BREAKING: Panic at the Disco!!!

I wrote about financial repression last week, and it arrived 30 minutes ago.

The U.S. Treasury just announced that it would double the amount of bond-buying operations it does to support the long end of the curve (10- to 30-year maturities).

I told you that Bessent had turned into Yellen, but this is him donning a dowdy dress and matching handbag.

It’s not-QE, QE (quantitative easing - where the Federal Reserve buys bonds).

It’s also an admission that the Fed had lost control of the long end, and that Warsh was in a pickle - not wanting to bite his master with a rate hike so soon after his appointment.

This is not the move of a financially strong country. Strong countries only do this after a major war or some huge exogenous shock.

We are financially weak, spending way beyond our means, and now the Federal Government is going to transfer wealth from debt holders to debt issuers (the government being the biggest issuer in the known universe).

It’s simple: the debt issuers borrowed in strong dollars, and will pay back the loans with Chuck E. Cheese coins. OK, that’s a bit of an exaggeration, but it illustrates the point better than “weak dollars”. Think of it this way, when the government borrowed money 10 years ago, $100 dollars lent to it would buy a basket full of groceries. Now it will pay the loan back with $100 dollars… that will only buy half a basket of groceries.

You see, the dollar is getting more debased with this move, and is down 0.62 percent as I write (a big move for one day).