Feb 20, 2020
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The Invisible Run-Off
Today, the Alphaville section of the Financial Times published The invisible run-off, in which I discuss a new source of “quantitative tightening” that almost no one seems to have noticed. I estimate that $350 billion of private funds will be absorbed when the U.S. Treasury refinances its securities that are now in special accounts for state and local government bonds. The Treasuries are…
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My FT Alphaville Commentary on Managing U.S. Treasury Debt
My FT Alphaville Commentary on Managing U.S. Treasury Debt
My commentary Go Long, Mr Mnuchin has just been posted at FT Alphaville of the Financial Times. I address the questions of whether the U.S. Treasury debt should be lengthened and whether it should use 50-year or 100-year bonds to do so. These are hot topics that the likely next Secretary of the Treasury raised after he was nominated last fall. I think that “ultra-long” bonds are good idea but…
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President to Introduce Treasury Bond Investment Program
We've discussed here before (Vulgar Trader: Keep an Eye on Your 401K) that its only a matter of time until the government nationalizes the nation's 401k retirement plans as a way to prop up the demand for US Treasury debt. While that plan has still yet to be implemented, the president is set to introduce a new type of retirement program that would operate alongside existing plans.
The AP explains:
Eager not to be limited by legislative gridlock, Obama is also expected to announce executive actions on job training, retirement security and help for the long-term unemployed in finding work.
Among those actions is a new retirement savings plan geared toward workers whose employers don't currently offer such plans.
The program would allow first-time savers to start building up savings in Treasury bonds that eventually could be converted into a traditional IRAs, according to two people who have discussed the proposal with the administration. Those people weren't authorized to discuss it ahead of the announcement and insisted on anonymity.
Like Japan, the plan would encourage savers to invest directly in the country's debt, keeping yields low and allowing for sustained levels of debt well above 100 percent of GDP. Currently, Japan's debt to GDP ratio is well over 200.
The website, The American Thinker wrote last year:
Make no mistake here: Obama is after your retirement money. The “annuities” will “invest” not in the familiar packages of bond and stock mutual funds but in the Treasury debt.
When the 10-year (now at almost 3 percent) rises to unsustainable levels, you can expect this confiscation to be enacted in a desperate attempt to get the debt system under control. In the meantime, this is an attempt to stave off that dreaded day by a few more years. The President is playing a long game.
For more, read our sister site's expose on Poland's nationalized retirement accounts.