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March 14, 2011
SouthAmerica: This week it will be a very interesting week regarding the financial markets.
As the dust settles and banks, insurance companies, hedge funds, and the financial markets in general start realizing the damage caused by the catastrophic events in Japan.
And also the potential impact that this mess will have regarding the coming meltdown of the US dollar.
MAJOR FOREIGN HOLDERS OF US TREASURY SECURITIES
Japan = US$ 882 billion as of December 31, 2010
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
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Last week Bill Gross announced that he is out of the US treasuries market.
The United States needs to fund over $ 1.5 trillion dollars per year regarding its US government deficit spending.
China and Japan had decided to stop adding to their vast portfolio of US treasuries, and China had been trying to get out of some of their holdings.
Every time the US government needs money to fund its deficit spending 30 percent of the treasuries are bought by the public including foreign holders, and 70 percent is being bought by the Federal Reserve under the QE2 program that ends in June 2011.
Bill Gross one of the main investors of Treasuries in the US is out of the market, China is trying to reduce their position, and now Japan will be forced to sell a big piece of its US$ 882 billion holding to be able to fund the rebuilding of Japan after the latest catastrophe.
After the dust settles the only player that still be around to finance the US government deficit spending, it will be Ben Bernanke and the Federal Reserve and its infinite power of creating US dollars from nothing.
The good news is: Ben Bernanke and his pals at the Fed must be working very hard right now regarding their next strategy to try to stop a US dollar meltdown as follows:
QE3 = US$ 1 trillion dollars
followed by
QE4 = US$ 2 trillion dollars
and
QE5, QE6, QE7, QE8, etc, etc.....
Note: I wonder how many zeros after a number the Federal Reserve can add to the accounts of banks to create money from nothing. Here is how they do it:
The Federal Reserve brings up on its computer screen the account of a major US bank to be able to create money from nothing as follows:
QE15 =
US$1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000.00
The Federal Reserve press enter, and they just created a gazillion dollars to keep the US financial system afloat, and at the same time torpedo most emerging market economies with massive inflation.
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