Important Takeaways:
- China is one of the United States’ largest creditors, owning about $859.4 billion in U.S. debt. It doesn’t own the most U.S. debt of any foreign country, however.
- Nations borrowing from each other may be as old as the concept of money. Foreign debt provides the opportunity for countries to secure financing that they ordinarily wouldn’t have access to and to stimulate their economy.
- The concept of foreign debt carries a negative connotation, however, especially when it concerns large amounts owed to nations embroiled in controversy. The huge amount of debt that the U.S. government owes Chinese lenders has been the subject of countless debates, headline news stories, and political platforms for decades.
- Japan commands the top spot among foreign creditors with $1.1 trillion, about 3% of total U.S. debt owed by the U.S. government. China holds the number two position with $859.4 billion of U.S. Treasury’s, about 2.6% of the total U.S. debt.
- Consequences of Owing Debt to the Chinese
- It’s politically popular to say that the China “owns the United States” because it’s such a huge creditor but the reality is very different from the rhetoric.
- The U.S. dollar would depreciate and the yuan would appreciate if China called in all its U.S. holdings, making Chinese goods more expensive.
- Although 2.6% of the national debt isn’t insignificant, the Treasury Department has had no problems finding buyers for its products even after a rating downgrade.
- Others would likely step in to service the market if the Chinese suddenly decided to call in all the federal government’s obligations and this isn’t possible because of the maturities of debt securities. This includes the Federal Reserve which already owns six times as much debt as China.
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Important Takeaways:
- Most Americans realize that the federal government is drowning in debt and that inflation is out of control. But very few Americans can coherently explain where money comes from or how our financial system actually works. For decades, bankers that we do not elect have controlled America’s currency, have run our economy into the ground, and have driven the U.S. government to the brink of bankruptcy. The Federal Reserve is an institution that was designed to drain wealth from U.S. taxpayers and transfer it to the global elite. Have you ever wondered why a sovereign nation such as the United States has to borrow United States dollars from anyone? Have you ever wondered why a sovereign nation such as the United States does not even issue its own currency? Have you ever wondered why we allow a group of unelected private bankers to run our economy?
- The truth is that our financial system is centrally-controlled and centrally-managed by a group of banking oligarchs who oversee a constantly expanding debt spiral which could come crashing down at any time. If the American people truly understood how our system works, they would be protesting in the streets right now. The following are 11 reasons why the Federal Reserve is bad…
- 1 – The Federal Reserve was created as a way to enslave the U.S. government. In fact, the Federal Reserve System literally could not function without U.S. Treasury bonds. Government debt is at the very core of the system, and our federal government is now trapped in a debt spiral from which it can never possibly escape because the system is operating exactly as it was designed. Our national debt has been rising at an exponential rate, and that will continue to be the case until either the current system collapses or we adopt an entirely new system.
- 2 – The individual Federal Reserve Banks are not “federal” at all. In fact, on the official website of the Federal Reserve Bank of St. Louis, it is openly admitted that Federal Reserve Banks “are not a part of the federal government” and that private banks “hold stock in the Federal Reserve Banks and earn dividends”…
- 3 – Why does the Federal Reserve issue our currency? The U.S. Constitution explicitly gives Congress the power to issue our currency…
- [The Congress shall have Power . . . ] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; . . .
- 4 – The Federal Reserve creates money out of thin air. I asked Google AI about this, and this is what I was told…
- Yes, the Federal Reserve (Fed) creates money out of thin air by increasing the money supply. This process is called “creating money out of thin air” because it involves adding funds to the economy without printing currency.
- 5 – The Federal Reserve devalues our currency. Since the Federal Reserve was created in 1913, the U.S. dollar has lost more than 96 percent of its purchasing power. The truth is that just a two percent inflation rate will wipe out half of your purchasing power within a single generation.
- 6 – The Federal Reserve manipulates the U.S. economy by setting interest rates. By moving rates higher or lower, the Federal Reserve has the power to create economic growth or to destroy it. They have the power to inflate massive economic bubbles and to pop them. Most Americans believe that our presidents “run the economy”, but the truth is that the Federal Reserve has far more control over the economy than the White House does.
- 7 – The Federal Reserve also controls the national money supply. They can pump trillions of dollars into the economy or pull trillions of dollars out of the economy without being accountable to anyone. This can have absolutely disastrous consequences. For example, inflation started getting wildly out of control after the Federal Reserve dramatically increased the size of the money supply during the pandemic.
- 8 – The Federal Reserve has become far, far too powerful. Our financial markets swing up and down whenever a Fed official makes an important statement, and every man, woman and child in the entire country is directly affected by the decisions that the Federal Reserve Board makes. Ron Paul once told MSNBC that he believes that the Federal Reserve has actually become more powerful than Congress…
- “The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”
- 9 – The Federal Reserve is dominated by Wall Street and the New York banks. The New York representative is the only permanent member of the Federal Open Market Committee, while the other members rotate. The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks.
- 10 – The Federal Reserve has completely eliminated minimum reserve requirements for our banks. Fractional reserve banking has always been a way that the bankers have conned the public, but now they have gotten rid of minimum reserve requirements altogether. This is literally insane.
- 11 – The Federal Reserve is not accountable to the voters, and Federal Reserve Chair Jerome Powell is flaunting the fact that he cannot even be fired by President Trump…
- Federal Reserve Chair Jerome Powell had a clear, direct response when asked during a press conference Thursday if he would step down if asked to do so by President-elect Trump.
- “No,” said Powell, whose term as chair ends in 2026.
- When asked to elaborate and if he would be legally required to leave, he again said, “No.”
- Powell later said it is “not permitted under the law” for the president to fire or demote him or any of the other Fed governors with leadership positions.
- Nobody knows what is really going on inside the Federal Reserve, because we aren’t allowed to see.
- Unfortunately, the truth is that they desperately do not want light to be shined on the elaborate “shell game” that they are running
- The system that we have now is clearly not working. The Federal Reserve was supposed to guarantee that our system would be perfectly stable, but in reality, our system has become much more unstable.
- It is time for different thinking.
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Important Takeaways:
- The Federal Reserve announced the second consecutive cut in its interest rate benchmark on Thursday, a move widely anticipated by investors.
- The Fed said it will now target a range of 4.50 percent to 4.75 percent for the federal funds rate, the rate banks charge each other to borrow reserves, one-quarter of a point below the target announced in September.
- This marks a moderated approach compared to the Fed’s earlier, sharper 50 basis point cut in September, reflecting a recalibration of monetary policy. The Fed’s decision to announce the larger rate cut in September, just weeks before the presidential election, was widely criticized by Republicans as creating the appearance of inappropriate politicization.
- President-elect Donald Trump’s victory, coupled with expected Republican majorities in Congress, could set the stage for significant shifts in the economic landscape, with potential changes to taxes, spending, immigration, and trade policies on the horizon. This anticipated alignment in Washington has fueled a rally in stocks, with many investors expecting economic growth to be recharged by Trump’s policies.
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Important Takeaways:
- With U.S. debt now at $35.3 trillion, the cost of paying the interest on all that borrowing has soared recently and now averages out to $3 billion a day, according to Apollo chief economist Torsten Sløk.
- And that includes Saturdays and Sundays, he pointed out in a note on Tuesday.
- The daily interest expense has doubled since 2020 and is up from $2 trillion about two years ago. That’s when the Federal Reserve began its campaign of aggressive rate hikes to rein in inflation.
- In the process, that made servicing U.S. debt more costly as Treasury bonds paid out higher yields. But with the Fed now poised to start cutting rates later this month, the reverse can happen.
- “If the Fed cuts interest rates by 1%-point and the entire yield curve declines by 1%-point, then daily interest expenses will decline from $3 billion per day to $2.5 billion per day,” Sløk estimated.
- Meanwhile, the federal government closes out its fiscal year at the end of this month, and the year-to-date cost of paying interest on U.S. debt was already at $1 trillion months ago.
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Important Takeaways:
- Federal Reserve chair Jerome Powell said Friday that the central bank is poised to cut interest rates, adding that policymakers do not want to see the job market cool any further.
- In a much-anticipated speech in Jackson Hole, Wyoming, Powell said the Fed’s fight to reduce inflation has largely succeeded and it now is attuned to risks of a faltering job market — setting up a rate cut in mid-September.
- The unemployment has now risen to 4.3%, up nearly a percentage point from recent lows, raising alarm bells about a weakening economy.
- “We do not seek or welcome further cooling in labor market conditions,” he said, in a notable contrast with his tone over much of the last two years, when he described a cooling in the job market as needed in order to bring the economy into better balance.
- Between the lines: “We will do everything we can to support a strong labor market as we make further progress toward price stability,” Powell said, suggesting the recent worsening of the job market — the unemployment rate has risen from 3.7% in January to 4.3% in July — has the Fed’s attention.
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Important Takeaways:
- As many as a million jobs could vanish from US jobs data in revised numbers released this week.
- Jobs growth in the year through March was likely much lower than initially estimated, top bankers are warning.
- This could refuel concerns that the US economy is not as robust as it has appeared, and that the Federal Reserve is falling behind in its aim to lower interest rates.
- The government will release its first revisions of jobs growth data on Wednesday, and then the final numbers are due early next year.
- Goldman Sachs economists expect jobs growth for the year will be at least 600,000 weaker than current estimates – and the decline could be as much as a million.
- A downward revision of more than 501,000 would be the largest in 15 years, Bloomberg reported, and would suggest the labor market has been cooling for longer than was originally thought.
- The unemployment rate also edged higher to 4.3 percent – the highest level since October 2021.
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Important Takeaways:
- US job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates.
- Goldman Sachs Group Inc. and Wells Fargo & Co. economists expect the government’s preliminary benchmark revisions on Wednesday to show payrolls growth in the year through March was at least 600,000 weaker than currently estimated — about 50,000 a month.
- While JPMorgan Chase & Co. forecasters see a decline of about 360,000, Goldman Sachs indicates it could be as large as a million.
- There are a number of caveats in the preliminary figure, but a downward revision to employment of more than 501,000 would be the largest in 15 years and suggest the labor market has been cooling for longer — and perhaps more so — than originally thought. The final numbers are due early next year.
- Once a year, the BLS benchmarks the March payrolls level to a more accurate but less timely data source called the Quarterly Census of Employment and Wages, which is based on state unemployment insurance tax records and covers nearly all US jobs. The release of the latest QCEW report in June already hinted at weaker payroll gains last year.
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Important Takeaways:
- The cybercrime group claims it grabbed ‘33 terabytes’ of data from the Fed.
- In a post to the dark web this week, the criminal organization alleged that it had been in talks with the bank in order to secure a ransom in exchange for keeping the data private.
- “33 terabytes of juicy banking information containing Americans’ banking secrets,” the group wrote. “You better hire another negotiator within 48 hours, and fire this clinical idiot who values Americans’ bank secrecy at $50,000.”
- LockBit rose to prominence in 2019 by bringing in millions of dollars in ransom payments. And although the group’s online infrastructure was shuttered by the FBI and other law enforcement agencies in February, LockBit has managed to reemerge and continue its operations.
- Cybersecurity experts, however, are skeptical of claims regarding the Federal Reserve and note that LockBit has not released any sample data.
- The Daily Dot reached out to the Federal Reserve to confirm whether LockBit’s claims were true but did not receive a reply.
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Important Takeaways:
- Inflation driven Dow plunge is worst in 11 months
- U.S. stocks tumbled in a broad sell-off after a hotter-than-expected inflation report may jeopardize the Federal Reserve’s plan to cut interest rates.
- The Dow Jones Industrial Average fell 524 points or 1.3%, trimming a deficit of over 700 points reached during the session. It was the worst trading day in 11 months.
- The benchmark has erased almost half its gains for 2024 with the 10-year Treasury yield hitting 4.3%.
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Important Takeaways:
- Banks are bracing for a recession as Treasury yields surge
- Bank stocks might be on pace for yearly losses as sharply higher interest rates take a toll, but the industry’s reserves are at the highest level in three decades, according to DBRS Morningstar.
- Bank shares have come under more selling pressure since the Federal Reserve in September signaled it could keep rates higher for longer than earlier anticipated. The tough talk has dampened the year’s rally in stocks and reignited a dramatic selloff in the roughly $25 trillion Treasury market.
- “Right now, there is nothing standing in the way of higher Treasury yields,” Kathy Jones, chief fixed-income strategist at Schwab Center for Financial Research, told MarketWatch. “It’s fairly obvious it’s not good for banks. The rise in yields has just been relentless.”
- Higher yields on newly issued Treasury bonds erode the value of portfolios that include lower coupon debt issued when rates were lower. Banks also tend to hold large exposure to commercial property loans that could be difficult to refinance if rates stay higher for longer.
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