once again wanting a currency to be backed by something more substantial. But we probably have a little bit of a way to go before the USD starts acting like the GBP. And at that point, where printing money devalues the USD even more, then the debt will certainly be a much bigger issue.

The Ruble is showing its strength ... in Russia. Where it is now in a closed-loop Putin controlled system, other than some trade done with China, India, Iran and such.

This is the Moscow Stock Exchange Index. Does this look like it has been showing its strength?

BTW the U.S. pumps (but also consumes) more oil than Russia.

 

[countryBoy641]

Seems the problem in the very near term is more about the EU, than about the U.S.
Around the globe, everybody seems to have been preoccupied with 21st Century stuff, like Cloud Servers and Peleton bikes.
Nobody even bothered to think about heating the houses in Germany. OOPS!!

I used to work with a guy at HSBC Bank.
He was a Russian national, about 45 years old.
He told me his grandfather told him that as soon as WWII started, one of the first things that Stalin did was to nationalize all the vodka distilleries.
So when you watch those grainy WWII films with Russian soldiers dying in the snow, rest assured. Those people were probably not feeling much.
But the grandson of that Russian soldier is fine, and remembers the tales of death and destruction. And the graves of his ancestors.

This will be a tough winter for Europe.
Let's hope for some small wisdom in our new crop of leaders.

 

[SunTrader]

Saw on Bloomberg last night a big shopping item in Europe currently is electric blankets. They better hope the power generators have enough natty gas to keep producing electricity. Think I heard they do.

Who'd thunk the French would be smarter than the Germans - with all their Nukes still running strong.

 

[Overnight]

Saw on Bloomberg last night a big shopping item in Europe currently is electric blankets. They better hope the power generators have enough natty gas to keep producing electricity. Think I heard they do.

Who'd thunk the French would be smarter than the Germans - with all their Nukes still running strong.

Yeah, Germans all be like "no nuke power, it's bad for the environment(?)"

Rest of world is like huh? Except the USA. If Greenpeace had their way, we'd be back to killing whales to heat our oil lamps with, so long as we do not burn fossil fuels because...CO2

 

[SunTrader]

Yeah, Germans all be like "no nuke power, it's bad for the environment(?)"

Rest of world is like huh? Except the USA. If Greenpeace had their way, we'd be back to killing whales to heat our oil lamps with, so long as we do not burn fossil fuels because...CO2

Nuke problem is way more than Greenpeace fanatics.

NIMBY for one. Where to ship and store waste? Cost to build and who foots it? Yada yada.

 

[Overnight]

...Where to ship and store waste? ...

Yucca Mountain.

 

[NoahA]

The Ruble is showing its strength ... in Russia. Where it is now in a closed-loop Putin controlled system, other than some trade done with China, India, Iran and such.

This is the Moscow Stock Exchange Index. Does this look like it has been showing its strength?
View attachment 296158

BTW the U.S. pumps (but also consumes) more oil than Russia.

I was reading other sources, and now just looked it up myself. Seems like its stronger than before the invasion, as I have read. Now of course I have no idea how easy it is to use the Ruble, or who will do business with you, but this chart at least shows strength vs. many other currencies against the USD.