원문 보기
based on the marketable borrowing estimates published on July 31st treasury this is crazy treasury currently expects privately held net borrowing of 1.007 trillion dollars in this quarter with an assumed end of September cash balance of 650 and then they said we expect another 852 billion dollars of borrowing next quarter that means treasury is going to try and issue and sell two trillion dollars worth of Treasury bonds in the next two quarters that's two trillion dollars of new borrowing by the federal government to pay our bills at the start of the year they were estimating 1.6 trillion for the year which was an insane number now we're talking about 2 trillion and just two quarters a few days ago the United States Department of the treasury released its current estimates for privately held marketable borrowing in the third quarter of 2023 and the fourth quarter during the third quarter the treasury borrowing advisory committee projects a borrowing of 1.007 trillion dollars in privately held net marketable debt assuming a cash balance of 650 billion dollars at the end of September this updated estimate is 274 billion higher than the figure announced less than three months prior for the fourth quarter the treasury anticipates borrowing 852 billion dollars in privately held net marketable debt with a projected cash balance of 750 billion dollars at the end of December in the recent episode of the all-in podcast prominent figures like venture capitalist chamath palahapidia entrepreneur and angel investor David Friedberg and David Sachs co-founder and general partner at craft Ventures delved into the topic of the federal government's escalating debt and its potential ramifications Friedberg particularly highlighted warning signs for the U.S economy including the risk of losing the Dollar's Global Reserve currency status due to unchecked fiscal spending he cited Fitch a major credit rating agency which recently downgraded the U.S government's credit rating Friedberg emphasized that investor confidence in the U.S government's ability to manage its massive debt obligations is waning however opinions varied among the podcast participants chamath disagreed with friedberg's dire Outlook suggesting that while the U.S economy is facing challenges other economies are an even more precarious positions sax took a middle ground stance acknowledging signs of trouble while indicating that a complete collapse might not be imminent for the U.S economy this is a pretty striking chart that I think I showed this before this is federal government interest payments that are being made we're now up to you know a trillion dollars the chart as you can see a year has spiked and by the way that number is spiking further and we'll talk about this in one second as a result of rising interest rates and increased fiscal spending so this is now becoming a pretty sizable part of our budget and as of now paying the interest on our debt is a larger capital outlay for the federal government than defense spending the second chart shows what happened in the last week which is that 30-year treasuries have been sold off and as that's happened treasury yields have climbed so there's been about a 10 decline in pricing and you know a concurrent nearly 10 increase and Bill Ackman you know basically said today that he's shorting 30-year treasuries he thinks we're going to go to five and a half percent long-term rates currently the 30-year treasury sitting at 4.3 and remember I told you guys this after this thing I went to a few weeks ago that there were two prominent economists who shared that they think were going to be facing long-term rates in the five to seven percent range very long-term rates for a very long period of time that it is a new fiscal regime and then if you pull up the last link I sent Nick this is a report made by the treasury borrowing advisory committee of the Treasury Department and I just want to read a couple of quotes from this report this just came out uh today and it was published that it was sent over to the Secretary of the Treasury yesterday and it said since the advisory committee convened in May two-year treasury yields are about 100 basis points higher while tenure treasuries have increased by about 40 basis points the Bank holdings of non-mortgage-backed government securities mainly treasuries have actually declined by 146 billion so far this year so that means banks are selling off their treasuries the committee goes on to say at the same time treasury investors have noted that treasury Supply will need to increase to address the rise in public deficits as tax revenues have come in weaker and government spending has increased rates are climbing as a result we need to borrow more and this is a perfect manifestation of the debt spiral problem that we've talked about multiple times our fifth spending outlay and the rising interest rates combine to create an insurmountable debt spiral that is now manifesting in the fact that we need to sell two trillion dollars of um treasuries and here's the crazy statistic that they said in reviewing recent demand for U.S treasuries in auctions the committee noted that an increasing percentage of Supply is being absorbed by investment funds while foreign participation has remain range bound that means as we're trying to sell more treasuries governments Federal foreign governments are buying fewer of them which means that the U.S currency as a reserve is no longer the place that everyone wants to plow their money as much as it used to be it is in Decline now the other thing I want to share which I think is is absolutely critical is how do we address this Gap well the one way is these entitlement programs and so several Republican presidential candidates Nikki Haley Ron DeSantis and Mike Pence have all publicly stated on the the campaign trail that they're promoting programs to cut Social Security benefits for people that are 30 and 40 years old and here's the response to that a poll was done and on that poll 82 of Voters oppose the push to cut Social Security for Americans under 50.
82 percent so where is this going to take us this is what is so scary to me jaycal I'm not an American declinist I believe in the American system it benefited me and my family but I do worry that we find ourselves in a Whirlpool that is very hard to get out of because the populace says we don't want to make the cuts that are necessary in order for us to save ourselves that's what's so scary to me according to friedberg's assessment the U.S dollar May retain its World Reserve currency status for the foreseeable future nevertheless its purchasing power is expected to continue eroding potentially reaching a point where the dollar holds no value in contrast sax predicts that the initial indication of trouble will manifest in the stock market given the federal government's urgency in selling multi-trillion dollar bonds within a tight time frame of fewer than 200 days sax explains that the treasury will need to elevate bond yields to attract both domestic and international investors however this action is likely to reduce the flow of funds into the stock market leading to a deceleration in growth and overall economic activities on a more positive note John envisions a brighter future for the U.S economy particularly in comparison to the challenges being faced by other major economies such as Japan for further insights here are additional segments from the interview let me just State what I think about the downgrades it's irrelevant the s p did it 13 years ago Fitch is a marginal credit rating agency they're at a minimum 13 years late at a maximum they're just anxiety written like other people are always dreaming that the sky is true so that's my first point the second point and the more important one is that I none of you who are always freaking out about this understand this conversation about relativism all of these conversations are relatively you deal with them in absolutes on a relative basis Japan's debt to GDP is 270 and growing on a relative basis our debt to GDP is half of that we are the most important economic force in the world it is going to continue to be the most economic force in the world and all I see actually on every single monetary basis is every other country struggling more than we are so my question to all of the chicken littles is what do you do if you're a central government where you have to have foreign Reserves do you all of a sudden double down on the Euro do you double down in the Yuan which is basically a proxy for being for doubling down in the US dollar what are you supposed to do and I never get a good answer because on a relative basis the U.S will still continue to do well I think that debt to GDP is a red herring for a lot of people and I think that the way that people run their personal lives which should take income to debt into consideration I don't think applies as much to governments and I think these things are going to March forward as a group there's not going to be a single G8 country that all of a sudden moves away and starts printing surpluses it happened almost as an accident an aberration during the Clinton Administration it'll never happen again and I think that we shouldn't worry so much because I just don't see an alternative so give me instead of telling me how bad this is because you think about your own life and how it would be bad if you had debt to GDP I get it as a country give me the alternative country but just start with that can you answer that question what is the alternative country well let me paint a scenario that's not as dire as a collapse of the US Dollars the world's Reserve currency let me paint like a non-catastrophic scenario or non-apocalyptic scenario which is what you saw in this Fitch ratings downgrade is that the bond market did move at the margins there was a sell-off in the 10-year and as a result the 10-year bond yield moved up to 4.2 percent so it wasn't a case of everybody shedding all of their U.S treasuries it's just that there were Market actors at the margins who adjusted their portfolios okay now Friedberg is saying that the treasury is going to have to do another two trillion dollar Bond offering and we have trillion dollar plus deficits as far as the eye can see and we've got entitlement liabilities on the horizon and then at political and willingness to do anything about it so the deficits are only going to get bigger and bigger now what does that do it's supply and demand when the U.S treasury needs to keep issuing more or more bonds at some point the demand for those things gets incrementally saturated and they have to offer a higher yield so what happens well the bond rates go up and so the tenure goes up like Freebird was saying from 4.2 to somewhere in the five to seven percent range and that doesn't mean that the US dollar is not the world's Reserve currency it just means that it gets incrementally harder and more expensive to keep financing our debt now what is the result of that well if I as an investor could theoretically get seven percent from the US Treasury as the risk-free rate why would I want to take Equity risk and put it in the stock market which historically has yielded somewhere in the five to seven percent range so if I can get my five to seven percent from a risk-free U.S government Bond of course I'm going to do that so the discount rate on equities will go up that means that the stock market relatively on a relative basis will go down risk Capital will go down and they'll be way less risk Capital available for things like venture capital and private Equity does risk taking of all kinds and so the economy will just grow slower it's not like there'll be a collapse it'll just be this yeah huge Albatross yeah around the neck of the private sector and this is called crowding out in the current month the treasury is slated to auction 270 billion dollars in notes and bonds marking a 24 billion dollar increase from the sales volume in July this week the auction size for notes and bonds will be elevated to 103 billion dollars followed by an additional sale of 167 billion dollars later in the month the uptick in issuance will be more pronounced in October with a 35 billion dollar increase bringing the issuance of notes and bonds to 281 billion dollars the treasury borrowing advisory committee forecasts that by August 2024 the treasury will likely augment its monthly issuance of primary notes and bonds by nearly 60 percent reaching a total of 354 billion dollars the committee emphasizes that these quarterly estimates could be further augmented in subsequent quarters to accommodate reduced government revenue and heightened spending what are your insights regarding the imminent influx of notes and bonds into the market how do you anticipate this might influence cryptocurrency prices over the fourth coming months feel free to share your thoughts on both the video and the featured discussion
Comments 0