That’s the title of a Youtube interview that Dimitri Simes, Jr., did with Tom Luongo. Simes, Jr., is the son of well known, in certain circles, political scientist Dimitri Simes. Readers may be interested in his biography, noting that, after he supported Trump, he was vilified by the Left and ultimately returned to Russia. Simes, Jr., is also based in Russia, now.
Inflation numbers / cpi were extremely massaged. Did you know healthcare insurance costs went down 25%? And they are .62% of the average households spend?
This was all set up with Blinken's visit ahead of Yellen's. He was tasked with the One China message to bring home. Zhou's Admin. will capitulate at most everything China related going forward.
Yellen is continuing to make the EU our vassals. Amazingly fairly quiet from EU leaders since Yellen's visit IMO. Previously Macron and others defended themselves "not being US vassals". Imagine having to grovel as Yellen did in order to get funding to bail out the Treasury and in turn leverage the EU as puppets. 4 days worth too!
IMO the EU recession/inflation outlook is probably likely as they share. Wait till energy prices (as energy importers) rise in the winter adding further inflation pressure. With Taiwan elections in a few months I'm wagering a significant shift back to the Motherland which in turn will put immense pressure on the US economy (think chips) etc. Get your loved one's electronic devices upgraded this Holiday season as it may be supply and/or price challenged further in 2024 and beyond.
Great post! The "Theory of Everything" meets "Yellen goes to China," presented very clearly and concisely. It is nice to see the latter described in context with the former. Thanks very much for the transcription, Mark.
I don't want people to think I am a shill for Luongo (although regular readers here know I am a great fan of his by now). Nevertheless, as a sort of public service, I will add that for anyone who is particularly interested in the "Yellen goes to China" thesis, Luongo detailed and elaborated on it in his latest newsletter - which just came out (subscription only). His treatment of it addresses many of the questions I had concerning it. I expect it would do the same to a great extent for others.
Yeah, I thought that was a very clear presentation of what, for me, is a difficult to understand topic. It was worth the time it took to get it into readable format.
I can only speculate. I don't know the size/volume of the treasury market.
1. Yellen would presumably not seek the entire amount from one source. TL provides quite a large possible spread--1T to 1.5T. He's making an estimate. If some considerable amount was sold in the normal course through the markets, then China would make up the balance--still, presumably, a very considerable amount. Given what we know about USG finances.
2. I would argue against the idea that Yellen ONLY wanted China to stop dumping its holdings--Japan has been doing that, too, by the way. My argument would be that the US still needs to finance its CONTINUING deficit--every year we spend lots more and grow the deficit lots more--and China stopping downsizing of its holdings doesn't accomplish that.
3. OTOH, a combination of the three--China stops downsizing its holdings, buys more treasuries than usual at this point in time, US finances some significant amount through more normal market channels--would be a possibility.
Inflation numbers / cpi were extremely massaged. Did you know healthcare insurance costs went down 25%? And they are .62% of the average households spend?
https://market-ticker.org/akcs-www?post=249270
China wants the US financial destruction not to go to fast, so to minimize the negative blowback.
Wow if true “ she needs to do something drastic in order to invalidate all the debt that's out there that nobody can service anymore.“
I wonder if something similar will happen on cre? If Biden can wipe away student loan debt, why not cre?
Did you know healthcare insurance costs went down 25%?
Hmmm. That would seem to rank right up there with the parting of the Red Sea.
This was all set up with Blinken's visit ahead of Yellen's. He was tasked with the One China message to bring home. Zhou's Admin. will capitulate at most everything China related going forward.
Yellen is continuing to make the EU our vassals. Amazingly fairly quiet from EU leaders since Yellen's visit IMO. Previously Macron and others defended themselves "not being US vassals". Imagine having to grovel as Yellen did in order to get funding to bail out the Treasury and in turn leverage the EU as puppets. 4 days worth too!
IMO the EU recession/inflation outlook is probably likely as they share. Wait till energy prices (as energy importers) rise in the winter adding further inflation pressure. With Taiwan elections in a few months I'm wagering a significant shift back to the Motherland which in turn will put immense pressure on the US economy (think chips) etc. Get your loved one's electronic devices upgraded this Holiday season as it may be supply and/or price challenged further in 2024 and beyond.
It does seem hard to believe that Yellen could have got a hearing without Blinken first conceding to the One China Policy.
Great post! The "Theory of Everything" meets "Yellen goes to China," presented very clearly and concisely. It is nice to see the latter described in context with the former. Thanks very much for the transcription, Mark.
I don't want people to think I am a shill for Luongo (although regular readers here know I am a great fan of his by now). Nevertheless, as a sort of public service, I will add that for anyone who is particularly interested in the "Yellen goes to China" thesis, Luongo detailed and elaborated on it in his latest newsletter - which just came out (subscription only). His treatment of it addresses many of the questions I had concerning it. I expect it would do the same to a great extent for others.
Yeah, I thought that was a very clear presentation of what, for me, is a difficult to understand topic. It was worth the time it took to get it into readable format.
Much appreciated, along with your commentary!
I can only speculate. I don't know the size/volume of the treasury market.
1. Yellen would presumably not seek the entire amount from one source. TL provides quite a large possible spread--1T to 1.5T. He's making an estimate. If some considerable amount was sold in the normal course through the markets, then China would make up the balance--still, presumably, a very considerable amount. Given what we know about USG finances.
2. I would argue against the idea that Yellen ONLY wanted China to stop dumping its holdings--Japan has been doing that, too, by the way. My argument would be that the US still needs to finance its CONTINUING deficit--every year we spend lots more and grow the deficit lots more--and China stopping downsizing of its holdings doesn't accomplish that.
3. OTOH, a combination of the three--China stops downsizing its holdings, buys more treasuries than usual at this point in time, US finances some significant amount through more normal market channels--would be a possibility.
"What has China been promised?"
That's the key question, all right. The Chinese are not stupid. They'll drive a hard bargain and demand ironclad safequards.